Lease amounts per restaurant revenue?

[Greg V.]

I'm thinking about buying a microbrew pub property and lease it to an operator. Are there rules of thumb in the restaurant business as to what percentage of revenue should be a lease expense? Are there any other rules of thumb?

[Mike L.]

It would be best if the rent and triple net fees are less than 10% of the restaurant's revenues. If they are spending more than 10% on rent and NNN, then they may be in trouble.

That's our guideline here in the Inland Empire area of Southern California.  It may vary in other areas.