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Landlords Must Adjust Restaurant Rents After COVID

Restaurants Should Stop Paying Rent Right Now and Negotiate Adjusted Lease Terms

Restaurants, if they can open at all, will not have the same number of customers per night forcing restaurants to cut expenses wherever they can. Rent, being one of the largest expenses and calculated based upon nightly traffic, must be reduced for a restaurant to be able to survive. Landlords Must Adjust Restaurant Rents After COVID.

Restaurants have been forced to close for up to two months by orders of Governors across the County seeking to flatten the COVID curve with Stay-At-Home orders bringing already struggling restaurants to their knees.

As States begin to lift stay-at-home rules and allow restaurants to open, many restaurants are looking at severe reductions in revenues as States demand social distancing between diners transforming what might have been a 50 person dining room to a 20 or 30 person dining room. How can a restaurant continue to pay the same rent that was based upon revenues of 50 people 2 or 3 times an evening? Landlords Must Adjust Restaurant Rents After COVID. LANDLORDS TAKE NOTICE.

Landlords Must Negotiate New Lease Terms Or See Long-Term Vacancies.

Landlords are certainly in a tough spot but, if they don’t agree right now to reduce rents, they are going to have a vacant first-floor space that isn’t going to be taken by another restaurant anytime soon.

As reported in Restaurant Business: The Cheesecake Factory notified its landlords that it planned to not pay April to rent as it closed restaurants or generated a fraction of typical revenue as sales shifted to all takeout and delivery and hundreds of operators and chains are doing the same thing: contacting their landlord about rent, which typically comes due the first of the month.

Restaurants are facing months with little or no sales and many have no idea when they will come back. That rent can be difficult, if not impossible, to pay. But landlords, too, could face months with a substantial decrease in revenue as retailers and restaurants hold back on rent.

Some landlords are willing to listen but others, referencing their own obligations to pay loan payments, utilities, and other ongoing expenses, are not, or perhaps, cannot.

In those situations where a landlord is willing to allow a tenant to skip a month or two of rent, they are still expecting that at some time in the future, that skipped rent will be made up saddling the business with additional debt it probably can’t afford.

See more articles and information on our COVID Restaurant page.

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