A restaurant lease is not a generic commercial lease with a kitchen in it. Food service stacks a six-figure build-out, specialized equipment, a liquor license, recurring grease and ventilation obligations, and one of the highest business-failure rates in the economy onto the same document. The terms that decide whether a slow year becomes a personal bankruptcy are food-service-specific, and most of them sit well below the base rent on page one. This checklist walks them group by group. For the dollar math behind the exposure, see the restaurant lease exposure breakdown; for the general commercial terms, see the commercial lease checklist.
This is an observational checklist. Each item names what to find in your lease and why it matters — it does not tell you what to decide. Confirm what your document actually says for each point, and treat any protection that is simply absent as information about where your exposure sits. The legal judgment about what to do with what you find is yours.
1. The Build-Out and Equipment Terms
The kitchen is where restaurant money is made and lost. These items decide who pays to build it and who pays to remove it.
- Tenant improvement (TI) allowance. Confirm the dollar amount the landlord contributes to the build-out, how it is paid (up front, on completion, or as rent credit), and what happens to unused allowance. Kitchen build-outs commonly run well past a standard TI allowance.
- Equipment ownership and fixtures. Find which equipment is the landlord's (and stays) versus your trade fixtures (and leave with you). Walk-ins, hoods, and grease interceptors are frequent points of dispute at move-out.
- Restoration and surrender condition. Find the condition the lease requires the space to be returned in. A clause requiring a strip-back to vanilla shell and removal of the entire kitchen can run into tens of thousands of dollars. The restoration cost estimator gives a range.
- Delivery condition and possession date. Confirm what condition the space is delivered in (warm shell, cold shell, as-is) and the date possession starts, since build-out delays eat free-rent periods.
2. The Food-Service Operating Terms
These clauses are specific to running a restaurant and rarely appear in other commercial leases.
- Permitted use and concept. Confirm the permitted-use clause covers your concept and leaves room to evolve the menu. A narrow use clause can block a pivot or a later sale to a different operator.
- Liquor license contingency. If alcohol is part of the model, find whether the lease is contingent on obtaining a liquor license, and what happens to rent if the license is delayed or denied.
- Grease trap, hood, and ventilation maintenance. Confirm which party is responsible for grease-trap pumping, hood cleaning, exhaust ventilation, and HVAC. Landlord-drafted leases commonly push these recurring costs onto the tenant.
- Hours and continuous operation. Find whether the lease requires you to stay open set hours (a continuous-operation or "go dark" clause), which removes your flexibility to cut hours in a downturn.
- Exclusivity and co-tenancy. Confirm whether you have exclusivity against a competing restaurant in the center, and whether a co-tenancy clause protects you if the anchor tenant leaves.
- Health, permits, and certificate of occupancy. Find which party carries responsibility for code compliance, health-department requirements, and obtaining the certificate of occupancy.
3. The Money Terms
Base rent is only the start of what a restaurant pays each month.
- Base rent and lease structure. Confirm whether the lease is gross or net. In a net or triple-net (NNN) lease you also pay a share of taxes, insurance, and maintenance.
- Percentage rent. If present, confirm the percentage, the breakpoint above which it applies, how sales are defined, and whether the landlord has audit rights over your books. Percentage rent is common in malls and food halls.
- CAM and pass-throughs. Confirm your pro-rata share and whether annual CAM increases are capped, including shared costs for trash, grease, and common-area cleaning. The CAM charges calculator estimates the range.
- Rent escalation and free-rent period. Find the annual increase and confirm the build-out free-rent period is long enough to cover construction before rent starts.
4. The Liability and Exit Terms
Restaurants fail more often than most businesses, which makes these terms decisive.
- Personal guaranty. Confirm whether you are personally guaranteeing the lease and whether the guaranty is unlimited or capped. An unlimited personal guaranty puts your own assets behind the full remaining lease value; negotiated leases commonly include a dollar cap, a time limit, or a burn-off. The personal guaranty calculator sizes the exposure.
- Assignment and subletting. Find whether you can assign the lease when you sell the restaurant, and on what conditions. Restaurants are often sold as going concerns, so a restrictive assignment clause can block your exit.
- Early termination and holdover. Confirm whether any early-termination right exists and what holdover rent applies if you stay past the end date. The early termination calculator estimates the exposure.
- Insurance and indemnification. Confirm the required coverage (including liquor liability if applicable) and whether indemnification runs one way or is mutual.
5. The Dispute Terms
These decide the outcome if the relationship goes wrong.
- Default, cure periods, and landlord mitigation. Confirm how default is defined, how long you have to cure, and whether the landlord must make reasonable efforts to re-let after a default.
- Attorney fees. Confirm whether fee-shifting is one-way (landlord only) or mutual.
- Jury trial waiver and governing law. Find whether you are waiving a jury trial and which state's law and venue govern disputes.
How to use the result: Mark every item you cannot answer from the lease text. The unanswered items are your shortlist for questions, negotiation, or counsel review — and a missing protection (no CAM cap, no assignment right, unclear grease-trap responsibility) is itself a finding, not a blank to ignore. Related reading: bar and nightclub exposure, food franchise exposure, and restaurant lease risk by state.
Frequently Asked Questions
What should I check in a restaurant lease before signing?
Beyond the standard commercial terms, a restaurant lease has food-service-specific items that drive most of the cost surprises: who owns and maintains the kitchen build-out and equipment, who is responsible for the grease trap, hood, and ventilation, whether the permitted-use clause covers your concept and a liquor license, whether rent includes a percentage-of-sales component, whether the lease forces continuous operation, and what restoration the landlord requires when you leave. Confirm each against the lease text before signing.
What is the most expensive restaurant lease clause to miss?
Two compete for first place. The restoration or surrender clause can require you to strip the space back to a vanilla shell and remove the entire kitchen at your cost, which routinely runs tens of thousands of dollars. And the personal guaranty puts your own assets behind the lease, which matters because restaurants fail at a higher rate than most businesses. Neither appears in the base rent figure.
Is percentage rent normal in a restaurant lease?
Percentage rent, where you pay base rent plus a percentage of sales above a breakpoint, is common in mall, food-hall, and high-traffic retail locations. It is less common in standalone or strip-center sites. If your lease includes it, confirm the percentage, the natural or artificial breakpoint, how sales are defined, and whether the landlord has audit rights over your books.
Who pays for the grease trap and kitchen hood?
It depends entirely on the lease. Many landlord-drafted restaurant leases push grease trap pumping, hood cleaning, ventilation, and HVAC maintenance onto the tenant, and these are recurring costs that can run into the thousands per year. Confirm which party is responsible for each system, and whether maintenance is direct or billed back through CAM.
Should a restaurant lease be reviewed by an attorney?
Restaurant leases combine a personal guaranty, a large build-out, specialized equipment, and high failure rates, so they are commonly reviewed by counsel before signing. A checklist and an automated scan can tell you where the exposure sits; the legal judgment about what to do with that information is yours.