Occupancy Cost Ratio
This tool unlocks when we launch paid plans
We're putting the finishing touches on secure checkout. Meanwhile, every free tool on franbase.ai is open — try one and see the value first.
Want first access when it opens? Create a free account and we'll let you know.
What this tool does
Check rent + occupancy as a share of revenue against healthy benchmarks, and your max sustainable rent.
Other tools for this stage
- Ops CopilotDescribe what's going wrong in the unit; get causes, this week's actions, and metrics.
- Multi-Unit BenchmarkPut your units side by side — find the drag, and what closing the gap is worth.
- FDD Builder AIFor franchisors: your disclosure outline, the data to gather, and the earnings-claim call.
- Break-Even CalculatorThe revenue — and customer count — a unit needs each month before it makes a cent.
- Working Capital & RunwayModel the ramp-up: the working capital a unit burns before break-even, and whether your reserve survives it.
- Prime Cost CalculatorCOGS plus labour as a share of revenue — the master health metric for a food or retail unit, rated.
What this calculates
Expresses rent plus service charge, insurance and property taxes as a share of revenue, and works the calculation backwards to give the maximum rent your projected revenue can sustain. Occupancy is a fixed commitment for the length of a lease, which is what makes it different from every other cost line.
What you will need
Full occupancy cost. Not just base rent. Service charges, insurance, property taxes and any turnover rent all belong here — base rent alone routinely understates the true commitment.
Realistic annual revenue. Use a conservative figure. The ratio is a risk measure, and calculating it against your optimistic case defeats the point.
How to read the result
A high ratio is not automatically wrong, but it changes what the site has to deliver: expensive locations must produce proportionally more revenue per square metre to justify themselves, and the ratio tells you how much more. The maximum sustainable rent figure is the one to take into a negotiation, because it converts an abstract worry into a walk-away number. And remember the asymmetry — if revenue falls, rent does not, so a ratio that is merely uncomfortable at plan becomes dangerous in a downturn.
Questions about this tool
What is a healthy occupancy ratio?
It varies by sector and by format, and any single number quoted as universal should be treated with suspicion. Compare against your own other units and against what the site must earn to work, rather than against a rule of thumb.
Should turnover rent be included?
Yes. It is part of what you pay to occupy the site, and because it rises with revenue it changes the shape of the ratio as you grow.
My ratio is high but the location is excellent. Is that fine?
It can be, if the location genuinely delivers the extra revenue density. The test is whether it does so in your actual numbers, not whether the location feels strong.
For reference only; not legal, tax, or investment advice. Results depend entirely on the figures you enter — check them against your own quotes and your franchise agreement before acting on them.