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EATER: For Restaurants Fighting to Stay Open, Landlords Prove a Major Hurdle

Amid an array of challenges facing restaurant owners, rent remains the biggest threat.

In March, dining rooms were ordered closed in cities across the country, leaving most restaurants to rely solely on takeout and delivery orders, if they remained open at all. Since then, the foodservice industry has been struggling desperately to bolster revenue streams and cut operational costs to stay afloat until social distancing rules are relaxed. One cost that has remained a preeminent obstacle for restaurants is rent, and landlords are largely proving inflexible.

On Tuesday, EATER published a deep dive into the foodservice industry’s current war with landlords. Where most restaurants have been able to scale back spending on food, staff and marketing, rent is one fixed cost that restaurants have no control over. 

Many restaurant owners have tried to negotiate with their landlords, to mixed results.

Particularly generous landlords might abate rent altogether or give a rent reduction, knowing they will never be repaid in full. Some landlords are choosing to simply not respond, leaving owners to figure out whether or not to pay rent. If the businesses don’t pay rent, these landlords are leaving themselves the option of evicting those tenants later on.

Still, some owners feel they have more leverage when it comes to rent negotiations than landlords are willing to admit.

“There’s going to be heroes and villains that come out of this,” says [Chad Mackay, CEO of Fire & Vine Hospitality]. “Some landlords are going to be terrible. When this is all over, they may not have us as a tenant,” he says, referring to the restaurant industry as a whole. Many restaurant owners are counting on the awareness that there will be few new businesses to make potential tenants when the threat of coronavirus is over. “Landlords need to be willing to make sacrifices that lead to a temporary loss of revenue because they’re playing the long game and want to make sure they have tenants,” says Button. Better a 50 percent loss of income now than no rental income at all for months at a time.

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