• February 16, 2013 at 3:51 am #64272
    vitester
    Member

    How much rent / mortgage payment do you guys pay a month as % of

    gross sales? what is an ideal amount

    (apart of as little as possible :0 ) to shoot for.

    February 17, 2013 at 3:24 pm #73039
    Tom Ham
    Participant

    The range that I have heard most often is 4% to 6% of gross sales.

    But, if the building is in such a great location that you can take 2%

    off your marketing budget, then 6% to 8% makes sense to me.

    The reverse is also true. A weak location could require an additional 3%

    in the marketing budget. In that case 1% to 3% would be about right.

    Tom - Shop Owner since 1978

    February 19, 2013 at 1:51 am #73042
    vitester
    Member

    Very helpful, thanks.

    Lee

    February 20, 2013 at 6:57 pm #73043
    HOAUTO
    Member

    Interesting information. Does anyone have a variable rent/lease agreement based on a percentage of gross sales? We do not, but it is an interesting concept.

    Andy

    February 20, 2013 at 7:26 pm #73044
    joecval
    Participant

    Andy,

    Over the last 2 years I have looked at leasing several spaces and on 2 of them I drew up a tiered lease that based the lease amount to our gross sales. I had a hard time selling it to the property owners. We just moved into our new location Jan 2nd of this year and for this place I did a tiered lease but with fixed amounts. I used the average $/sqft over the lease term and checked it against the estimated gross sales that we should be able to do, trying to keep the lease in the 4 – 7% range. With 2 years of “research” under my belt as I looked and priced several different locations and shops I felt comfortable moving and know that I am getting great value for the money.

    February 20, 2013 at 8:46 pm #73045
    HOAUTO
    Member

    Thanks for your information Joe. We are up for renewal soon and this may help us negotiate a better lease.

    Andy

    March 4, 2013 at 6:30 pm #73053

    We pay a lot for rent. Most say too much. You can cut back on advertising, but you can’t cut back on rent. 50 million vehicles drive by our shop each year (137K/day).

    Before you say $8300/mo. is way too much for 3K sq. ft. of shop space, consider this: Our 4 bays crank out $1.5M/yr. on a 5 day work week after being open for only 4 years.

    I got the idea from Roy H. Williams in Austin. You can either read the article or play the audio at:

    http://www.mondaymorningmemo.com/newsletters/read/1771

    June 20, 2013 at 7:47 am #73135
    nctransmission
    Participant

    My location is on an excellent street, according to the DMV I get almost 175,000 impressions a week from traffic.  I inevitably hear “I drive by here all the time” but my business name gets in the way of getting as much business as I’d like to.  I have 4000 sqft, and this years lease is about $3500.  That puts my rent on the extremely high end of those “suggested numbers” but is very fair for rent prices in my suburban Raleigh location.  One of my competitors in town is paying about double the price per sqft, and admits he’s been “had” by the landlord. 

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