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Should you buy or lease your restaurant space?

On Behalf of | Oct 5, 2022 | Real Estate Law |

Choosing the right location for your restaurant is vital to the success of your business. Whether you should buy or rent your space, however, depends on your circumstances. There are advantages to either approach.

Advantages of renting

The most obvious advantage of renting is that you spend less money up front. This leaves you with more capital to invest in quality equipment and enables you to open for business sooner. For new restauranteurs, renting is often the more affordable and practical option.

Building upkeep and repairs can be a significant expense for business owners. In a typical commercial lease, your landlord is responsible for the upkeep of the roof, exterior walls and foundation. This can take a significant financial burden off your shoulders.

Advantages of buying

Owning your restaurant building gives you more freedom to make modifications as your business grows, such as adding additional kitchen or dining room space. While you are responsible for all maintenance and repairs, this may work in your favor, as you will not have to wait for a landlord to complete repairs.

Owning a building also avoids the added expense that comes with a rent increase. In the restaurant business, there are many factors that affect your operating costs. A sudden increase in rent may necessitate raising your prices, which in turn impacts your customers. Avoiding this factor can help you keep your expenses, and therefore your prices, more predictable.

Finally, buying a building is a long-term investment. Should you decide to relocate your restaurant, you may choose to rent out your original location, providing an additional source of income that you can re-invest in your growing business.

When it comes to starting a new business, there is no one-size-fits-all approach. Consider the needs of your business carefully to make an educated decision.