This week’s blog was written by Herman R. Lipkis of Holland & Knight, a global law firm with more than 1,250 lawyers in 27 offices throughout the world. Established in Florida, the firm has eight offices throughout the Sunshine State and provides representation in litigation, business, real estate, and governmental law. Mr. Lipkis can be reached at firstname.lastname@example.org.
Considerations for Transforming Your Bar or Restaurant into a Temporary Coworking Space
While “traditional” office coworking spaces have flourished for years, a new trend is emerging to transform restaurants, bars and lounges into coworking environments. Several companies are now focused on converting well-located, but underused restaurants and bars into daytime pop-up offices complete with accessible electrical outlets, high-speed Wi-Fi and complimentary coffee. Bar and restaurant owners benefit by receiving a passive source of income during a period of the day their space would otherwise sit empty. In an industry known for fierce competition and razor-thin margins, transforming into a temporary coworking space can net a bar or restaurant 20% or more in additional revenue. That extra cash can be a lifesaver for fledgling eateries facing steep competition, increasing rents and labor costs.
Since coworking operators do not need to spend significant funds reconstructing a restaurant, they are able to offer their customers lower membership fees than traditional office coworking operators. Working out of a high-end restaurant or lounge with soundproofing offers members a quiet respite from noisy, overcrowded coffee shops and offices. Meanwhile, coworking members offer restaurants and bars a built-in market for happy hour and dinner service.
The temporary coworking model has proven successful, but like any new venture, hospitality operators should consider the business and legal risks before agreeing to lease or sublease their space.
Many new businesses fail and coworking operations are no different. Prior to executing any agreement, restaurant and bar owners should perform their due diligence and consider the coworking operator’s experience, reputation and leadership. You want to work with reputable operators with successfully-operating locations. Ask to speak with the owners of those locations. Check if complaints have been filed against the coworking company with the state or local department of consumer affairs or chamber of commerce. You should consider staffing requirements. While the coworking operator should have its employees onsite during operating hours, you may also want your own managers present.
Working Out an Agreement
If your bar or restaurant leases its space, you should first review the lease prior to entering into any agreements. Most leases include language prohibiting subleasing without the landlord’s prior written consent. Where the lease strictly forbids subleasing, you may consider approaching the landlord to discuss an accommodation. Many landlords understand the difficulty of operating a consistently profitable bar or restaurant and would rather work with you than deal with a default and the additional expenses of re-renting a space.
Property owners can enter into a lease agreement with the coworking company or opt for a non-traditional structure such as a joint venture or licensing. Your agreement can incorporate profit-sharing but should also clearly delineate roles and responsibilities.
Regardless of the business structure, your agreement should require proof of the coworking company’s insurance coverage naming the bar or restaurant as an additional insured. The agreement should contain language indemnifying your bar or restaurant from liability arising from the acts of the coworking company and its customers.
Security for You and Your Guests
Restaurant and bar owners should also consider enhancing security and surveillance systems and ensure that any alterations to the space performed by the coworking company comply with applicable laws and regulations.
With the continued rise of the gig economy, temporary coworking spaces are exploding in popularity. A carefully drafted agreement with a coworking operator can help ensure a successful and profitable relationship for years to come.
Looking for more content like this? Check out the latest issue of the Florida Restaurant & Lodging magazine here.