Retail rents buck the trend at The Cheesecake Shop
Sweet treat retail franchise The Cheesecake Shop has taken steps to improve rental deals for franchisees in the network through direct negotiation with landlords.
The dessert chain of 200 plus stores recently renewed nine leases and obtained 14 months of rent free from the respective landlords.
Nick Avgerinos, national franchise development manager of The Cheesecake Shop said “This is equivalent to a saving of approximately $50,000 for our franchisees. On top of that, in a further three renewed leases we successfully negotiated no rent increase for at least two years.
“One of the advantages of The Cheesecake Shop model is that we offer sites that include a mixture of neighbourhood centres and sub regional shopping centres. Avoiding major shopping centres has meant an avoidance of spiraling rents, which many other franchising operations have faced of late,” Avgerinos added.
Managing director of The Cheesecake Shop, Ken Rosebery, told Franchising " This is a good reminder that because of the sites we choose, we are typically in a more powerful position. Our cost of rent is demonstrably lower.
"A lot of our landlords own a small number of sites and as a tenant we're a nationally branded retailer. For them we're a huge, national, stable retailer. "
Although the isues of high cost rentals in major shopping centres do not directly affect the The Cheesecake Shop franchisees, the company has also joined the Franchise Council of Australia’s recently formed committee to help create a proposal for a retail leasing code.
Included on the working group are the Australian Retailers Association and members from the Pharmacy Guild, Restaurant and Catering, Harvey World Travel, Luxottica and Lease1.
“Currently if a retailer has a lease with a shopping centre, it’s CPI plus two percent. But with retail growing at between two to three percent annually, we just can’t sustain those levels,” Australian Retailers Association executive director Russell Zimmerman said.
So are landlords more open to negotiation? What do you think?
Image: The Cheesecake Shop outlets are in secondary shopping centres