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Landlords are keeping SF’s restaurant industry from going under

Posted by: | Posted on: September 28, 2020

For restaurant and bar owners, opening their own place is usually a dream come true. But before the COVID-19 pandemic, many underestimated the power of an often overlooked partner in their success — their landlord.

Many restaurants lucky enough to survive this long, while adapting their business model to fit new ways of doing business like takeout and outdoor dining, now have to navigate restructuring leases or asking for temporary rent deferment or abatement in order to survive.

“We’re extremely busy renegotiating leases,” said Louis Cornejo, president of commercial real estate company Urban Group. “The problem is it would be easy to say, ‘OK  this will work for four, five or six months,’ but no one knows what’s going to happen. It has us all trying to reinvent how we do business.”

He said for the most part, it’s been nice to see agents, landlords and restaurateurs working together to try and find a solution. Landlords are making concessions, some opting temporarily for “percentage rent” for the time being, which is when a restaurant pays their rent based on a percentage of their sales. This reduces the risk for the tenant since it means if the business isn’t able to operate, it won’t have to pay rent.

Not every landlord goes for that, Cornejo said, some preferring to defer a few months of rent or charge a reduced price for a certain time period.

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