Restaurant Lease Cost Analyzer
True NNN occupancy cost, viability check, and space comparison — before you sign anything.
Landlords quote base rent per square foot. That number is fiction. The real cost includes CAM charges, property taxes, building insurance, and management fees — often 30–50% more than the base rate. This tool calculates your true all-in occupancy cost, shows it as a percentage of projected revenue, and tells you whether this space can support a viable restaurant at your sales volume.
Use the Single Space tab to analyze one location or the Compare Two Spaces tab to evaluate side-by-side before you negotiate.
Space Details
Full Cost Breakdown
| Line Item | $/sq ft/yr | Annual | Monthly |
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Revenue Viability — What Sales Do You Need?
Based on your true all-in occupancy cost, here's the minimum annual revenue required to hit each occupancy cost target.
| Occupancy Cost Target | Min. Annual Revenue | Min. Monthly Revenue | Your Revenue | Status |
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CAM Risk Assessment
CAM charges are estimated at signing and trued up at year end. Actual CAM often runs 20–30% above budget. Your exposure:
Compare Two Spaces Side by Side
🅐 Space A
🅑 Space B
Side-by-Side Comparison
| Metric | Space A | Space B |
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The Hidden NNN Trap: Why "Quoted Rent" Is Never the Real Number
When a broker says a space is "$30 per square foot," they mean the base rent. That sounds like a 2,000 sq ft space costs $60,000 a year — or $5,000 a month. In most restaurant markets, the true all-in number is $72,000–$90,000 once NNN charges are stacked on top.
Operators who sign leases based on the quoted base rate often discover they've committed to an occupancy cost above 12% of sales before they serve a single table. At that level, the business is working to pay the landlord — not to generate returns for the operator.
What NNN Actually Means
Triple Net means the tenant pays for three expense categories on top of base rent:
Your pro-rata share of the building's real estate tax bill. Typically $2–$6/sq ft/yr. Can increase significantly if the property is reassessed after a sale.
Landlord's building/casualty insurance, not your renter's or liability policy. Typically $1–$2/sq ft/yr. You still need your own tenant policy on top of this.
The variable, negotiable, and often abused category. Includes parking lot maintenance, landscaping, shared utilities, and building management fees of 10–15% of the CAM subtotal.
Often buried inside CAM: the landlord charges a management fee on the property, typically 10–15% of controllable CAM expenses. Sometimes called the "administrative fee." Negotiate a cap on this.
The CAM True-Up Problem
CAM is estimated at lease signing and reconciled (trued up) at year end. Actual CAM regularly runs 20–30% above the landlord's estimate. A lease with budgeted CAM of $9/sq ft might come in at $11–$12/sq ft in year two once the reconciliation hits. On a 2,000 sq ft space, that's a $4,000–$6,000 surprise bill.
Always request three years of CAM reconciliation history before signing. If the landlord refuses, treat that as a major red flag. The operators who demand itemized CAM breakdowns regularly find and recover 15–20% in disallowed charges — expenses from other properties, capital improvements that shouldn't be in CAM, and inflated management fees.
The Occupancy Cost Rule
The industry benchmark is simple: total occupancy cost should be 5–10% of gross revenue. The target sweet spot for a healthy full-service restaurant is 6–8%. Here's what each range looks like in practice:
Healthy margin for operations. Gives you room to absorb slow weeks, rent escalations, and CAM true-ups without distress.
Viable but requires consistent volume and tight cost controls. Little room for error. Negotiate hard on CAM caps before signing.
Requires exceptional food cost and labor discipline to survive. The lease is consuming profits that should fund operations and growth.
Unless you have a very specific high-revenue concept (high-volume bar, tourist area, attached hotel), this occupancy load makes profitability structurally unlikely.
Lease Negotiation Checklist
- Request 3 years of CAM reconciliation history before signing
- Negotiate a CAM cap — limit year-over-year increases to 3–5% on controllable costs
- Exclude capital expenditures (roof, structure, HVAC replacement) from CAM
- Cap landlord management/admin fee at 10% of controllable CAM
- Negotiate free rent during buildout (typically 2–4 months)
- Push for Tenant Improvement (TI) allowance — $25–$75/sq ft is negotiable
- Include co-tenancy clause if anchor tenants matter to your traffic
- Negotiate personal guarantee burn-down (guarantee reduces after years 2–3)
- Clarify usable vs. rentable square footage before committing
- Have a commercial real estate attorney review before signing — always
Frequently Asked Questions
What is a good occupancy cost percentage for a restaurant?
Restaurant occupancy cost should be 5–10% of gross revenue. The target sweet spot is 6–8%. At 10–12% you need exceptional volume and tight cost controls to survive. Above 12% is a structural red flag that makes profitability very difficult. Occupancy cost includes base rent plus all NNN charges: CAM, property taxes, building insurance, and landlord admin fees.
What does NNN mean in a restaurant lease?
NNN stands for Triple Net. In an NNN lease, you pay base rent plus three additional categories: property taxes, building insurance, and CAM (Common Area Maintenance). CAM covers shared area upkeep — parking lots, hallways, landscaping, and property management. The base rate quoted by brokers is only part of your true cost; the all-in NNN total is typically 30–50% higher.
What are CAM charges and how much should I expect?
CAM (Common Area Maintenance) charges typically run $8–$20 per square foot per year in retail/restaurant spaces. CAM includes shared area maintenance, landscaping, parking lot repairs, and a management fee of 10–15% of the CAM subtotal. CAM is estimated at lease signing and trued up at year end — actual CAM often runs 20–30% above budget. Always request 3 years of CAM history before signing.
How do I negotiate a better NNN lease as a restaurant tenant?
Key items to negotiate: CAM cap limiting year-over-year increases to 3–5%, exclusion of capital expenditures from CAM, landlord admin fee capped at 10% of controllable CAM, free rent during buildout (2–4 months is common), and a TI allowance ($25–$75/sq ft for restaurant buildouts). Always have a commercial real estate attorney review any restaurant lease. The cost of an attorney is trivial compared to the cost of a bad lease.
What is the difference between rentable and usable square footage?
Usable square footage is the actual space your restaurant occupies. Rentable square footage adds a pro-rata share of common areas via a load factor that typically runs 10–20%. You pay rent on rentable square footage but only use the usable portion. Always clarify which measurement is quoted and negotiate based on the usable area you actually need for your concept.
Should I request a CAM audit?
Yes — especially if your CAM true-up seems higher than your budget or if CAM has been escalating faster than expected. Most NNN leases give tenants the right to audit within 90–180 days of receiving the annual reconciliation. Operators who request itemized CAM breakdowns regularly recover 15–20% in overcharges. Common issues include expenses from other properties, disallowed capital improvements, and inflated management fees.