How To Optimize Your Real Estate Leases to Protect Profits

As your business grows and you add more locations, how can you be sure you aren't overpaying or missing a renewal?
How to optimize your lease portfolio to save money

Today, we find ourselves at a crucial turning point in the industry, where the aftermath of post-Covid economics and inflation is intersecting, molding this new reality. Margins are under pressure as expenses rise, compelling every department to cut costs and tighten budgets for sustained profitability.

This economic scenario sets the stage for an increasingly competitive market, where landlords are less forgiving. The significance of lease renewals has skyrocketed; any oversight might result in forfeiting a prime location. The struggle to secure and maintain these coveted spots is now more crucial than ever.

How does this impact your profits? It’s tough. Your team is already handling many roles to make more money, and now is also dealing with real estate.

Owners and staff, moving between front and back-of-house, are stuck in a tangle of jobs. From finding locations to talking about leases, keeping track of CAM and tax, and dealing with contracts – it’s a lot.

Franchise deals, permits, licenses, warranties, leases – each one adds to the complexity. And with various people involved, from renewing leases to negotiations, everyone is working together for the best results in this challenging situation.

Are you relying on tools like Excel, PDF, email, and Dropbox to handle your real estate and boost revenue? Millions of dollars of liability and obligations, sitting in just another google doc?

Let me ask you…

Do you know your current lease obligations? How sure are you about those answers?

How much time do you spend figuring out the best deal for lease renewals and cutting occupancy costs? Where do you even start with that?

Now, throw in everything beyond leases. Where are your other documents? How do you keep up with franchise agreement regulations? Are you aware if your business license is about to expire in two weeks?

If you’re counting on tools like Excel or emails, it’s not going to be enough. Top brands like Lettuce Entertain You Restaurants and Planet Fitness don’t rely on these methods for their real estate strategies. How do we know? Well, we’ve worked closely with these brands and many other franchise owners through Leasecake’s real estate and location management platform, and we’re here to share insights into how they tackle challenges and boost revenue.

And, this is why we created Leasecake — the modern and easy to use real estate and location management platform.

Now we’re going to be diving deeper into the top three real estate challenges we hear from our customers and see how they are tackling these hurdles using technology.

Top 3 Business Challenges for Real Estate

We will be looking deeper at lease obligations, occupancy costs and renewal periods, and handling obligations beyond the lease.

1. Effectively Managing Your Obligations

Now, let’s focus on Lettuce Entertain You Restaurants. If you’re not familiar, they’re the brains behind 130 diverse restaurants, ranging from casual to fine dining, spread across 12 states.

When Lettuce Entertain You Restaurants teamed up with Leasecake, they were facing the challenge of potentially missing a critical lease renewal. Ethan Samson, their Vice President and Deputy General Counsel, explained the extensive investment in each restaurant, from finding the perfect location and investing in construction to sourcing top-notch ingredients and staffing – we’re talking multimillion-dollar commitments. The idea of missing a lease renewal and risking the loss of their property was a risk they couldn’t take.

So, how did they handle it?

They chose Leasecake to simplify their upcoming important tasks, including lease renewals.

According to Ethan, who has been using Leasecake from the start, he says, “With Leasecake, my worries have been solved.”

Lettuce Entertain You Enterprises adopting Leasecake led to an effective and streamlined lease management solution. The platform not only addressed issues like missed deadlines, document disorganization, and communication problems but also equipped the team with tools to proactively handle their lease portfolio, improve agreements, and protect their valuable investments.

Let’s dive into Leasecake to see how you can achieve this as well.

1) Avoiding Missed Deadlines: Leasecake’s Automated Reminders kept the team informed, reducing the risk of missed lease renewals, financial penalties, and disruptions to investments.

2) Organized Lease Documents: Leasecake’s Central Repository streamlined access to essential lease details, improving efficiency and transparency in lease management.

3) Improved Communication: Leasecake’s platform enabled seamless team collaboration by providing easily accessible location data, eliminating communication barriers and enhancing efficiency.

2. Occupancy Cost Reduction and Lease Renewal Improvement

Let’s dive into another story, this time about Jeff Klein, a franchise owner in the Las Vegas market with approximately 20 units.

When Jeff teamed up with Leasecake, he was a one-man show, handling everything from day-to-day operations to critical negotiations and lease renewals. Every decision had a direct impact on his wallet.

In Jeff’s experience, dealing with landlords is like navigating a tricky playbook. As he describes it, ‘Landlords trick you in the way they draft leases.’ It’s a game of inconsistency between locations, and if you lose track of the details, your lease renewal can easily slip away. Imagine managing it all, only to end up negotiating a subpar renewal rate because you lacked the right information. That’s where Leasecake made a difference, turning the odds in Jeff’s favor.

“You’re putting yourself at risk by not using Leasecake. In an environment where every advantage matters –– Leasecake is a strategic necessity.”

For Jeff, Leasecake is the ultimate solution for lease and location information, available anytime, anywhere. No more long searches; reports and data take minutes, not hours.

Thanks to Leasecake’s insights, Jeff has a strategic advantage in lease negotiations. With accurate, timely info, he navigates confidently, ensuring better terms and outcomes.

1) The built-in notifications feature is a game-changer, offering peace of mind by eliminating concerns about missing crucial lease renewal or other significant dates.

2) Occupancy costs/rent schedule: Knowing your current occupancy costs, covering rent, common area maintenance (CAM) charges, taxes, and other expenses, is crucial for negotiating with knowledge. This clarity helps you grasp market rates, forming a strong base for negotiations. Predicting future occupancy costs aids in effective budgeting and resource allocation, allowing you to anticipate the impact of potential changes. Understanding future costs is also vital in assessing proposed lease terms, like lengths, renewal options, and escalation clauses. Recognizing and addressing potential cost increases supports risk mitigation strategies during negotiations. This readiness not only gives you a competitive edge but also lets you negotiate comprehensive terms beyond rent, such as CAM charges and maintenance responsibilities, aligning with your business’s financial goals.

3. Holistic Obligation Oversight Beyond Lease

Now, let’s look at Core Development and Management, the force behind 70+ Planet Fitness locations. This team was on an aggressive growth plan, mainly through acquisitions.

Acquiring locations involves extensive due diligence and often hefty legal fees to ensure a confident investment. Core turned to Leasecake for a streamlined solution. They needed a central hub for everything related to these locations, not just the lease. Inheriting contracts, permits, and business licenses, they required a single place to track and store all these critical details. Why? So, when evaluating another property, they had a solid comparison at their fingertips.

“Expanding quickly through M&A brought challenges in handling each location’s duties. Acquiring smaller franchises without organized documents made due diligence slow and costly.”

Simply put, Core chose Leasecake to centralize and compare crucial elements related to their locations, enhancing their growth strategy efficiency.

According to their EVP of Development & In-House Counsel, “Leasecake is our go-to for clarifying responsibilities, especially in facilities. It allows our team to quickly find details like HVAC or exterior window responsibilities, providing an immediate solution. The centralized repository in Leasecake, including contacts and key details, has been a time-saver. In our journey of growth through franchise acquisitions, every crucial piece of information became readily available with Leasecake.”

How does Leasecake help?

1) Lease Abstraction: Our team of expert lease abstracters helps simplifies complex lease documents into key, easily digestible information.

2) Tenant vs Landlord responsibility: Leasecake helps to clarify responsibilities in facilities, like HVAC or exterior windows, for swift issue resolution. This also means you won’t be overpaying for something your landlord is responsible for.

3) Document repository: Easily track and store essential documents in one place with the Document Repository

4) Using Cakebot for critical clauses and chatbots: Cakebot is like another real estate team member who knows your leases really well, except it’s actually an AI tool. You can easily ask questions about your lease or critical clauses to quickly understand your responsibilities and key details.

5) Lightweight CRM: Manage contacts, key details, and interactions efficiently with a Lightweight CRM. Not sure who the property manager or landlord is at one of your 100s of locations? Leasecake offers that clarity instantly, and is available on mobile 24/7.

And there you have it – three savvy operators mastering their real estate challenges and boosting revenue with Leasecake.

Curious about the cost? Here’s the deal: On average, it’s less than 1/10th of 1% of your AUV per location. Pricing starts at just $6 per location per month. And, not to mention, we are the only major provider in this space that offers transparency on our pricing.

For as low as $6 per location, you can protect your investment, manage risk, and secure your profits. Your investments are too important to leave to chance. With Leasecake, proactive management and strategic planning are affordable ways to bring peace of mind. Don’t risk your assets; a small investment now can bring you big gains later.

Want to learn more? Contact us for more information.

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