THE KEY TO GETTING KEY MONEY FOR YOUR RESTAURANT

By Marjorie Borell

I am seeing this distressing situation occur more and more as restaurant owners looking to get key money for their leases wait too long to put their spaces on the market.

Once the decision to close has been made, restaurant owners should give themselves, or their brokers, a minimum of 6 months to try to get their asking. 

Why? 

Back rent will accumulate, vendor bills will keep piling up and licenses can expire all before you, or your broker, have had adequate time to find a qualified buyer.

On numerous occasions recently, I have seen owners forced to leave or simply walk away from their restaurants without ANY key money because they didn't have enough time to find a buyer.  

My advice is to keep your licenses active. Keep your outstanding bills to a minimum and manage landlord expectations as best you can.  After all, they stand to benefit too with a qualified new tenant and the repayment of back rent.

Remember, in today's market it takes considerably longer to find qualified buyers with ready cash.  So don't wait until the last minute and risk losing it all simply because your time's up! 

Here is a check of what you need to know before you move on:

• Before you close the doors you need to evaluate the legal, financial and tax consequences of closing your restaurant.
• Consider how and when to announce your actions to employees and customers.
• Consider whether or not bankruptcy is appropriate.
• Much of the work associated with closing actually happens after you've closed such as filing final tax forms, closing accounts and reducing future liability.