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Business

Advice

Montecito Attorney Jim Haslem to Talk Restaurant Leases at Industry Conference

Years after the trauma of the Great Recession, restaurants remain under siege. Much of the trauma comes from a lack of understanding on the part of restaurant owners of the importance of the restaurant lease.

Jim Haslem
Jim Haslem

Nationally recognized debt and lease restructuring expert Jim Haslem will speak Nov. 9 and 11 at the nation’s leading restaurant conference — the 2015 Restaurant Finance & Development Conference at the Wynn Las Vegas. Haslem will lead two in-depth discussions focused on helping restaurants negotiate lease terms that will enable them to survive and thrive.

Haslem is a principal with Huntley, Mullaney, Spargo & Sullivan, a debt and lease restructuring firm. He and the firm’s co-founder, Thomas Mullaney, are based in Montecito. The firm’s clients include many national and international restaurant operators.

“Time and again, we see that restaurant operators don’t grasp the importance of negotiating, and renegotiating, lease terms that will enable them to survive and thrive over the long term,” Haslem said.

Many factors play into the success or failure of a restaurant, but the lease and the rent are dominant factors, he  said. In fact, he added, “they are predominant. If you don’t have the rent and lease term right, your chances of failure are high.”

In 2011, Haslem guided a well-known pizza restaurant chain through the renegotiation of its leases in a Chapter 11 bankruptcy.

“We had access to a wealth of information, and that information spoke very clearly to us — if the rent for a restaurant was just a little bit too high, the restaurant had a very high chance of failure — more than a 50% probability,” he said.

Even large restaurant chains find that they can be at a disadvantage when dealing with landlords.

“Large companies have had to reduce overhead costs, and many have reduced or eliminated their real estate departments,” Haslem said.

As a result, companies are constantly playing catch-up when negotiating with landlords. While a company saves money by cutting staff, the company becomes less able to negotiate the best deal possible.

Haslem has saved millions of dollars for a California-based hamburger chain and he works regularly with a leading coffee company.

“The savings that we deliver are reflected in the company’s earnings report,” he said.

There is a growing awareness that savings garnered are equivalent to earnings, he added.

“We calculate the internal rate of return on lease savings,” Haslem said. “The results catch the attention of a company’s CFO.”

The disciplines that large companies deploy apply to small and single restaurant operators.

“You can do everything right (the food, the service, the following), but if you don’t have the rent right-sized for a specific location, it can make the difference between success and failure,” Haslem said.

Click here for more information about Huntley, Mullaney, Spargo & Sullivan, or contact Haslem at [email protected].

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