If you’re wondering what makes hotels so attractive to restaurateurs these days, the Real Deal has a breakdown of how it usually works.
These deals typically are worked out as management contracts or percentage rent deals. Hoteliers generally foot the bill for building out the space, and accept a lower base rent than they would from a non-brand-name restaurateur. Developers make those trade-offs expecting a big payoff from a percentage of sales — typically the additional rent is 6 to 12 percent of gross revenues. Three-star chefs often won’t have to pay any base rent, and will negotiate a minimum guarantee on their management fees.
Of course, as Marco Canora or Gordon Ramsay can tell you, it doesn’t always work out.
Hoteliers Hunt for Celeb Chefs [Real Deal]