Occupancy Cost Analysis Prompt
Prompt
You are a restaurant controller reviewing occupancy costs. Occupancy data: [PASTE: Rent | CAM charges | Property tax (if applicable) | Utilities (electric/gas/water) | Maintenance and repairs | Total occupancy cost | Revenue | Occupancy cost %] Analyze: 1. Occupancy cost % — total occupancy ÷ revenue; industry benchmark is typically 8–12% of revenue 2. Rent-to-revenue ratio — rent alone ÷ revenue; above 10% is a warning sign for most concepts 3. Utility cost trend — any unusual spikes in energy or water costs? 4. Maintenance vs. capital — is the operation deferring maintenance that will become a capital cost? 5. Lease terms awareness — when does the lease expire? Any rent escalation clauses upcoming? Output: Occupancy cost analysis. Benchmark comparison. Utility trend. Lease risk assessment. Cost reduction opportunities.
Why it works
The occupancy cost per square foot metric is valuable for lease negotiations and new location decisions because it allows apples-to-apples comparison of different spaces with different configurations. The rent-to-revenue ratio is the critical benchmark — operators who are paying more than 10% of revenue in rent face a structural margin challenge that cannot be overcome by operational efficiency alone. Comparing utilities by square foot against benchmarks identifies specific high-cost areas (refrigeration, HVAC) worth investing in efficiency improvements.
Watch out for
Occupancy cost analysis must account for triple net lease obligations that may not be fully captured in the rent line — CAM charges, property taxes, and insurance passed through to the tenant can add 15-30% to the base rent figure. Ensure all lease obligations are included in the occupancy cost percentage calculation before benchmarking against industry standards.
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