On Restaurants and Rent

From blog.ice.edu by Institute of Culinary Education
On Restaurants and Rent


By Steve Zagor—Dean of Business & Management Studies


Once again, the headline reads: “Well-Known Neighborhood Café Closes Due to Escalating Rents.” We hear it about the iconic temples of gastronomy like Danny Meyer’s Union Square Café. The local bistro where you proposed to your wife. Or maybe it’s—worst of all—that little neighborhood coffee shop that always remembered your order. In fact, last year Zagat reported twice as many restaurant closings as openings—the first time that has happened since 2007—due in large part to rising rents.


As a consultant, I’m privy to insider information about these kinds of restaurant woes. I recently received a call from an owner of a long-established East Village restaurant whose lease expired after 15 years. She was forced to sign a short-term, interim lease to see if she could afford the huge rent increase. “It’s better than closing or moving,” she said.


But is this really the whole story? Who is right? Who to believe?


Read on to learn about the many factors that affect a restaurant's life span.