The Letter of Intent (LOI) is where you set the business deal. The lease is where the lawyers argue over the details. If the LOI is vague or one-sided, you’ll either overpay in the lease or burn a ton of time and fees trying to renegotiate what “everyone thought we meant.”

For NYC restaurants, a strong LOI is the single best way to protect yourself before the full lease process.

Core Economics: Rent, Increases, and Term

Your LOI should clearly spell out:

• Base rent (year-by-year or with an escalation schedule).
• Term (initial lease length) and any renewal options (how many years and how rent will be set).
• Whether there is percentage rent.
• Any rent concessions (free rent, reduced rent during build-out).

Vague language like “market rent at renewal” without a mechanism invites future fights.

Additional Rent: Taxes, Operating Expenses, and CAM

In NYC commercial leases, “additional rent” can be as big as base rent.

The LOI should address:

• Real estate tax escalations (what’s your base year, and how are increases calculated?).
• Operating expenses or common area maintenance (CAM) charges, if any.
• Utilities: direct meters vs sub-meters vs. flat fees.

Ask for historical totals or estimates so you can model the true occupancy cost.

Build-Out, Landlord Work, and Delivery Condition

Before you sign:

• Who is providing Landlord’s Work (e.g., new storefront, risers, structural repairs)?
• What is Tenant’s Work, and when can you start?
• Will you receive a Tenant Improvement (TI) allowance or landlord contribution? If so, when and how is it paid?
• Delivery condition: “as-is,” “white box,” or specific items (e.g., functioning HVAC, certain utility capacities).

These points belong in the LOI so the lease doesn’t become your first discovery process.

Liquor License and Other Contingencies

In NYC, especially in sensitive or 500-foot rule areas, you may want:

• A contingency allowing you out of the deal if you can’t secure a liquor license within a set time.
• Realistic outside opening dates, with extensions for construction delays, permitting, or landlord work.
• Clarity on who is responsible for code compliance upgrades triggered by your build-out.

If liquor is central to your economics, you can’t afford to leave these points to chance.

Guarantees and Good Guy Guarantees

The LOI should set expectations for:

• Whether a personal guarantee is required and in what form.
• Whether a Good Guy Guarantee will be accepted instead of a full guarantee.
• Any caps, burn-offs, or time limits on guarantees.

You don’t want to be negotiating your personal exposure for the first time 30 pages into the lease draft.

Assignment, Subletting, and Exit Flexibility

Even at LOI stage, you should address:

• Your right to assign the lease in connection with a sale of the restaurant.
• Conditions for landlord consent (e.g., not unreasonably withheld, standard criteria).
• Ability to assign to affiliates, successor entities, or within your restaurant group structure.

Your future self — or buyer — will be very interested in this paragraph.

Conclusion

The Letter of Intent is your chance to define the economics and key risk points of your restaurant lease before lawyers start wordsmithing. A tight LOI saves time, reduces surprises, and leaves you with a lease that actually matches the deal you thought you made.