LEASE AGREEMENT REFERENCE GUIDE 320: STRATEGIES FOR FOOD COURT LEASES $49.95
Anatomy Of A Food Court Lease
This LARG focuses on the tasty subject of the food court lease. It seems as if every suburban regional shopping center and major urban retail complex has a food court these days. These food service areas contain a variety of restauranteurs that share seating areas, storage rooms and other common areas devoted exclusively to their use. The size of their actual premises is far smaller than it would be if each operator were required to provide its own seating and common areas. That makes it possible for the landlord to charge a much higher percentage of the tenant's gross sales as rental for the space.
Usually the common seating and storage areas do not cost the landlord substantially more to construct than other common areas in the retail center. Often food courts surround visual or recreational amenities integrated into the complex. For example, a number of regional shopping centers developed by the Hahn Company locate food courts around the center's ice skating rink, providing views for food court patrons.
Obviously landlords like the higher per square foot rents food court tenants can afford to pay. But that is not the only advantage to food courts. Food courts give the shopper a quick and inexpensive way to eat while shopping at the mall. This substantially lengthens the average shopping visit, which translates to higher per square foot sales for all retailers in the complex.
Food court leases looks much like the leases for non-food retailers in the same complex. They do contain certain unique features, however, especially in the lease provisions regarding construction and tenant operations. For instance, a special section in the lease relating to the operation of the common food court areas (i.e., seating areas) and the pass through of the expense of doing so is usually contained in addition to the common area maintenance clause for the center as a whole (i.e., the non food court common areas).
Food court leases also generally contain greater landlord control over the operations of the tenant due to the nature of food service operations. The landlord wants the food court to have an exciting and appetizing feel, and wants mall customers to be attracted to the area. He also has special concerns over HVAC balance for the food court area, and wants to ensure that the mall's main HVAC system isn't drained by the food court area.
The landlord wants expanded control over the appearance of the food court tenant's employees, over handling and disposition of paper, trash and refuse, and expanded control over the food court tenant's maintenance responsibilities (e.g., periodic cleaning of the tenant's exhaust hoods, grease traps, and the like). He also wants the food court tenants to take oral or written direction from the mall manager, and when a problem arises with a food court tenant's operation, he wants a short fuse on remedial action by the tenant.
A Food Court Checklist follows that covers a number of issues important in food court leases.