PLEASE HELP - rent amount for drive thru

jsitz

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Dec 28, 2004
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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!
 
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).
 
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....
 
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!
 
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