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.
Found another way around this?
Share your steps and trade-offs so fellow engineers don't have to reinvent the wheel. No account required.
- 1Cutting back on staff and working all the shifts aloneDid this help you?
- 2Running heavy discounts on third-party delivery appsDid this help you?
- 3Doing door-to-door marketing and local geo-location advertisingDid this help you?
- 4Pursuing legal remedies against the franchisor for misleading sales figuresDid this help you?
In their words
Unedited, grouped by where they were said, most upvoted first within each place, 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 ↗
“As someone else who owns a franchise and also has these struggles I FEEL YOUR FRUSTRATION. It’s infuriating at times.”source ↗
Where this came up
People with this problem also raised
- 9How to get out of the restaurant business when you're completely burned out
- 2Should I open another restaurant after failing?
- 8Making less money after starting a business
- 4How do I know if a commercial lease is normal?
- 9Why are restaurant and cafe startup costs so high?
- 5Why do all my business ideas end up at a dead end?