PLEASE HELP - rent amount for drive thru

[jsitz]

Thought I would quiz you all about how much I should be willing to pay for an A++ drive thru location. The rule of thumb I have always been quoted is pay about 5% of estimated sales for a drive-thru.

Estimating sales on a location that doesn't exist yet is of course challenging, but the site I am considering is abolutely killer. So I am assuming once we ramp up, it could be a top producer, even as many as 500 drinks per day. If I hit that lofty number and average $2.75 per drink 25 days per month, 5% of sales will be $1,719.

The trouble is I know the landlord is going to ask for more than that (I'm waiting to hear his offer). So my question is how much do I bend this rule of thumb for a great site? Any of you out there with high producing sites have a recommendation? I'd hate to walk away from this location, but who knows if I can actually come anywhere near 500 drinks per day, and even if I do, how much is too much?

Please help!

 

[alexbailey]

Rent amount

The bottom line is all about volume. Instead of 5% you should be willing to pay 15% above the break even amount. In other words. If your break even is $10000/mo and you think a spot will do $15000, then you should pay $15000-$10000=$5000*15%=$750/mo. If you think it would do $20,000 you should be willing to go twice as much (be willing, not necessarially offer it up front, becasue anything you negotiate lower is a bargin for you).

 

[celement]

Lots of variables

Location, Location, Location,

How much traffic, what kind of traffic,

I'd gladly pay 5% of gross anywhere...seriously....I believe most McDonalds operators are paying 8 to 10% right now and they have to have volume.

My preference is to pay a set fixed amount, but that's hard to come by....

 

[RMC]

Paying the rent

Just wanted to thank alexbailey for his concrete response. I'm new to the forum and, like many of you, seriously considering opening a drive-thru. Many of us come here because we are frightened at the risk we put upon ourselves and our families and we need a little strength and hope. I'm not whining, just being real. I'm writing my business plan and the financials are difficult. I have to justify some assumptions that I really know nothing about. Alex is credible enough to quote and, frankly, sometimes getting a straight answer here is like pulling teeth. Of course I know that none of the numbers here are written in blood, but a lot of us need SOME idea of what to expect. That said, can anybody out there suggest a range of ramp up expectations? Let me know and I'll give you whatever info you need to help me make a reasonable assumption. Thanks!