Questions to Ask a Restaurant Tenant
For commercial landlords and leasing brokers vetting a restaurant operator who wants to lease a space. The questions follow the order the conversation usually runs in: the operator and the concept, money and lease terms, the build-out and the building's systems, permits and licenses, daily operations, and insurance and the end of the lease.
Want questions from the whole vault instead? Try the random question generator.
The questions
Each question, and why to ask it
The operator
What is the concept, and which existing restaurant is it most like?
Why ask it
Start here, because the hood, the hours, the smell and the parking all follow from what is being cooked and for whom. A useful answer names the cuisine, the price range, the service style and a real place you can go and look at. 'Elevated casual with a great vibe' means the operator has not finished thinking, and the permitted use clause in the lease will need a sharper description than that.
Which restaurants have you owned or managed, and which of them are still open?
Why ask it
Owning, managing and cooking in a restaurant are three different records, so find out which one each place on the list was. A first-time owner is not a no, but it shifts weight onto the guarantee, the deposit and the people around them. Look the places up yourself afterward: when they opened, whether the doors are still open and what the last six months of reviews say.
Do you have a written business plan and a draft menu you can send me?
Why ask it
Read the two against each other: a menu built around a wood-fired grill and a plan with no line for a hood do not describe the same restaurant. The plan need not be polished, but it should say who the customers are, what opening costs and what a slow first year looks like. From an operator with several locations, the last opening's budget set beside what was actually spent tells you more than any new plan.
Why this space, and what else did you look at before it?
Why ask it
Operators who have studied a location talk about foot traffic at particular hours, the offices and housing nearby, visibility from the street and who else is feeding the block. The worrying answer is only about the rent, or about the equipment the last tenant left behind. Follow up with what would make them walk away, since that tells you which lease terms they care about most.
Who will run the restaurant day to day, and how many hours a week will you be on site?
Why ask it
Plenty of restaurants are pitched to the landlord by a founder and then run by a manager nobody met. Get the names of the general manager and the chef, how long each has worked with the owner, and who has authority to deal with you about the building. If a second or third location is opening at the same time, ask which one gets the owner when both have a bad week.
Can I visit one of your current locations during a busy service?
Why ask it
Go once by arrangement and once unannounced on a Friday night. You are looking at what your building would live with: the back door, the dumpster area, the restrooms, how the staff move when the room is full. An operator with nothing open yet can show you the kitchen they work in now; if neither visit can be arranged, ask why before you go any further.
Have you ever closed a restaurant or left a lease before the term ended, and how did you leave things with the landlord?
Why ask it
Closures are common in this business, and a single one in a long career says little about the operator. What matters is how it ended: whether the landlord heard early, the rent was settled and the space came back clean. A story in which everything was someone else's fault deserves a call to that landlord.
May I call your current landlord and one from a space you have left?
Why ask it
The former landlord is the better reference, since the current one may have reasons to be kind. Ask both the same four things: was the rent on time, did neighbors complain, how was the kitchen maintained, and would they lease to this operator again. If the only references offered are suppliers and friends, ask directly why no landlord is on the list.
Who owns the company that will sign the lease, and who can make decisions for it?
Why ask it
It is ordinary for a restaurant to lease through a new company with no assets, but you need to know who stands behind it. Ask for the ownership split, any silent investors and what happens if the partners fall out. Your attorney can confirm from the company's documents that the person signing is allowed to.
Is this an independent restaurant or a franchise, and what would the franchisor require of the lease?
Why ask it
Franchisors often send their own lease addendum, which can include a right to step into the lease or fix the tenant's defaults, along with standards for signage and layout. Ask for that document before anything is drafted, and for the name of the person at the franchisor who approves sites. A known brand is a comfort, but check whether the franchisor guarantees anything or only the local franchisee does.
How many seats are you planning, and what does a full day look like from the first delivery to the last guest?
Why ask it
The seat count drives occupancy limits, restroom numbers, parking and how hard the building's systems work, so it should be a number and not a hope. Having the day described hour by hour brings out what nobody lists: the bread truck at six, the smell of afternoon prep, the staff break by the back door. Keep the answer and compare it with the drawings when they arrive.
Money and terms
What will it cost to open in this space, and where is the money coming from?
Why ask it
A serious operator has a budget with lines for construction, equipment, deposits, licenses, opening inventory and payroll before the first sale. Find out how much is their own cash, how much is borrowed and how much depends on investors who have not yet sent anything. A budget that only works if your improvement allowance covers most of it makes you the main investor without a share of the profit.
Once the doors open, how long could you keep paying rent and staff if the restaurant made no profit at all?
Why ask it
New restaurants tend to open late and fill slowly, and the reserve is what pays your rent in the meantime. You want a figure in months with the arithmetic behind it. 'We expect to be profitable from the first month' comes from someone who has not opened one, or who hopes you have not.
Can I see financial statements or tax returns for your existing restaurants, and a personal financial statement?
Why ask it
Two or three years show the direction and not only the best year. If restaurant numbers are not your field, have your accountant read them for three things: that the sales are real, that rent has been affordable and that there is no debt you cannot see. Reluctance is normal at first contact, and an offer to sign a confidentiality agreement usually settles it once terms are serious.
Will you authorize a credit and background check on the company and on each guarantor?
Why ask it
Raise it as routine, along with the application, and get the authorization in writing, because what you may pull and what consent it takes depends on where you are. Then ask what the reports will show: unpaid taxes, court judgments, a past bankruptcy, a dispute with a former landlord. A problem disclosed up front with an explanation is easier to weigh than the same one found a week later.
What sales do you project for the first two years, and what are those numbers built from?
Why ask it
Sound projections start from seats, turns, average check and days open, and the operator can defend each figure from their other locations. Weak ones start from the sales needed to make the rent work and run backward. Have them show the plan at two thirds of the forecast, because that is the case you are really lending the space against.
What percentage of your projected sales will rent and the other occupancy costs come to?
Why ask it
Most operators carry a rule of thumb for this, and hearing theirs shows whether they have run it against your asking rent. If the share is far above what they pay elsewhere, the deal is tight before the doors open. Check that they counted taxes, insurance and common area charges, not base rent alone.
Who will personally guarantee the lease, and what stands behind that guarantee?
Why ask it
A guarantee is worth what the guarantor owns and how reachable they are, so get the name, where they live and a statement of assets. Operators often counter with one that is capped, that falls away after some years of on-time rent, or that ends when the keys come back in good order, sometimes paired with a larger deposit or a letter of credit. Decide beforehand what you would accept, and ask your attorney how each version is enforced where the building is.
How long a lease do you want, and what renewal options are you asking for?
Why ask it
Restaurant operators usually want a long first term or options to renew, because the kitchen they are paying for takes years to earn back. The length they ask for shows how they see the business: two years with an easy way out suggests a trial run in your building. If you grant options, settle how the rent for each one is set and whether the guarantee carries through them.
How many months of free rent are you asking for, and what opening date is that based on?
Why ask it
The request should come out of a real construction and permit schedule, not a round number. Tie the free months to dates or milestones so a slow build does not quietly stretch them, and find out whether they expect the building's charges waived as well. Settle whether rent starts on a fixed date or on the day they open, since those are very different promises when a permit stalls.
Will you report your sales to me each month, and are you open to percentage rent?
Why ask it
Even if you want no share of sales, the reports are an early warning: sliding sales usually show up before late rent does. Operators with clean books rarely object. If percentage rent is on the table, settle first what counts as sales, including delivery app orders, gift cards and catering.
Do you expect an exclusive on your type of food, and are there neighbors you would object to?
Why ask it
Operators commonly ask that no competing concept be allowed elsewhere on the property. Before you answer, check what you have already promised other tenants, and keep any exclusive narrow: a named cuisine, for as long as they are open and paying, and not 'any restaurant'. The second half of the question shows what they think threatens them, which is a quiet measure of their confidence in the concept.
Will any of the kitchen equipment be leased or financed, and will the lender want a claim on it?
Why ask it
Equipment lenders commonly want the landlord to sign a waiver letting them come in and remove what they financed. Hearing about it now saves an argument later over a walk-in or a range you assumed would stay. Get the list of financed items and have the waiver read before you sign it.
Build-out
Walking through the space as it is, what would you have to change or add?
Why ask it
Do this on site, with their architect present if they have one. A former restaurant with a hood, an interceptor and floor drains is a very different project from a retail shell, and the operator should know which one they are standing in. Note every item they mention; the list becomes the first draft of who builds and pays for what.
Who are your architect, kitchen designer and contractor, and how many restaurants have they built?
Why ask it
Restaurant work has its own traps: hood clearances, the finishes a health department wants, grease lines laid to the right slope. A team that has done it before gets through plan review faster and cuts fewer holes in your building. Ask for two addresses of finished jobs and go look at them, and require the contractor's license and insurance certificate before any work starts.
What kind of exhaust hood does your cooking need, and what route would the duct take to the outside?
Why ask it
Of everything on this list, the duct route is the item most likely to decide whether the space can work at all. Cooking that gives off grease generally needs its own duct to a discharge point the code accepts, and in a building with floors above that can mean a shaft through other tenants' space or a run up an outside wall. Have the route drawn and checked by your own engineer before signing, and ask the local building department what it will permit.
How will you replace the air the hood pulls out, and what will that do to the building's heating and cooling?
Why ask it
A hood that pulls air out needs air brought back in, or doors whistle, the dining room drafts and neighbors lose the air they paid to condition. The right answer arrives with an equipment schedule from the mechanical designer. If the term makeup air draws a blank, their mechanical designer needs to be at the next meeting.
What grease interceptor do you need, where would it go, and how often will it be pumped?
Why ask it
Size and type are usually set by the local sewer authority, so the operator should have called there instead of guessing. Where it sits matters to you: a unit in the ground means cutting slab or paving, and one indoors has to be reached by a pump truck's hose without crossing the dining room. Pumping records from their other sites are worth asking for, because a neglected interceptor ends up in your drains.
How much gas, electrical and water capacity does your equipment list call for, compared with what the space has?
Why ask it
Ask for the equipment list with the loads on it and hand it to someone who can read your panel and your gas meter. A service upgrade can take months and runs on the utility's schedule, not yours or the tenant's. Agree now on who pays for it and who owns the larger service afterward.
What will you mount on the roof or run through walls and floors, and who repairs those openings?
Why ask it
Exhaust fans, condensers and rooftop units all bring weight and holes. Many landlords insist their own roofer makes every penetration so the roof warranty survives, so read what yours says. Raise structural loading for anything heavy, and waterproofing under the kitchen floor if there is occupied space below.
How will the hood's fire suppression tie in with the building's sprinklers and alarm?
Why ask it
A cooking line under a hood usually has its own suppression system, which commonly has to signal the building alarm and cut the gas or power when it trips. Someone must design that link, test it and keep it inspected. Ask which fire protection contractor will do it, and make clear the tenant pays for any change to your system that their layout causes.
How much of the build-out are you asking me to pay for, and which of those improvements would stay with the building?
Why ask it
Money you put in is best spent on things that stay with the building and help the next tenant: the duct, the interceptor, the electrical service, the restrooms. Furniture, decor and a signature oven are the operator's to fund. Many landlords release an allowance in stages, against paid invoices and lien waivers, and hold back the last part until the permits are closed out.
What is your construction schedule, and how much contingency is in the budget if it runs over?
Why ask it
Overruns on restaurant build-outs usually trace to plan review, equipment lead times and surprises under the slab. An experienced operator carries a contingency, can tell you its size and remembers how much of the last one got spent. Be wary of a schedule with no slack and a budget that spends every dollar raised.
How will you make sure every contractor and supplier is paid, so no lien is filed against the building?
Why ask it
In many places an unpaid trade can claim against the property and not only against the tenant who hired them. Common protections are a lien waiver with each payment and a duty on the tenant to clear any lien within a set number of days. The rules, and any notice an owner should post, differ by state and country, so have your attorney explain how it works where the building stands.
Do you plan outdoor seating, new signage or changes to the storefront?
Why ask it
Patios and signs are where an operator's wishes meet the city, the neighbors and any design rules for the property. Find out which of them the concept cannot do without, because a tenant refused a patio later is an unhappy one. Whatever you allow, put the area, the hours and who cleans and insures it in writing.
Permits
Which permits and licenses do you need to open here, and which have you already applied for?
Why ask it
A prepared operator can recite them: building permit, health department plan review, business license, fire inspection, any liquor license, sign and patio permits. Names and sequence differ everywhere, so the detail matters less than whether they have called the offices that issue them. How long each took at their last opening is a good follow-up.
Has anyone confirmed with the city that a restaurant is an allowed use for this address and this building?
Why ask it
Turning a shop or an office into a restaurant can count as a change of use, with knock-on requirements for exits, restrooms, accessibility and parking. The operator's architect should check, and so should you, since some of those upgrades can fall on the building and not the suite. Call the planning or building office yourself and ask how it works for this address.
Will you serve alcohol, and what kind of license are you applying for?
Why ask it
Wine with dinner and a full bar open late make different neighbors, and often need different licenses. Ask what share of sales they expect from drinks, since a concept described as a restaurant can turn out to be a bar that serves food. Licensing rules and neighbor notices are local, and in some places the property owner must consent or is notified, so find out what your part would be.
What do your recent health inspection reports look like, and can I see them?
Why ask it
In many places these reports are public, which makes the question a test of candor as much as of cleanliness. Every kitchen has findings, so what you want is an operator who can say what was written up and what they changed. Repeated findings for pests, temperatures or drains are the ones that turn into a building problem.
What will you need me to sign or provide for your applications?
Why ask it
Typical requests are an owner consent form, a site plan, a letter for the liquor authority and proof of the building's occupancy approval. Having the list early lets you respond quickly and read what you are consenting to. Take care with any form that makes the property owner a party to the license or answerable for its conditions.
If a permit or license is refused or badly delayed, what do you expect to happen to the lease?
Why ask it
Operators often want the right to walk away if the liquor license or the hood permit does not come through. That is reasonable within limits: a deadline, evidence they applied promptly and kept after it, and agreement on who bears the costs spent by then. An open-ended contingency leaves your space off the market with no rent and no end date.
Operations
What days and hours will you be open, and when does the last guest leave?
Why ask it
The closing time on the door and the hour the building goes quiet can be far apart once cleaning and staff departures are counted. Set the answer against hours limits in your other leases, the property's rules and the local noise ordinance. Raise minimum hours too: a restaurant that is dark four days a week does little for the tenants beside it.
Will there be music, live acts, televised games or private events, and how will the sound be kept inside?
Why ask it
Background music from ceiling speakers and a DJ on Saturdays need different walls. Where there are apartments or offices above or alongside, find out what acoustic treatment is in the budget and whether subwoofers are planned. Detail about ceiling isolation and door seals is reassuring, and 'we have never had a complaint' is not a design.
How will you keep cooking smells out of the neighboring units and the common areas?
Why ask it
Much of this comes down to where the exhaust discharges relative to windows and air intakes. Wood fire, charcoal, frying and heavy spice carry furthest, so the menu matters as much as the fan. If odor is your main worry, ask whether filtration is planned and who services it, then talk to the neighbors of one of their existing locations.
When will deliveries arrive, through which door, and how large are the trucks?
Why ask it
Food deliveries come early and often, and a driver will take the nearest door unless told otherwise. Walk the route together: where the truck stops, who it blocks, what the hand truck rolls across. Then agree on a window that suits the tenants who share the alley or the loading area.
Where will trash, recycling, food waste and used cooking oil be kept, and how often will each be collected?
Why ask it
A restaurant fills a dumpster far faster than a shop does, and a shared enclosure sized for retail is unlikely to keep up. Look for a dedicated container or compactor, pickups frequent enough that the lids close, a sealed oil tank on a surface that can be washed down, and a named person who cleans the area. See the dumpster behind their current restaurant before you believe the plan.
What pest control will you have in place from the first day?
Why ask it
A contract with a licensed company, scheduled visits and a log you can ask to see is what you are hoping to hear. Pests do not stop at the wall between suites, so this is a building matter even when the kitchen is spotless. It helps if their provider will coordinate with the one you already have for the property.
How many parking spaces will guests and staff take at your busiest time?
Why ask it
Restaurants tend to need more parking per square foot than shops, and their peak may land on top of a neighbor's. Have the operator estimate from seats and staff per shift, then check it against what the site has and what your other leases promise. If valet service is part of the plan, find out where the cars go.
How much of the business will be takeout and delivery, and where will drivers wait and park?
Why ask it
A busy delivery trade puts scooters and cars at the curb every few minutes and couriers in the doorway. See whether the design has a pickup shelf or a separate window. The answer also bears on percentage rent, since app orders are easy to leave out of reported sales.
Who will clean the hood, ducts and exhaust fan, how often, and will you send me the reports?
Why ask it
Grease built up in a duct is a fire risk to the whole building, so this is one routine worth writing into the lease as a schedule. How often usually depends on the type and volume of cooking, under the fire code and the insurer's conditions; ask the operator what applies to them and confirm it with the fire marshal's office. Dated reports with photos from a qualified cleaning company are the evidence to request.
Who will maintain and replace the systems that serve only the restaurant?
Why ask it
The hood, the exhaust fan, the interceptor, the refrigeration and the lines running to them wear faster than anything else in the building. Many landlords put all of it on the tenant, with service contracts and records available on request. Be exact about where the tenant's part stops, for example at the point their drain line joins the main.
Who do I call at two in the morning if there is a leak, an alarm or a break-in?
Why ask it
You are after two names with cell numbers, one of whom can reach the building quickly. Settle who holds keys and alarm codes, and whether you can get in to shut off water and gas in an emergency. How readily the operator answers shows how they handle the unglamorous side of running a place.
Insurance and exit
What insurance will you carry, and will the building owner be named on the policies?
Why ask it
Landlords commonly ask for general liability, coverage for the tenant's improvements and equipment, business interruption, workers' compensation as the law requires, and liquor liability if they pour. Take the list and limits from your own insurer or broker, and hold the keys until a certificate arrives. If the operator's broker has insured restaurants before, nothing on your list will come as a surprise.
If the restaurant closes, what do you expect to take with you and what stays?
Why ask it
Settle this while everyone is optimistic. The hood, ductwork, interceptor, walk-in box and bar are worth a great deal to the next restaurant tenant and very little on a truck, so many landlords have them stay. Movable equipment and anything financed belong on a second list, and both lists go into the lease so nobody is left leaning on the word 'fixtures'.
In what condition will you hand the space back at the end?
Why ask it
A closed restaurant can leave grease in the drains, holes in the roof and a floor full of capped pipes. Choose which you want, the kitchen infrastructure left clean and working or the space stripped to a shell, and have the lease say so, along with a final interceptor pump-out and hood cleaning. A deposit sized to that cleanup is easier to rely on than a claim made afterward.
Would you want the right to sell the business and pass the lease to another operator?
Why ask it
Most restaurateurs will, because the lease is a large part of what a buyer pays for. That can work if you keep approval over who comes in, vet the buyer as you are vetting this operator and decide whether the original guarantee carries on. Their reaction to those conditions shows whether they are building a business or planning a quick sale.
If sales fall well short in the first year, what would you do, and when would you tell me?
Why ask it
Strong answers are specific: shorter hours, a changed menu, catering, more money from the owners, and a call to the landlord before a payment is missed. You also learn who would be making that call. A tenant who talks early can often be worked with, while silence followed by a dark storefront leaves you with few choices.
How to vet a restaurant operator before you lease
Practical guidance for the conversation itself
Before the first meeting
Know what your building can take
Find out what the space has before anyone tours it: gas and electrical service, an existing hood or a possible duct route, an interceptor, floor drains, the terms of the roof warranty. An hour with your engineer or property manager lets you say early that a charcoal grill will not work under two floors of offices, which saves both sides a month.
Read your other leases
Look for exclusives, restricted uses, parking promises and quiet hours you have already granted. A pizza exclusive next door or a clause about cooking odors answers some of this list before you ask it.
Ask for the paperwork first
Request the business plan, a draft menu, the equipment list, financial statements and references ahead of the meeting. What arrives, and how quickly, is information in itself, and the meeting can then go to the gaps.
Eat there as a stranger
If the operator has a restaurant open, go as a customer before they know your face. Look at the restrooms, the back door and the dumpster as well as the plate.
On the walk-through
Hold the meeting in the space
Stand where the cooking line would go and ask where the duct runs from there. Problems that hide on a floor plan are plain when you are both looking at the beam in the way.
Bring the person who knows the building
The Build-out questions produce technical answers, and someone has to judge them. Your engineer, contractor or property manager will hear in a minute whether the operator's plan for exhaust and grease fits what is behind the walls.
Let the operator describe the kitchen first
Ask what they need before you say what the space has. An operator who lists hood type, gas load and interceptor size unprompted has built a kitchen before. One who waits for you to tell them is learning on your building.
Write down who said they would pay
Every 'we will take care of that' goes on a list, and the list goes to both sides by email the same day. It is the raw material for the construction terms, and it is much harder to dispute a week later than a memory.
Turning answers into lease terms
Permitted use
Describe the concept you were told about: the kind of cooking, alcohol, hours, music and outdoor seating. A lease that says only 'restaurant' lets the tenant you approved become a different one without asking you.
The construction terms
List who builds and who pays for each item: the duct, the interceptor, utility upgrades, roof openings, changes to the fire systems. Add your approval of the drawings before they go in for permits, and the conditions for paying out any allowance.
Operating rules
Hood and duct cleaning, interceptor pumping, pest control, trash pickups and delivery windows can each have a schedule in the lease, with your right to see the records. Rules agreed on before opening are far easier than rules introduced after the first complaint.
The end of the lease
Attach two lists, what stays and what leaves, and state the condition of the space on return. Your attorney writes the wording and knows what holds up locally. Your part is to bring the lists and the answers you were given.
Reasons to slow down
The exhaust route is still to be worked out
If nobody can show on a drawing how the kitchen vents, there is no restaurant yet. Do not sign on the promise that the architect will find a way, because the way may run through another tenant's ceiling.
The plan depends on your money
A large allowance, a long free period and a guarantee from a company with no assets, all in one proposal, mean the operator has little of their own at stake. Each can be fair alone. Together they leave you carrying the risk three ways.
References you cannot reach
Former landlords who never call back, or restaurants on the resume that you cannot find, are worth another week of checking. Operators with a good record make it easy to check.
Pressure to sign this week
Another site may truly be in play, and it is fair for the operator to say so. Even so, a restaurant lease ties up a space and its systems for years, and a tenant who will not wait for your engineer to look at the duct route is telling you how the build-out will go.