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Property Advice zone

In the restaurant sector rents are calculated according to a number of different criteria. Chartered surveyor Fleurets divides restaurants into five main types: pub-restaurants; purpose-built shell units; high street; shopping centres; and leisure parks.

With pub-restaurants, where food provides the driving force behind sales and profits, rents are determined according to a fair maintainable trade and profits, as with traditional pubs. According to Fleurets, “The assessment of rents relative to fair maintainable turnover ensures a link to affordability.”

Next come the fast-casual operators, such as Nando’s and La Tasca, which have opened apace in recent years in towns and cities around the country.

Restaurateurs for these units typically require smaller premises of 3,500-4,000sq ft, and rents are proportionately higher than for the superpubs. Rents for these units are typically analysed on a per-sq-ft basis.

High-street rents for traditional restaurants tend to be linked to shop rents and are valued on a “zoned” basis. “As trade across the restaurant sector has suffered over the past two years, landlords have been keen to rely on increasing retail rents to force up restaurant rents, which will have been contributory to the record number of restaurant closures during 2003,” says Fleurets.

Shopping centres have become an increasingly popular choice for restaurant operators in recent years. Often, the rents for restaurant units are linked to a percentage of turnover, which Fleurets says can be an attractive option for established operators which have suffered from increasing rents on the high street against a backdrop of falling sales. But, as the sector picks up, restaurateurs should be more wary of taking on turnover leases, advises Fleurets.

Some operators, such as Pizza Hut and Frankie & Benny’s, have sought solace in out-of-town leisure parks, where rents tend to be valued on per-sq-ft basis. With only a handful of operators per park, new lettings are scarce and so rental evidence has to be taken from other leisure parks and adjustments made for location and the performance of the park in question.

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