Due to a real lack of supply of premises on the market, and ever-increasing rents being demanded by both landlords and outgoing tenants, coffee shops and start-ups are looking at alternative ways to operate to make use of available property stock.
Premises in shop use (Class A1) are able to change to café use (Class A3) providing that the premises is less than 150m2 and subject to the Prior Approval from the Local Planning Authority.
When taking a new lease of premises, it is important to remember that you will not only be required to comply with the “permitted use” under the terms of the lease but will also need to comply with the use permitted under planning legislation.
Most restaurants will operate within Use Class A3 (which permits the sale of food or drink for consumption of the premises or hot food for consumption off the premises).
However, a number of coffee shops, which nowadays operate as restaurants in all but name, are varying their offering to enable them to trade from A1 (or retail) premises.
This loophole has been used by Pret -a-manger, Starbucks, Costa etc. to enable them to open quickly and in locations where competition for suitable A3 premises may lead to very high rents, when in reality A1 properties are often cheaper than A3 premises due to the level of available stock available in the open market.
However, the question as to where A1 use ends and A3 begins is a tricky one.
Many think it a question as to whether you will be carrying out primary cooking on site (e.g. cooking a breakfast) as opposed to re-heating pre-prepared food, or keeping food at an ambient temperature.
While this goes some way towards the distinction it is not the be all and end all.
In reality the decision will vary from local authority to local authority.
Most of them will most likely take the availability of existing amenities and prevailing use classes in their local area into account.
Councils may also consider the percentage of your business involved in the sale of food, the number of covers at the premises and whether you require extraction for your kitchen.
If you operate your premises in breach of the authorised planning use the local authority may seek to take enforcement action and could ultimately prevent you from operating from the premises.
If your business plan involves an all-day offering and you intend to serve alcohol you will also need to consider applying for a premises licence.
While somewhat of an anomaly it is possible to obtain a license permitting the sale of alcohol for consumption on the premises for an A1 retail site.
So what should be considered when applying for a license for your new coffee shop.
With all licensing matters, the complexity of, or ease of the process is dependent on the Local Authority’s procedures but nothing bars an operator from applying for a Premises Licence to sell alcohol from an A1 site.
However there are certain matters which require early consideration.
The current principles as far as the Home Office Guidance to the Licensing Act 2003 is concerned is that the licensing and planning regimes ‘Involve consideration of different (albeit related) matters. Licensing Committees are not bound by decisions made by a Planning Committee and vice versa.
Some Councils will grant a Premises Licence permitting the sale of alcohol without the appropriate planning permission being in place at that stage but others will simply either refuse an application or adjourn a hearing until the issue of planning has been addressed.
Once a site is located, it is therefore wise to obtain advice from a licensing expert, familiar with the process and certainly familiar with Council procedures.
It is prudent to check the terms of the lease and any existing planning permissions to identify any restrictions for example, on the opening times of the premises or on selling alcohol at the site.
Whether an A1 site trades as a shop or sandwich bar, a crucial issue to consider is whether the premises is located in what some Local Authorities call their Cumulative Impact areas.
If this is the case, there is a rebuttable presumption against the grant of any premises licence unless it can be shown the operation will not add to the existing problems causing crime and disorder and public nuisance in the area. This is evidentially difficult and legal advice is a must.
While the greater availability of A1 premises on the market may be better for a new entrant to the coffee shop or fast casual market, it is worth remembering that any other alterations to the premises, such as signage or extraction, will require planning permission and if you are unsure whether your use will fall within use class A1 you may wish to consider applying for a change of use to A3 at the same time.
If you are looking at taking a lease of commercial premises to run a coffee shop or food based business and need advice please call 0191.4862799 or email firstname.lastname@example.org