This page has been rewritten as a practical decision guide. It does not reproduce an earlier news report or claim that a historical market trend remains current.
Describe the actual proposal
Before comparing offers, write down whether the tenant proposes fixed rent, base rent plus a percentage component, or percentage-only rent. Record the proposed sales definition, calculation period, rate and any threshold. These terms can differ materially between proposals. Have the lease advisers confirm the actual wording rather than relying on the offer’s headline.
Put the economics on the same basis
Compare alternatives over the same period. Use separate columns for fixed payments, variable payments, concessions, landlord work and retained expenses. For a simple percentage-only illustration, monthly qualifying sales of $100,000 at 6% produce $6,000 before other charges. At $60,000 of qualifying sales, the same rate produces $3,600. These are invented arithmetic examples, not FIP rent quotes or market benchmarks.
Check what evidence supports sales
Ask what operating history exists and which assumptions depend on a new location, opening date or business plan. Consider a lower-sales case and an opening delay. A percentage-based proposal transfers some of the operating variability into the owner’s rent receipts. It does not eliminate the owner’s expenses, debt obligations or capital commitments.
Resolve measurement and reporting questions
Ask the tenant and advisers how sales are defined, documented and reported, how delivery or online transactions are treated, and how discrepancies would be resolved. Identify which records the owner would need and how confidential information would be handled. Leave the enforceable provisions to the appointed legal advisers.
Keep property fit in the decision
Review the intended restaurant use, existing conditions, required work, approvals, opening dependencies and neighboring occupiers. The SBA identifies zoning and permits as location considerations. Do not infer approval from a previous restaurant use. Allocate unresolved work, cost and timing questions before treating the proposed rent as an achievable outcome.
Record the owner’s decision
State the minimum evidence needed to continue, the downside the owner is prepared to accept and the terms that need revision. Compare the proposal with a credible alternative, including the cost of continued vacancy. Send Roy Faith a concise property brief for a brokerage discussion. Keep sensitive operating records out of the introductory email.
Sources and further reading: SBA location and zoning guidance.