Your Actual Exposure: $320,000

A $5,000/mo restaurant lease doesn't create $5,000/mo in liability. It creates $320,000 in total exposure across rent, personal guaranty, restoration, and every other clause your landlord drafted to protect themselves — not you.

Where $320,000 Comes From

Remaining Rent$150,000
Personal Guaranty$150,000
Restoration$45,000
CAM Charges$30,000
Early Termination$30,000
Legal Fees$20,000
Holdover$30,000
Total Exposure$320,000

What Most People Miss

The restoration clause. Most restaurant tenants sign leases requiring them to remove all improvements — including the commercial kitchen they spent $80,000 installing — at their own expense when they leave.

Key Risks in This Scenario

  • Personal guaranty on full lease term — your home is on the line
  • Restoration clause requires removing all improvements at your expense
  • NNN or CAM charges add 30-50% on top of base rent every month

How to Reduce Your Exposure

  • Cap personal guaranty to 12-18 months rent with a burn-down provision
  • Get explicit landlord consent to improvements with a waiver of restoration obligation

Frequently Asked Questions

Can I sign a restaurant lease through an LLC to limit liability?
Yes, but landlords require a personal guaranty in 95% of restaurant leases. The LLC protects against general business claims but not the personal guaranty itself.
What is a typical restaurant lease term?
10-15 years is standard. The landlord wants long-term security. That also means your maximum exposure is enormous if the business fails in year 2.
What does restaurant restoration typically cost?
Removing commercial kitchen equipment, venting, grease traps, and specialized flooring runs $30-60 per square foot. A 1,500 sq ft space = $45,000-$90,000.
What happens if my restaurant fails and I can't pay rent?
The landlord activates your personal guaranty. You're liable for all remaining rent, CAM charges, restoration costs, and their legal fees — personally, regardless of your LLC.
Can I negotiate the personal guaranty on a restaurant lease?
Yes. Push for a burn-down guaranty that reduces your personal exposure by 20% each year the lease is in good standing. After 5 years of good performance, your exposure drops to zero.