Occupancy cost

Definition

Rent plus its extras as a share of sales, which is the number a lease renewal moves.

Why It Matters

Rent plus taxes, insurance and common charges as a share of sales is the ratio that decides whether a restaurant survives a soft year, and the lease is the one term a buyer inherits without the power to change. A number that looks fine today moves the day an option period reprices. Read the lease for the renewal formula and any percentage rent, then compute the ratio at today's sales and at a fifteen percent decline.