ERAU Days of Operation & Annual Gross Revenue for Restaurant Startup Discussion

You inform Sally that you have read and drafted all of the documents related to either the purchase or lease of the property, you suggest that you have a discussion analyzing the available options and issues that might impede the operation or make the deal costs prohibitive. Sally agrees, “Hey, I am a bit perplexed. The purchase agreement appears to contain terms unfavorable to us. We should organize all of the issues we might dispute and develop a negotiation strategy to argue favorable conditions and options. These deals have a way of being great investments for the owners of the property. Often, leasing terms are designed to squeeze all of the profit out of the tenants’ operations.

You tell Sally that you developed a pro and con sheet for each document that you will present and discuss in the discussion assignment. This way, we can develop a Term Sheet (PDF) (Example) and negotiation strategy to deal with the broker. But first, we need to calculate our potential operating costs to determine our potential income

Supplemental Material:

• Buying a Restaurant (Web Restaurant Store) (Links to an external site.)– This article covers how much it costs to buy a restaurant and the steps you need to take to purchase a restaurant.
• 10 most expensive restaurants in the world (USAToday) (Links to an external site.) – Background to determine average per diner average costs in a Three-Star Restaurant
• How Bob Chinn’s Crab House Became The Highest-Grossing Restaurant In The U.S (Forbes) (Links to an external site.)– Demonstration of potential gross revenue.

Figure out yearly income

1. Gross Revenue- ROI calculation determine: (2) Gross Revenue: (See Article Bob Chinns-crab-House) (Number of seats 259) * (average meal costs) = ($Y) * (365 Days of operation) = Gross Revenue. Determine an Average Meal cost using the rate charged by a Three Star Michelin restaurant comparison (See “B” Article: “10 most expensive restaurants in the world.” Fine dining at Michelin-starred restaurants around the world can come at a price.

Your assignment

1. Complete your discussion posting by the 4th day of the module week.