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[HTD 500] - Final Exam Guide - Comprehensive Notes for the exam (43 pages long!)


Department
Hospitality and Tourism Management
Course Code
HTD 500
Professor
Richard Wade
Study Guide
Final

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Ryerson
HTD 500
FINAL EXAM
STUDY GUIDE

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Let’s Make a Deal
When negotiating a lease there should be a lot of homework, creativity and charisma involved.
One bad deal or location could doom your dream before it begins. Restaurants that close their doors
have always made a bad deal. Economic climate makes it easier to convince a landlord to agree to better
tes ad a oesatuated aket akes it hade to sig a deal. Hoee, these to fatos should’t
change the hallmarks of a good agreement.
Location, Location, Location
It all begins with the building as a restaurant lives and dies here. The first thing you need to
decide is to search alone for a location or use an agent. You need to keep in mind that some realtors
ok o a oissio paid to the ladlod, eaig the ae’t okig fo ou, the’e okig to
make a deal. Realtors who focus on downtown malls and towers usually do not get a commission from
the landlord, so they ask for a fixed monthly fee or a success fee based on what they find you. Using an
agent may be a good idea in Ontario because it has become more difficult to find the fitting criteria. The
most important thing is to do your homework.
A research company does a full demographic study and analysis of the site, including the trade
area and customer counts. You can use this formula of your existing locations and compare it to new
locations through a database. You can do your own homework too, like learning the history of the
property and surveying potential neighbours about their payment terms and conditions with the
landlord, also take the state of the economy into consideration.
The property should be selected based on a certain set of criteria that is important to you, like
waterfront, good visibility, access and enough parking. Once the property is chosen you should get an
expert to check the property for structural problems.
Cutting the Deal
The initial, informal offer to lease starts with the letter of intent (LOI), this highlights the
conditions linked to the formal agreement. A landlord really looks at the overall retail centre as a
business in percentage rent. They want to draw in complementary tenants that do this, drive traffic,
complement each other and help everyone do well. Landlords place great value in covenant-proof of the
worth of the tenant which may involve co-~signing.
Some key points to remember are to ask for tenant improvements as the landlord will usually
pay up to 25% of your total improvement costs. Ask for a fixturing period during the construction of your
premises, this is just during your construction. Also ask for a free rent period once you have opened your
business. But both of these usually involve paying some utilities and/or taxes. Always ask for double
what you want!!
It’s ot all aout the oe, it’s aout elusiit. It’s aout akig sue the exclude some of
our competitors, usually put in a radius restriction clause in a lease saying you cannot open another
identical restaurant within one to five miles of this location.
Sealing the Deal`
This part should be the easiest. Capture the major points that are important to you, at this point
there should be no more negotiations, just the basic checking for errors and capturing what the LOI says.
Do’t e afaid to ask fo az thigs, thee’s othig that stipulates how a deal is done, be unorthodox.
Remember to be charismatic, they have to like you! Landing one deal for one client means tougher
egotiatios ith the ladlod do the oad. If ou a’t get alog ith ou ladlod, sta aa!!
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Money Talks
When developing financial projections for a new restaurant operation it is all about research
and planning.
Step One
Develop a strong, sound and sensible business plan. This involves creating a detailed concept
outline, explaining unique selling points. What separates it from competition? What will the exterior
look like? Tell the menu so your reader knows what will be served. You could even include standard cost
recipes so you know what your costs will be.
Step Two
Determine the economic outlook in your area, is it growing or shrinking?
Step Three
Examine the population make-up of the market you are entering to establish the type of
clientele you are going to attract. This should include age, education, income, household values and
depth of mortgages.
Step Four
Do a self-assessment of the chosen site. Is it highly visible? Etc. If you are a destination
estauat ou do’t eed to e lose to etai aeities. You aket is liited to -4 kilometres
around your site.
Step Five
Include a marketing plan, highlighting how you differentiate from competition.
With this information an operator can compare their operation to the most similar businesses in the
neighbourhood and honestly assess how it will perform relative to the competition. Will you operate the
same? Will you over perform?
Restaurants vary in their degree of success, but sales per seat and sales per square foot are key ratios
that can benchmark a potential neighbourhood and restaurant.
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