Square Feet, Seats and Rent – What is the Correlation?

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Square Feet

Having conducted business with restaurateurs for over 20 years, and being a past New York State Restaurant Board member, restaurant brokerage is my expertise and passion. Each month I will share valuable information for those who may be thinking of buying or selling a restaurant, even if it is to a partner or family member.

Let’s begin with the correlation of restaurant square feet to number of seats it holds and how that equates to the rent.

A few years ago I had two restaurant listings in the same town, both were approximately 1,700 square feet (SF). One restaurant had 70 seats and the other had 44 seats. At about the same rent of $50.00 per SF, which was the better deal? All things being equal, obviously the restaurant with more seats was a much better opportunity. The discrepancy in number of seats was because one restaurant had no basement, so their office, storage space and prep room took up valuable dining space.

A few years ago I had two restaurant listings in the same town, both were approximately 1,700 square feet (SF). One restaurant had 70 seats and the other had 44 seats. At about the same rent of $50.00 per SF, which was the better deal? All things being equal, obviously the restaurant with more seats was a much better opportunity. The discrepancy in number of seats was because one restaurant had no basement, so their office, storage space and prep room took up valuable dining space.

91094911-5581-40ee-a2f9-fa067a7aa51dWithout two restaurants to compare, how do you know what is the right amount of seats for any size restaurant? Believe it or not, there is a formula. Total SF divided by 2, then divided again by 15 will give you a good estimate of how many seats should fit into a space. The logic is that 50% of a restaurant is taken up by the kitchen, bathrooms, storage and hallways. The number 15 represents the square foot size of one seated customer.

  • Example: 2,000SF /2 = 1,000SF/15= 66 seats. This could extend to 70+ or shrink to less than 50 depending on the layout of the restaurant. But now you have a formula to base how many seats a certain SF should have.
NAFEM Dec 2016 728×90

Why is this important? Because your rent is based on SF.

  • Example: 2,000SF x $50.00SF = $100,000.00 in annual rent, and $8,333.33 of monthly rent.

Obviously the more seats you have in the space, the higher your potential sales can be. This formula is also very important if you are creating a business plan for a new restaurant.

paul-ficalora
Paul Ficalora

When searching, every restaurant you see will be different in SF, seats and rent. Now you have a formula to compare and determine which one is the most cost effective. 

Feel free to contact me at 800-591-0894 with any questions, or visit my website for more information.

 

 

Paul Ficalora is one of the most well-rounded people in the industry when it comes to real estate. Paul works in property & casualty insurance, commercial real estate, and restaurants. Paul provides his services all around the Metro NYC area and has made a name for himself as a guy who can handle it all with expertise.