Rental % of gross for a parttime, weekend B&M location?

People we know have a city/urban café (coffee and meals) in a business district, operates 5 business days a week – 7am until 4pm. It is closed Saturday and Sunday, there is insufficient trade at these times. Was considering having a Saturday/Sunday breakfast/lunch operation 8am-2pm-ish (until sold out actually). The attraction is the location (on a main road very accessible from the freeway, good residential for miles around) and the kitchen (meaning we can prep and cook onsite). The challenge is what to offer them for renting the place from say 4pm Friday until 4pm Sunday. We could offer a fixed amount or we could offer a % of gross takings – it may have to be a combination – the larger of fixed amount or %. If we offered a % of takings, what % do you think? Have seen rental % of 8-10% for a BM location (including full kitchen) quoted by members here ... assume that is basic rent only, ins/utilities are extra?

The café is pretty straightforward, seating 30 inside and 12 outside, expecting take-out to be a significant proportion of sales. There is a small but full kitchen (full access), use of one fridge while onsite, CVAP/Alto-Sham probably only additional gear to buy (also smoker of course), great counters/serving, coffee machine/drinks. Kitchen we would have full access, bring knives of course. Smoking would be outside in the carpark right hard against the outside seating area. Great parking and visibility.

Nearing retirement, want to set up a profitable operation, that is worthwhile doing but one we are not completely dependent on, that isn’t overpowering once established. The dream would be a place like Snow’s (in Lexington, Tx), there are such locations around, but the cost of the kitchen is beyond us for these more semi-urban/rural sites which are atmospheric but without kitchens (and no local commissaries).

So, what %?

TIA.

toymaster said:

Wow. I can understand what you're trying to do and I wish you luck but I think your goal of being like Snow's BBQ is a little unrealistic. Miss Tootsie has had a loyal following for decades and I think she is the exception and not the rule. Maybe you should think about 1 or 2 weekends a month to see if this is a viable option in this location before jumping in head first. Maybe try a special once a week with the owner's permission to get the weekday people onboard.

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Mmmm ... Slow start etc is reasonable, thanks for the suggestion. The Snow's reference was really about being open for weekend only (I know, they are Sat only). Not trying to pretend too many other similarities. I was trying to paint the overall picture and goal so any suggestions might see where this could be headed. Thx for the input.

HBMTN said:

7-10% is what many people pay just to park their concessions set up in a parking lot to sell barbecue. I would expect the use of their restaurant to be much higher but not sure what to offer them. I'd expect they would want a lot more than 10% but that's just a guess.

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viking72 said:

It is closed Saturday and Sunday, there is insufficient trade at these times.
End of discussion.
Later,
Doug

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poorolddan said:

I did a similar thing at a KOA Fri & Sat's. Gave owners 50% of net profit. Very inconsistent sales. The commitment also ruined any chance of enjoying retirement being tied down every weekend all summer. Ended up working for less than min wage the whole time. There are better ways to supplement your retirement income.

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All good points, and I have tried to deal with these in the following manner:

Rental % (HBMTN)
I was trying to avoid the complication (and arguments) of calculating the net income by going instead with the gross. I personally think 15% up to 20% of gross for such a good site, with a hope for 15% because they get zero income (but also zero wear and tear) over the weekend.

No weekend trade, no business (viking72)
The café is deliberately set up for a business-days-only business. It is thriving on that basis. All business is walkup based on surrounding offices. So this is a completely different business, merely using the location. Why would there be trade then if the offices are empty?:
1. Virtually everyone here would drive if they were buying breakfast or lunch. Conclusion: lack of foot traffic not fatal.
2. Location is in a business area, but the business area is in essence just along the main road we are on, it is otherwise completely sitting in residential suburbs; suburbs which are adding density of population every day as building codes have changed to allow medium density housing. Conclusion: location in business area not fatal.

Demand fluctuation (poorolddan)
This is the biggest unknown and is not solved by doing a popup to test the market. There are a number of BBQ popups here, I know a couple of them, and they all go well on the day, but one swallow does not a summer make. The BBQ market here is a few foodtrucks (the latest has a SP in their trailer), else high-end restaurant type stuff. There is no 'low-brow' BBQ, serving standard BBQ day-in-day-out that becomes part of the general background of available food. That is the model I would be going for - high-quality, basic BBQ, available reliably and repeatably in a specific location. Conclusion: risky to try and bring in a new model of food availability for BBQ. Also risky is being able to keep the price down because the meat price here, given the cuts we can get, is very high.

Suitability as a retirement job (poorolddan)
Spot on question Dan, this is a real genuine concern for me personally and after a lifetime of self-employment and the struggles and stress, why continue? Not much use analysing why I want to do this, but I am offsetting Dan's (and my) concerns by doing it in partnership with a relative who works in the hospitality industry (very experienced rest. manager and rest. chain manager). This gives options for us to split days (there would be some staff), have weekends off etc. For neither would this be our main source of income. I am very sensitive and realistic to the absolute commitment, but am also trying to ensure it doesn't overwhelm or become a burden. Conclusion: have some options to alleviate the workload and stresses.

So, that is a bit more background to some excellent and fundamentally supportive questions. I don't have all the answers, am trying to be realistic and objective in a situation where the facts can't all be known.