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Successful Cafe Tip #1

  • 1. Have a Good Lease:
    The key to a good lease is flexibility for the lessee. Especially if a significant capital improvement commitment is being made on the tenant's part, he or she should have all the operating flexibility needed to be able to improvise and adapt to keep the business alive. Capital improvements are highly valued by landlords. In 99% of cases the tenant cannot take these improvements with them when their lease ends, but the landlord may be able to get more money from the next tenant because of the work YOU did. Therefore, the landlord should want to secure such a tenant and the tenant should understand this provides them with some bargaining leverage in negotiating a lease. The last thing a tenant needs is being bossed around by the landlord on petty items that may be a distraction (or worse) to running the business.

Successful Cafe Tip #2

  • 2. Keep Additional Capital as a Cushion Chances are good that your forecasts for operating and capital expenditures will be wrong. Once you have sunk your capital improvements into the landlords space, do you want to run out of money and shut down? Unfortunately, this happens all too often. Keep at least a 20% margin of error on all your budgets and expect the worst in all your cost estimates. Cafe operators who opened within 2007/2008 could never have expected commodities pricing to have gone through the roof as they have. Oil price spikes have affected everything from plastic "to-go" lids to bottled water.