Leasing a Restaurant Property: Common Questions and Legal Insights
Securing the right restaurant space is vital for the success of your business. However, the complexities of negotiating a restaurant lease can be overwhelming. Below are questions often raised about leasing a restaurant property.
1. What is a commercial lease, and how does it work for restaurants?
A commercial lease is an agreement between a landlord and a tenant that allows the tenant to use a space for business purposes over a specific period of time. While it can be a standard agreement, restaurant leases often have unique terms due to the specific requirements of operating a restaurant.
Key Point: Restaurant leases are negotiable. It’s essential to consult a solicitor early to ensure the lease terms are in your best interest.
2. What should be included in the “permitted use” clause?
There will be a definition in the Lease often referred to as the “The permitted use clause” which sets out how you can use the property. For a restaurant, this should clearly state that the property can be used for restaurant purposes, and often includes further definitions such as operating hours, type of food, and services.
Why it matters: Getting this right from the start will ensure the Landlord and Tenant are fully aware of what they are to do and offer. There may well be restrictions on the type of food you can offer which might be in competition with a neighbouring restaurant.
3. How do I ensure I have all the necessary licenses and permissions?
Running a restaurant requires various licenses, depending on the offerings you are seeking to make. The common ones to consider are alcohol licenses, food hygiene certificates, extraction for fumes and any takeaway offerings.
Why it matters: You do not want to take on a property and then find that there are a number of restrictions that stop you from using the property as you had intended. Agreeing with the Landlord from the outset means that both the landlord and tenant are aware of what is expected and you then need to agree who will apply for the appropriate consents.
4. Restaurant fit out.
Restaurants often require an number of changes to the Property to allow the Use. This again can involve a number of changes to the layout and need to ensure adequate restrooms and table seating. Are you looking to install a new kitchen? Does your restaurant require any special changes to the structure of the Property? are you going to need more water, gas or electricity? All of these could require working with the Landlord to ensure a supplier can get access to install such services.
If you are planning on major or indeed minor changes to the Property you will require the landlord consent and will need to check the lease terms to see what is required of you. The Landlord or the Local Council will no doubt want to have a say in what is allowed as amendments and will require this to be formally documented.
Why it matters: The consent from the Landlord will come at a cost and they may seek to instruct their own surveyor which will come at a cost to the Tenant. Getting this right from day one will ensure all parties have the same goal and know what works are to be done. Indeed this may well happen in a contract before the lease is entered into.
5. Other common obligations.
When operating a restaurant you must be fully aware of:
- health and safety laws,
- fire safety laws,
- accessibility and disability laws,
- food preparation standards,
- Insurance for your staff and customers,
- Opening hours,
- Any takeaway requirements.
Why it matters: The lease will often require the Tenant to comply with all laws and regulations making the Tenant the person responsible for any breaches. The Lease may well set out its own requirements for the Tenant to comply with for any of the above, e.g. the Landlord insurance may require more fire safety obligations than the Tenant had thought.
Leasing a restaurant property requires careful planning and negotiation. By understanding the key considerations and engaging an experienced solicitor, you can avoid common pitfalls and secure a lease that supports your business goals.
If you would like any more information relating to this article please contact Tony Chauhan on 020 8221 8011 or at tony.chauha@bowlinglaw.co.uk
This article is not intended to provide legal advice; it is intended to provide information of general interest about current legal issues.
