Why should you take your pop-up permanent?
Following the recent news that a Singapore street food stall has been awarded a coveted Michelin star do you really need to put down roots if temporary stalls are now receiving the same accolades as bricks-and-mortar restaurants?
Pop-up street food markets are now commonplace throughout England and Wales and with developers now setting aside space in their new developments (such as Deptford Market Yard) it may soon be even easier to find that perfect pitch. One of the benefits of a street food stall, when compared to a permanent restaurant, is that they are quick to set up and with relatively low start-up costs so they are an ideal way to test the market.
Pop-ups can take a number of forms from a mobile street food van, a pitch at the latest street food market or even a temporary residency taking over someone’s premises. So having worked hard on your branding, refined the product and generated a following why should you consider taking the big step to go from pop-up to permanent?
It is true that a permanent restaurant comes with additional overheads. Depending on the type of premises you will not only need to budget for rent and service charge (with both potentially attracting VAT) but, among other things, also business rates and stamp duty land tax. However, what the recent headlines neglect to mention is that the Michelin starred stall has been running since the 1960s. Given the temporary nature of the location, and sometimes erratic hours of street food markets this is one area where a permanent location betters a temporary location.
Relocating a restaurant can be a time consuming and expensive business and it may not be possible to recreate the success of the previous location. Subject to certain conditions it is possible for tenants of commercial premises to obtain security of tenure under the Landlord and Tenant Act 1954 (“the 1954 Act”).
The 1954 Act provides a tenant with a legal right to a new tenancy on substantially the same terms as the existing lease (subject to reasonable modernisation). Security of tenure can be beneficial to tenants as it protects the goodwill built up in the business over the course of the lease enabling an operator to capitalise on their customers’ engagement with the brand. A protected lease can also be more valuable, should you come to sell the business at a later date, as a purchaser will take comfort in the knowledge that they have a right to remain in the premises beyond the expiry of the existing lease.
Some landlords may want the lease to be excluded from the security of tenure provisions of the 1954 Act and the position is ultimately a matter for negotiation between the parties and a tenant should make it clear to a prospective landlord why it is important to have a lease with security of tenure.
If you are thinking about setting up or currently run a pop-up and would like to talk to CBG about the legal aspects of the taking a lease of commercial premises then please call Alex Hutchings on 020 7436 5151 for a free initial conversation or email ah@cbglaw.co.uk.