NYC Restaurant Sales Bolstered by Mall Locations

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

Sure, the advent of online shopping has somewhat altered many business models and has even shuttered 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 beneath them.

Consider that mall 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 issue. Here’s what they found:

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

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

True, driving 30 or 40 minutes is inconvenient for people 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 in and around malls tend to do so much better than those not in these types of central locations.

Now, once you have found a mall you think you may be interested in using to find or further your establishment, you will need to consult 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. Many shopping centers and malls will want you to 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 doesn’t agree to an inspection, make the landlord agree that the space complies with all applicable laws.

Secondly, you’ll want to ensure the use clause is relatively flexible. You don’t want to be running to get permission whenever you try to add a new service or product.

If the lease is part of a franchise purchase, ensure 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. If the restaurant doesn’t do so well, you don’t want to have to pay for it for the duration of the lease, mainly 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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