Surrender Lease – an option for F&B operators to cut loss in a tough market
The pressure is still on!?
Against a bleak outlook in retail market at the beginning of the Year of the Rooster, most of the business owners, including F&B operators, do not expect a rosy market in 2017.
Perhaps it’s the right time to plan ahead:
Would it be necessary to streamline the operations, change the focus to profitable outlets, cut the cost of operations or develop alternative sources of revenue?
But it would not be easy to streamline the operation immediately while the operation is under a lease which will not expire in short run. Surrender lease thus provides an option for F&B operators to cut loss in a tough market.
What is lease surrender?
An F&B shop lease is usually under a fixed term of 3 years in Hong Kong. Tenants cannot abandon the lease before the fixed term expiry.
Walking out of the lease without landlord’s consent would be a breach of contract, which would induce possible consequences of forfeit of security deposits (normally 3 to 6 months’ rent), and it may cause possible claims of liability for the remaining lease term by landlord. It’s not only loss in terms of money, but also the legal liability by the tenant’s company and tenant himself.
How lease surrender can be a relief?
Lease surrender can help the tenant to quit the lease in a legal and proper manner. But it is usually not a quick process. The process is sometimes difficult.
Frustrated and uncertain too. A professional F&B shop consultant who understand the process and valuation of lease surrender, as well as knowing how to facilitate the agreements among landlord, incoming tenant and outgoing tenant are very crucial.
Lease surrender can also help the Tenant to get part of their money back by selling the fitting, equipment and furniture as well as license transfer, which is regarded as the sale of restaurant or sale of bar.
A success story of lease surrender
LacruLand (Lacrucci’s property arm) is a professional F&B shop consultant, who has succeeded in assisting a number of F&B operators to surrender lease over the years.
The most recent case is the surrender lease by Picnic on Forbes in Kennedy Town.
Picnic in Kennedy Town was a French restaurant set up by Starred Chef & Owner Philippe Orrico in 2015, who is also running Michelin-starred restaurants in Hong Kong, Upper Modern Bistro and ON Dining.
Picnic was once a new attempt by Philippe’s F&B Group for expansion to a new district, which is conveniently connected by MTR.
However, the clienteles in Kennedy Town did not sound to be the same as the fans of French cuisine as in Central or Sheung Wan.
Lacrucci.com, a brand F&B community consultant developed by Lacruland Ltd was then appointed by this F&B Group in 2016 and wrapped up the surrender lease with a new lease confirmed by Café Siam, a Thai restaurant under Eclipse Hospitality Group.
Talk to Lacrucci
Lacrucci.com is a brand F&B community consultant developed by Lacruland Ltd. If you would like to join us, please use one of the following methods:
- Phone: +852 6280.3566
- Office Phone: + 852-3597 5561
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Hong Kong F&B Popular Areas
- Central restaruants, bars, cafes
- Causeway Bay restaurants, bars, cafes
- Sheung Wan restaurants, bars, cafes
- Tsim Sha Tsui restaurants, bars, cafes
- Wanchai restaruants, bars, cafes