You might be able to order a dozen delicious cupcakes online. Still, there is nothing like walking into a bakery, smelling the sweet freshness, and savoring a delectable treat with a friend.

But what if you’re a cupcake maker who can’t foot the high rent in Manhattan? Thousands of New York entrepreneurs in a similar bind are turning to the “pop-up restaurant” model, wherein they can rent a brick-and-mortar location to test the waters.

Consult a commercial lease attorney who understands how to establish a pop-up restaurant.

Rents range from a few hundred dollars to tens of thousands, depending on the lease’s length and the space’s size. Some locations are open for just a few days. Others may rent for a few weeks.

Providers of these short-term leases don’t typically charge for the list or the lease. Still, they will take a portion of the proceeds for extending limited liability insurance, temporary staffing, furniture, and lighting.

Since the recession, the temporary lease model has snowballed in recent years, with many business founders either unwilling or sometimes unable to cover the cost of a longer-term rental agreement.

This has worked quite well for certain types of retail operations. Still, it can be equally effective for those who want to gauge reception before investing in opening a storefront restaurant. Opening a new restaurant in New York City can cost half a million dollars – or more – while operating a temporary pop-up restaurant in Manhattan may cost you a few thousand dollars a week.

The result is that food tends to be less constricted and edgier. The chefs are younger. They have more money to play with than they might if they were more concerned about covering more mundane expenses.

Another spin-off of this idea was reported a few years ago in The New York Times. In that model, unremarkable restaurants open up their underused kitchens and dining rooms on certain nights and rent space to up-and-coming chefs and restaurant owners. The hope is that by providing local residents with a small taste of what they can offer, they might gain enough traction to open their location.

While this might seem counterintuitive for the restaurant renting the space (after all, you may be helping to launch a competitor), the extra income it brings in monthly can make it well worth the while. Plus, unlike underground supper clubs, they are above board.

Landlords can benefit from these agreements, too, particularly those whose spaces might otherwise remain vacant for those short stretches. Landlords find that renting to a pop-up operation while advertising for a longer-term client can help fill those gaps where they might otherwise be losing money by having the place sit empty.

Still, to ensure everyone involved is fully covered in legal considerations, engaging in at least a brief consultation with an experienced commercial lease lawyer is essential. They can review these short-term agreements and help ensure all parties understand their responsibilities and liabilities and that all necessary permits and licenses are appropriately secured.

The Wright Law Firm is a restaurant and commercial lease law firm located in Midtown Manhattan—call (212) 619-1500 for a confidential consultation.

Additional Resources:

Startup Storefront aims to help companies find short-term space for pop-up stores, Aug. 26, 2013, By Elizabeth Lazarowitz, New York Daily News

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