Percentage Rent for Restaurant Tenant during COVID

[Vierra Wong]

With winter around the corner my tenant is concerned about business during the cooler months when customers don't want to eat outdoors. He's a good tenant and aside from April has paid rent in full. I'm thinking about offering percentage rent and want to see if others have offered this and how they have been structured. My plan is to have a floor of 60% of the rent so they can't pay below that. In addition the business income will need to be reduced by at least 10% for the percentage rent to kick in.  The numbers will be compared to the 3 full months of business prior to COVID. I'm also thinking about requesting to collect a percentage of the rent on the off chance that they make more than 100% of their numbers compared to the 3 months pre-covid. 

Has anyone structured one of these yet? Thanks for any input you have!

[Joe Splitrock]

This seems reasonable. Many restaurants are going out of business. I would do what you can to keep them afloat. There is plenty of time to make your money back when this passes.