Protect Against Landlord’s Failure to Deliver

You’re opening a new restaurant, and everything seems to be working in your favor. The current economic malaise meant less competition for your location of choice. And, you’ve been able to hire the best team ever. Staff training was an absolute homerun. The managing partner is fired up, and morale is high. The local marketing effort is a hit; customers have been knocking on the door for a week, hoping to dine with you. All systems are GO except for one. The landlord hasn’t completed the parking lot as promised.
 
What happens when you are ready to open your restaurant, but the landlord/developer can’t provide his deliverables? This recently happened to a friend of mine, Doug Lanham, Partner of Aspen Partners, operator of Jinja Bar & Bistro in Santa Fe, New Mexico.
 
“We are confident we can work through this,” Doug told me. “The landlord has good intentions, but he’s having a tough go of it right now.” Because of the economy, only half of the landlord’s shopping center is occupied. His financial challenges adversely affect the store opening, and that strains the tenant-landlord relationship.
 
Many aspects of a new project are beyond a restaurateur’s control. However, there are ways to mitigate the damage caused when a landlord does not deliver.

• In the project’s infancy, create a thorough timeline to identify all
  activities that need to happen prior to your store’s opening.
• Create accountability by assigning responsibility for each activity and
  deadline.
• Focus on the activities of the other parties and determine the “what ifs”
  in case they are unable to meet their responsibilities.
• Imagine a worst case scenario.

 
Once you fully understand what has to happen, who has to do it and what is the result if it does not happen, you can create a contingency plan. That plan should allow you to step in and complete any landlord work. And, you should have access to the funds necessary to complete that work. That’s possible if your lease agreement contains a provision to escrow funds related to the landlord’s responsibilities.
 
In summation, I encourage you to live by the old adage: “Protect the downside and the upside will take care of itself.”