Should you not pay your rent?
We are living in extraordinary times. Social distancing. Home confinement. Mandatory closures: schools, restaurants, bars, gyms, beaches, hiking trails, etc..
If your business is not deemed essential, how do you survive economically? Can you, should you, stop paying your rent? What are the ramifications?
Business owners faced similar circumstances in 2008. In fact, a large part of our business during that recession was renegotiating leases and rent relief for our clients.
Landlords face their set of challenges as well. They also have their financial obligations. But no one wants unnecessary litigation or vacancy. I believe communication with your landlord is critical to work through this crisis. Call your landlord NOW. Before your rent is late.
I just read an article online where The Cheesecake Factory, with close to 300 locations in the States, with 39 in California— will not be paying its rents on April 1st. In telling its landlords their inability to pay rents, they confirm the dire circumstances faced by many/most independent restaurants right now.
What about your business? Can you get a rent reprieve? My suggestion, contact your landlord now. You obviously don’t want to close your restaurant down. Maybe you are operating take-out or delivery only. I am sure your landlord doesn’t want an additional vacancy. His/her alternative is to find another operator. And who will want to open/operate a restaurant in your absence at this time?
Suggestions when speaking to your landlord:
- Do it early, do it now. Communication is key. The Founder/CEO of Cheesecake Factory sent his letter on March 18th. Want to see the letter the Cheesecake Factory sent to their landlords? Click here
- Lay out your plan to survive this crisis. He/ she is going to want to know that you are doing your best. Why would they help you, if you are not helping yourself?
- Perhaps your landlord will accept a percentage rent in these unknown times. Most restaurants can operate/survive when their rents do not exceed 12% of sales.
- Perhaps they will agree to deferring rents. Perhaps you can pay these back by increasing your rents when better times return.
I am a Business Broker by title, Business Advisor by nature. If you want to talk about your business, options, ideas, etc… please don’t hesitate. Shoot me an email or call me at 951-444-8237.
Be safe and take care!
Here are some additional link that could be helpful to your business: