On July 22, 2020, Evan Pritchard was quoted in BisNow regarding lease renegotiations for DC restaurants that have been affected by the coronavirus pandemic.
According to the article, the uncertainty of when pre-crisis sales will return is a main factor causing restaurateurs to decide to close. The top expenses for a restaurant are payroll and rent, and as business owners have adjusted to making a fraction of their pre-crisis sales, they say they need a break on rent in order to survive.
Pritchard said his firm's clients prefer to reach agreements that defer rent rather than forgive or reduce the monthly bill.
"Folks have agreed to defer on a wait-and-see approach," Pritchard said. "They're having struggles sometimes where the landlord wants certainty as to when tenants are going to pay rent, and tenants aren't able to make any predictions. There have been situations where people are deciding to shutter their business."
He said he expects more closures to occur as restaurants continue to bring in sales around 50% of their usual levels. He said it has been difficult to renegotiate leases because tenants are unable to forecast what their revenues will be in the coming months.
"Everybody's having trouble deciding what they can agree to," Pritchard said. "Nobody can agree on what a reasonable timeline is for forecasting increased revenue, so everybody's been a little reluctant to do a full-blown renegotiation."
Click here to access the article.