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NYC Restaurant Sales Bolstered by Mall Locations

There is a widespread misconception that the American mall is dead.

Sure, the advent of online shopping has somewhat altered many business models and has even resulted in the shuttering of some storefront retail locations.

However, our New York City restaurant lawyers know that if prospective restaurateurs are interested in making it, they will not blow off the mall as something that’s beneath them.

Consider that malls offer a steady stream of potential customers passing by, whether or not they are initially interested in your offerings. This can be enormously valuable, particularly for an operation that has not yet established itself.

And malls are nowhere close to extinct.

The Commercial Tenant’s Lease Insider recently published an article on this very issue. Here’s what they found:

First of all, while many customers utilize the Web as a means to thoroughly research a product – particularly if it is a large purchase item – they will still usually go to the brick-and-mortar store to finalize the sale in person. Only about 20 percent of daily social media users shop exclusively online, according to a national survey conducted by Glimcher Realty Trust.

Even as online shopping continues to grow, it’s still unable to compete with malls. The primary reason is because virtual shopping simply can’t compete with offering a genuine social experience.

True, it’s inconvenient for people to drive 30 or 40 minutes to buy something they could easily purchase with a few clicks. And in some cases, people are taking advantage of those Internet outlets to do so.

But if the bigger goal is to get out and be amongst real people, shoppers don’t mind doing that – especially if they can talk someone into joining them. At that point, it’s more about the experience than the purchase.

And it’s for this reason that restaurants located in and around malls tend to do so much better than those that aren’t in these types of central locations.

Now, once you have found a mall that you think you may be interested in using to found or further your establishment, you will need to consult with an experienced New York City business lawyer.

While each situation is going to be different, depending on the venue and the business model, here are generally some steps we’ll want to take:

A review of the lease terms and an inspection. A lot of shopping centers and malls will want you to simply accept the space as it is because the landlord doesn’t want to fork over money for repairs. Thus the onus could be on you to fix things like mold, work-out air conditioning units, faulty electrical wiring or bathrooms that don’t meet Americans with Disabilities Act requirements – particularly if you don’t have those issues addressed before you move in. If the landlord won’t agree to an inspection, make the landlord agree that the space is in compliance with all applicable laws.

Secondly, you’ll want to make sure the use clause is fairly flexible. You don’t want to have to be running to get permission every time you try to add a new service or product.

If the lease is part of a franchise purchase, make sure you get the Ok from the franchisor.

Ask for a rent-free use period. This is usually a term of one to two months during which you renovate the space to your needs. Many places will give it to you, but not if you don’t ask.

Make sure your commercial lease lawyer includes limits on your liability for early termination. In the event the restaurant doesn’t do so well, you don’t want to have to pay on it for the duration of the lease, particularly if we are talking several years. A liability cap can help you limit those damages.

The Wright Law Firm is a commercial lease lawyer located in Midtown Manhattan. Call (212) 619-1500 for a confidential consultation.

Additional Resources:

Survey: Mall as “Destination” Keeps Tenants in Business, May 29, 2013, Staff Report, Commercial Tenants Lease Insider

More Blog Entries:

Judge Scolds Lawyers Using Disability Law to Profit, April 5, 2013, New York City Commercial Lease Lawyer Blog


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