The debt service ratio corresponds to the ratio between your rent (including charges) and your projected or actual turnover. In the restaurant industry, the prudent benchmark is between 6% and 10%.
Beyond 10%, your profitability is threatened unless your business model is very specific (very high gross margin, few employees). If you are at 15% or more, you are working for your landlord.
Location dictates rent. High rent in a downtown or shopping center area is justified by the natural flow of customers (traffic). If you pay a lot but have to spend a lot on marketing to bring people in, there’s a problem.
For dark kitchens, the ratio should be lower, ideally around 5-6%, as you have no visibility and need to invest heavily in marketing and platform commissions.
Negotiate variable clauses if possible (fixed low rent + % of revenue), or rent discounts at the start to reach your cruising speed.
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