COMMENT: To attract the very best restaurants to create a must-visit destination it is crucial agents, landlords and operators explore new ways of working together, writes Ted Schama, managing partner at Shelley Sandzer.
Curating a key destination with a sense of place is the main priority for larger landlords, and they can only succeed in this by aggressively pursuing the most dynamic operators for their location.
For a prime urban area within a notable city, this is likely to be an on-trend and innovative independent operator.
For the regions or out-of-town locations, this may be a popular operator in a staple category such as burgers or pizza, or more likely something a little more adventurous.
The likely rents presented for these will differ depending on location and, as a result, also naturally attract certain operators.
Further to this, when considering a tenant for a destination, agents and landlords must work together to ascertain the sustainability of a potential tenant, taking into consideration their longevity and how the brands future journey may map out.
Where appropriate, it is fair to expect and achieve sizable rents.
However, in this climate operators are often put off or frightened by large rents and, indeed, sometimes these high figures are not entirely warranted.
For these situations, agents will find ways to be creative and come up with compromises.
This gets exciting brands into great locations, benefiting both the brand and the landlord.
Partnership and flexibility is also important when working with international brands yet to enter the UK market.
Remaining flexible and working with the restaurateur and landlord in partnership to form a deal ensures that these leading tenants don’t pass up the opportunity at the first hurdle.
By way of creating compromise, we have seen turnover rents included in deals for some time, however these are occasionally backed up by strong base rents.
What if I suggested that in order to secure the tenant of your dreams, you must completely remove the base rent?
You’d probably – and in some instances with good reason – accuse me of devaluing the property and causing major headaches with adjoining tenancy arrangements and so on.
On the contrary, I have seen in several instances and increasingly so that this approach is exactly what is necessary.
Overcoming this hesitance towards perceived risk together is how both landlords and operators can excel and achieve their goals.
One might argue that removing the base rent is an easy route to facilitating a deal, and one that nearly anyone can do.
Yet so few take the plunge. Many people perceive the risk as too great.
Conversely, I would argue the exact opposite; if you don’t act now, you may find your estate in a weaker position having lost such prime opportunities and possibly losing out to others in the process.
Another important relationship to consider is the one between the operator and the public – one which can start building well before a member of the public steps foot inside the restaurant.
Last month, I presented at the R200 Conference discussing the Liverpool restaurant property market.
I spoke about my aforementioned ideas and received more questions following my speech than ever before, which illustrates that the appetite and interest is there on the right terms.
A highlight for me was listening to a panel discussion with Gary Usher, the owner of Hispi in Didsbury, Sticky Walnut in Chester, Burnt Truffle in Heswall and Wreckfish in Liverpool, all of which have been assisted with crowdfunding.
Generally, I am not a fan of crowdfunding when it comes to restaurants.
Invariably, they are based on inflated valuations, making it difficult for investors to get their money back while the restaurants themselves rarely receive any added value from the investors assisting with their growth.
However, Usher took a more innovative approach to his most recent venture, turning crowdfunding into a community-based partnership.
The £200,000 crowdfunding for Wreckfish not only enriched Liverpool’s restaurant scene but also flipped the traditional format of crowdfunding on its head by giving investors vouchers to dine instead of buying equity shares.
Pre-buying their meal and experience instils a sense of community and partnership, and gives investors pride in being an integral part of that brands journey.
Though a different tale is often told, the current market presents itself for some exciting and successful restaurant and bar operators in London.
The UK still leads the worldwide dining scene, and these are just a few examples or how the green shoots of new growth are evolving in the industry. Now is the time of opportunity and most importantly a time of partnership.
Read more: What’s eating the casual dining sector?
