Sally has been looking at properties for the restaurant with a realtor. She asks you whether it is better to buy or lease. You suggest that you and Sally discuss the available options and issues that might impede the operation or make a deal cost-prohibitive. You explain that some leases have a way of being great investments for the owners of the property. Often, leasing terms are designed to squeeze all of the profit out of the tenants' operations. Although there are also pros and cons to owning the property. Our task right now is to decide if we should buy or lease.

First, calculate the potential profit. Here is the information you need:

• Profit = number of seats (259 seats and 90% will be occupied on average) x the number of meal seatings (3 per night (6:00 pm, 7:30 pm, and 9:00 pm)) x average meal price of $250 x 365 days of operation.
• Food and service expenses are 68% of your revenue. Additional costs including insurance, professional fees, etc. = 9.9 million per year.
• Rent would cost $100 per seat per day. The cost of the mortgage is $125 per seat.

Support Material:

• 10 Most Expensive Restaurants in the World (USA Today).(https://www.usatoday.com/story/travel/destinations/2013/11/23/most-expensive-restaurant/3684335/)- Fine dining at Michelin-starred restaurants around the world can come at a price.
• Buying a Restaurant (Web Restaurant Store) (https://www.webstaurantstore.com/article/135/buying-a-restaurant.html)- covers how much it costs to buy a restaurant and the steps you need to take to purchase a restaurant.
• Buying vs Leasing Commercial Real Estate: Pros and Cons of Each(https://www.valuepenguin.com/small-business/buying-vs-leasing-commercial-real-estate) - addresses the pros and cons of buying vs. leasing.
• How Bob Chinn's Crab House Became The Highest-Grossing Restaurant In The U.S (Forbes)(https://www.forbes.com/sites/dorothypomerantz/2012/07/18/how-bob-chinns-crab-house-became-the-highest-grossing-restaurant-in-the-u-s/?sh=6ee11896258e) - demonstration of potential gross revenue.

Based on the information that you have gathered, discuss the following:

• Your decision to buy or lease
• The calculations for the potential profit
• The pros and cons of buying and leasing