When it comes to finding the perfect restaurant space, there are a ton of factors to consider. How much space will you need? What’s your ideal location? How soon are you hoping to open your doors?
That said, there’s one major decision that shouldn’t be overlooked – whether you’ll be buying a property for your restaurant or leasing one.
We’ve compared buying versus leasing a restaurant on our blog before. In this article, we’re looking specifically at the real estate aspect of this question: should you buy or lease the property you need for your restaurant?
If you’re looking for insights about buying or leasing an existing restaurant business – click here to read our comparison.
Finding the Right Space For Your Restaurant
Dreaming of opening your own restaurant? You’re going to need a place to bring your vision to life. The long and short is that both buying and leasing a restaurant space have their advantages. As a restaurateur, you’ll need to think carefully about which path will be right for you.
What Are the Perks of Buying a Restaurant Property?
Let’s start by talking about the advantages of buying a restaurant property.
It’s an Investment
Any way you slice it, starting a restaurant is an investment. It may be your lifelong dream, but it’s also a formal business venture. With that in mind, when you buy a restaurant space, you’re not just securing a location for your business. You’re also making a separate investment in real estate. As you start making payments, you also start building equity. If you buy in a strategic location, there’s a good chance that the property’s value will appreciate over time – creating great ROI for you in the future.
Planning on buying a restaurant with property? You’ll want to explore these blogs next.
- Everything You Don’t Understand About Restaurant Real Estate
- Can You Buy a Restaurant as an Investor?
- Does Your Small Business Need Bricks & Mortar?
You’re Not Just Paying For the Space
When you start looking at property listings, you’ll notice that some are totally empty and unmodified while others are more turnkey. If you buy a property that recently housed a functioning restaurant, you’ll also be inheriting all kinds of equipment, kitchen essentials, and other very important elements of running an eatery.
Not only is this much more convenient than buying or leasing a space that you need to convert, gut, or renovate to turn into a restaurant, but it’s also another way to protect your investment. Let’s say you have trouble getting your business off the ground and you need to sell it, having physical property along with your business assets will make it much more appealing to buyers.
It’s More Stable
One of the biggest differences between buying a restaurant property and leasing one is stability.
The world of commercial real estate can sometimes be cutthroat. When you own your property, you have a whole lot more control over your environment and how you run your business.
A lease can offer some protections, but it won’t be completely airtight. As the building owner, you won’t need to worry about landlords increasing rent, imposing new restrictions, selling the building, or potentially pursuing eviction. This stability can provide peace of mind and allow you to focus entirely on running your restaurant to the best of your ability.
On top of stability, owning your own space also grants you more creative control over how you modify the property. As long as you have the necessary permits, you’ll have full say on renovations, design, structural changes, etc.
Owning a Multi-use Property
If you choose to buy a restaurant space, you may come across the opportunity to purchase a mixed-use building. In simple terms, a mixed-use property is any piece of commercial real estate with a restaurant (or other business) space on the main floor and one or more residential apartments upstairs. You can find mixed-use properties all across Ontario, however, they’re especially common in Toronto’s older neighbourhoods – Kensington Market is a great example of this.
As a restaurant owner, owning a mixed-use property can come with some unique perks. For instance, if you’re able to find a reliable, high-quality tenant for your upstairs apartment, you’ve just boosted your monthly cash flow quite nicely. On the other hand, you could also keep the apartment – converting it into an office for your restaurant or moving in yourself.
Want to know more about commercial real estate leases? Check out these other blog posts.
- What’s Included in a Restaurant Lease?
- 5 Things to Know When Negotiating a Restaurant Lease
- My Restaurant Lease is Ending, What Can I Do?
What Are the Perks of Leasing a Restaurant Property?
Now that we’ve looked at the perks of buying, it’s time to make a case for leasing.
It’s Easier
Arguably one of the biggest perks of leasing a restaurant space is that it’s easier (and faster) than buying one. Commercial real estate purchases are famously complex. There are countless variables involved from financing, to stakeholder relations, permit applications, and much more.
In comparison, commercial leases are fairly straightforward. Although negotiating and signing your lease won’t be an overnight process, it’s generally a much shorter timeline. If you’re well prepared and have your finances in order, you can potentially have your restaurant up and running faster than you would as a purchaser.
It’s Cheaper
Another reason to consider leasing is that it’s much more attainable (financially speaking). No matter the market, buying commercial real estate requires a lot of upfront capital. However, signing a lease typically only requires a security deposit and the first and last month’s rent. For many restauranteurs, this is the difference maker in deciding which route to take.
Plus, the affordability of leasing can also open up more opportunities when it comes to location – which is an essential part of your restaurant’s success. Commercial real estate in trendy locales or high-traffic neighbourhoods can be prohibitively expensive. However, you may find leasing opportunities in these areas that actually land within your budget.
Searching for the perfect place to bring your restaurant to life? We can help! Reach us at ryan@carverealestate.com or call 416-618-0054.
