Drive thru lease cost

[christine itzen]

I'm going to open a drive thru and have found a location I believe to be ideal. New construction of a 12 theater have contacted the owners of the theater and they ask me to make a proposal. Since the construction of the retail area has not begun I don't have any idea what rents will be. The location is in Colorado and there are not many drive thru's except old ones, to talk to so I thought I would base my rent on what 3% or 5% of gross sales would be? ($475 to $575 a month) Any help with this would be greatly appreciated. :roll:

 

[alexbailey]

Rents

Hi Christine,

When calculatng rent you have to consider 2 things:

1. You have only 1 chance to make a 1st impression on the landlord. If you lowball right off the bat you might not get a second chance.

2. The selection of your location is the most important decision in this business.

Rents in the 6-7% range are more typical in retail. Also I use the $500/10 cups rule in calculating how much to pay. The rule says that if you add all of your monthly overhead expenses together (rent, loan, utilitites and employees ) you can then divide that amount by $500 and multiply by 10. This number will the number of cups per day you will need to sell to break even.

Thus, if you pay $1000 as opposed to $500 then you would need to see a 10 cup per day increase in sales to pay for that additional rent. Hopefully a $1000 location would result in a much greater in crease than that. I hope this helps.

 

[RMC]

$500 x 10 cups rule

Alex,
I have no idea about the validity of this rule, but mathmatically it's easier to simply divide by 50. You'll get the same results. Have a good one.