How Much $$ is Too Much?

double m

Banned
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Joined Mar 23, 2011
Pheonix Arizona -  How Much should a 1600 square foot Commercial Kitchen with small dinning area Rent Out For?

It is not downtown however, is located near Historical Museum and would be the only restaurant facility near the Park?
 
5,192
295
Joined Jul 28, 2001
At our retail location I pay approx. 29.00 sq. ft. Triple Net.,,,,,,,,, for a 1050. sq ft,

This is very high. But it's all about location.

Income demographics,,,,,,5 mile radius.  3.5

HTH

Panini
 
3,401
162
Joined Sep 18, 2008
The amount of rent, by itself, is meaningless, IMHO. There are numerous factors to be considered before you can logically arrive at a number, not the least of which is what is your projected gross sales?

Using the somewhat antiquated (labor+food+overhead)*105% = minimum projected gross income, where rent is a portion of overhead, along with utilities, linens, fees, licenses, maintenance, etc., should give you some guidance.

Example: 10, 2 tops turning twice for lunch and 1.5 times for dinner with average tickets of, say, $15/cover and $25/cover respectively will gross $600 (lunch) plus $750 (dinner) or $1,350/day. If open 7 days/week, the monthly projected gross would be almost $41,000/month and you could afford to pay on the order of almost $13,000/month for rent, utilities, fees, licenses, maintenance, and the rest of your overhead expenses.

Drop to a single turn at lunch and half a turn for dinner and your gross drops to $550/day ($300+$250) or $16,670/month and now your overhead expenses had better be less than $5,300!

If your rent is 25% of your overhead, at the low end you could afford no more than $1,325/month rent (about $0.83/sqft/month) but at the high end you might go as high as $3,250/month (about $2.03/sqft/month).

How much can you afford? What does your market analysis and financial projections tell you you can afford???

If you haven't done a market analysis and financial projections, anything over $400-600 is pure folly and even that, IMHO, is risky!
 
2,238
515
Joined Feb 17, 2010
At our retail location I pay approx. 29.00 sq. ft. Triple Net.,,,,,,,,, for a 1050. sq ft,

This is very high. But it's all about location.

Income demographics,,,,,,5 mile radius.  3.5

HTH

Panini
I would not want to write that check every month!
 

double m

Banned
6
10
Joined Mar 23, 2011
I do not have a business plan. I posed the question because I acquired the task of renting out the kitchen space at the AZ Historical Museum.  Traffic to the Museum is low...  is it because there are not enough running programs at the Museum, or is it that there is no Cafe' to bring people to the Museum?

The Museum Kitchen is located at the entrance and can function independently without admission to facility.  It also sits at the mouth of Papago Park and would be the only place to get something to eat. The building has a stunning courtyard and facility is rented out for weddings, proms and private events offering any caterer to be a preferred choice.  I had several ideas for the space but I am not a professional and appreciate any advice I can get.

 My ideas for the space :

-Breakfast Cafe' for people to come early for healthy morning breakfast and walk/run in the park. It can even be dog friendly Cafe.

-Caterer can rent the space out for his own endeavors with Lunch served on Sat. & Sun. or not

-Culinary School with weekend service and running classes

-Bakery ( with simple Kiosk service)

-Shared Kitchen space

The task at hand is knowing what we have to offer and how much$ is to much$ to rent it out for.  I would love to give the opportunity to a culinary graduate who is looking for kitchen to make is mark.

Thanks for reply,

MM
 

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