Opening a new premises for your restaurant

Often the hardest part of opening a restaurant in the UK is finding the perfect premises and location for your venture but once you are in then you also need to make it a success.

Here are our hospitality lawyers top 5 tips to help the process of opening a new premises for your hospitality business and ensure it runs smoothly.

1. Be prepared

A landlord or property owner will need to believe in you and your business before they will consider allowing you to rent their premises. Ensure you have an easy to follow business plan ready. Use this process to also tighten up your financial budget and your key concept proposals.

It’s never too early to look at devising your menu and offering.

Think about the average spend per head as this will be crucial to help cover costs and handle cash flow.

Talk to some fit out contractors, Health and Safety consultants, recruitment agents, web designers etc. to start assessing set up costs.

Have you protected the name of the business and any other key intellectual property?

Will you need to get planning permission or change any premises licences to enable you to occupy? This can be time consuming and so is worth looking into at an early stage.

2. Know your market

Research is key. Check the area is suitable for your concept. Even carry out your own market research at different parts of the day as this will be useful insight. It will also show you what the footfall is like for passing customers.

Think about what will attract your target market to your restaurant.

Don’t be afraid to talk to other restaurants in the area and get their opinions and insight. The restaurant sector is a small world and most restaurant people are friendly and happy to help.

3. Don’t forget to budget for hidden costs.

As well as the obvious budgeting don’t forget these costs too:

• Business Rates – these can often be equivalent to an additional 50% of the rent.
• Landlord’s Fees – under your lease you are likely to be responsible for any costs the landlord incurs, including repairs, licence fees etc.
• Employee Costs – you’ll need to cover the staff benefits and employer tax contributions as well as maternity leave and agency costs.
• Energy – this can often be a huge cost in a commercial kitchen and so make sure you shop around.
• Brand development – marketing is important and you will need to spend on rewarding loyalty and making sure your website and overall brand continues to be positively developed.

4. Rely on a few key experts.

Often it is worth relying on a few key experts. A good accountant, lawyer, property agent and operations/HR consultant are worth their weight in gold. Also as the sector is so tight knit they should be able to help put you in touch with any other contacts you might need.

5. Be ready in case you need to exit.

It’s always been a fickle industry and so it is worth planning for a worst-case scenario where the business doesn’t take off or customers don’t get the concept.

When you negotiate the lease make sure you include a right to break the lease upon written notice. Ideally you want this at any time but often the landlord will only agree one after a few years of trading (e.g. on a 10 year lease at year 5 of the term).

Also make sure the lease provisions allow you to easily assign the lease to another party or grant a lease to a third party out of your leasehold interest. This way you can pass on the financial burden of the lease terms and also vacate the property.