Is 12% occupancy cost too high for a restaurant?

Twelve percent occupancy cost is above the healthy range for most restaurants. Public chains report rent and occupancy between roughly 5% and 11% of sales. At 12%, a restaurant is carrying rent that will show up as thin margins by year three.

What does occupancy cost include?

Occupancy cost is total annual occupancy divided by annual gross sales. It includes base rent, CAM, property taxes, building insurance, and percentage rent where it applies. Utilities usually sit outside it.

How do I test whether a rent is too high?

Divide the proposed annual occupancy cost by the tenant's realistic annual sales. If the result exceeds 10%, the tenant needs higher volume than projected or a lower rent.

How Do I Find Tenants for a Vacant Retail Space?

Sep 26

Written By Retail Made

Start from what the property needs rather than from who happens to be looking. Build a list of the categories the merchandising plan calls for, then find the specific operators in each one.

Waiting for inbound calls means leasing to whoever happened to see the sign. That is how properties end up with three of the same thing.

Build the list from the plan

Your merchandising plan says which categories the property is missing. That list is your target list.

For each category, find three kinds of prospect: operators already succeeding in adjacent trade areas who might expand, regional chains in growth mode, and local operators with one strong location and no second.

The single-location operator with a line out the door is the most overlooked prospect in retail leasing. They are not being called by anyone, they have proven demand, and a second location is the obvious next move they have not made yet.

Where the names actually come from

Walk the trade areas around your property and write down who is busy.

Then: franchise development pages, which list expansion criteria publicly. Local business press covering openings. Instagram, where operators announce growth before brokers hear about it. Permit filings, which tell you who is building. And the tenant reps who represent categories you want.

For franchised concepts, find the franchise development officer rather than the local franchisee. They control site approval and they are paid to expand.

Outreach that gets answered

Lead with something useful about their business, not something promotional about yours.

An email that opens with sales density, daypart fit, or a specific observation about why this corner suits their format gets read. An availability flyer attached to "please see attached" does not.

Keep it short enough to read on a phone. Name the property, say in one sentence why you thought of them specifically, and ask a question that is easy to answer.

The tour is not a showing

You are not selling square feet. You are answering whether this specific business survives here in year three.

Know their numbers before they arrive. What is their average ticket, what daypart carries them, what do they need in delivery condition. Then walk the space in terms of their operation: where the line forms, where the kitchen goes, what the morning light does, who walks past at 8am and at 7pm.

Follow up without becoming the person they avoid

Follow up with new information, not with a reminder that you are waiting.

A new tenant signing nearby, a traffic count, a change in the co-tenancy, a permit pulled across the street. Each of those is a reason to make contact. "Just checking in" is not, and it teaches the prospect that your emails contain nothing.

Courting the Ideal Tenant covers building a wish list from a merchandising plan, researching and ranking prospects, outreach that earns a meeting, and tours that help a tenant picture success.

Retail Made