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Renegotiating Lease Agreements to Improve National Restaurant Profitability

Challenge

Following a period of over-expansion and poor franchisee site selection, a national restaurant operator and franchisor of fast-casual pizza restaurants began experiencing a decline in profitability. The operating team determined decisive measures would be necessary to manage the franchisee portfolio, including lease restructuring and improved operational efficiencies.

As a result of the lease negotiations, the company realized an immediate 15% reduction in existing payment obligations.

How We Helped

Conway MacKenzie was brought in to assess and renegotiate the lease agreements and terms across the portfolio’s 100+ sites to improve store profitability. Using local market intelligence and applying a landlord’s perspective to the discussion, each negotiation was tailored to drive the most positive outcome for the store based on a thorough understanding of the market rates and concessions, re-leasing timeframe, and the counterparty’s restructuring limitations and financing constraints. We successfully renegotiated above-market lease agreements and early terminations of unprofitable leases, as well as managed litigation for shuttered locations, leveraging the uncertainty of local legal processes and tenant collectability to minimize settlement amounts.

Results

As a result of the lease negotiations conducted by Conway MacKenzie, the company realized an immediate 15% reduction in existing payment obligations.  In addition to the immediate savings, the stores also benefitted from long-term stability through negotiated lease extension options at favorable rates and updated landlord terms, including tenant improvement allowances and sales volume rent adjustments.

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Our experienced professionals at Conway MacKenzie partner with companies and their stakeholders to solve complex business problems and achieve their strategic and financial goals in challenging situations.