Said It Here

How to get out of a restaurant lease when losing money

High minimum wages and strict franchise rules mean many restaurants pull in less revenue during slow hours than it costs to staff them. Because owners are bound by multi-year commercial leases and heavy personal guarantees, closing down triggers devastating financial ruin instead of relief.

What people tried

Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.

  1. 1
    Cutting back on staff and working all the shifts alone
  2. 2
    Running heavy discounts on third-party delivery apps
  3. 3
    Doing door-to-door marketing and local geo-location advertising
  4. 4
    Pursuing legal remedies against the franchisor for misleading sales figures

In their words

Unedited, most upvoted first, each linked to the thread it came from.

“In California labor costs are $20 an hour + payroll tax = almost $25 an hour. That means to put 2 employees on shift, it’s roughly $50 an hour. Some hours roughly 6/11 hours we are open, we don’t even hit $150 in sales.”source ↗

“It’s a franchise, we cannot change the menu. We also are limited to how we can advertise. Yes, other franchisees are struggling (mainly cause they sold franchises on inflated numbers). We cannot close as $700K invested.”source ↗

“Simply in California, there is too much competition, where most of us are stuck with 10 year leases, and cannot close and do not want to accept massive loses due to personal guarantees that will exceed the loss.”source ↗

CharleysGuy · r/restaurantowners · 18 upvotes

“As someone else who owns a franchise and also has these struggles I FEEL YOUR FRUSTRATION. It’s infuriating at times.”source ↗

JFB-23 · r/restaurantowners · 2 upvotes

Where this came up

r/restaurantownersfranchisingrestaurant businesssmall business

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