But what if you’re a cupcake-maker who can’t foot the high rent in Manhattan? Thousands of New York entrepreneurs in a similar bind are turning to the “pop-up restaurant” model, wherein they can rent a brick and mortar location to test the waters.
Rents range from a few hundred dollars to tens of thousands, depending on the length of the lease and the size of the space. Some locations open for just a few days. Others may rent for a few weeks.
Providers of these short-term leases don’t typically charge for the list or even the lease, but they will take a portion of the proceeds for extending limited liability insurance, temporary staffing, furniture and lighting.
The temporary lease model has snowballed in recent years since the recession, with many business founders either unwilling or sometimes unable to cover the cost of a longer-term rental agreement.
This has worked quite well for certain types of retail operations, but it can be equally effective for those who want to gauge reception before investing in opening a storefront restaurant. Opening a new restaurant in New York City can cost half a million dollars – or more – while operating a temporary pop-up restaurant in Manhattan may cost you a few thousand dollars a week.
The result is that food tends to be less constricted, edgier. The chefs are younger. They have a little more money to play with than they might if they were more concerned about covering more mundane expenses.
Another spin off of this idea was reported a few years ago in The New York Times. In that model, unremarkable restaurants open up their underused kitchens and dining rooms on certain nights and rent space to up-and-coming chefs and restaurant owners. The hope is that by providing local residents with a small taste of what they can offer, they might gain enough traction to open their own location.
While this might seem counterintuitive for the restaurant renting the space (after all, you may be helping to launch a competitor), the extra income it brings in monthly can make it well worth the while. Plus, unlike underground supper clubs, they are totally above-board.
Landlords can benefit from these agreements too, particularly those whose spaces might otherwise remain vacant for those short stretches. Landlords find that renting to a pop-up operation while advertising for a longer-term client can help fill those gaps where they might otherwise be losing money by having the place sit empty.
Still, in order to ensure everyone involved is fully covered in terms of legal considerations, it’s important to engage in at least a brief consultation with an experienced commercial lease lawyer. He or she can review these short-term agreements and help to make sure all parties understand their responsibilities and liabilities and that all necessary permits and licenses are appropriately secured.
The Wright Law Firm is a restaurant and commercial lease law firm located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.
Startup Storefront aims to help companies find short-term space for pop-up stores, Aug. 26, 2013, By Elizabeth Lazarowitz, New York Daily News
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