Co-tenancy clause — Lease language that cuts rent or allows termination if a named anchor goes dark. A grocery can be the remaining tenant who suffers, or the named anchor whose closing triggers other tenants’ rights — read which side you are on.
If the grocery is the only reason a strip stays leased, the landlord may fight assignment — read the clause.
Operators, lenders, and buyers do not use this word the way a generic small-business blog uses it. On an independent grocery file it shows up in the recast, the count, or the license calendar.
Why it matters on a grocery close
A CIM that name-drops Co-tenancy clause without tying it to SDE or inventory at cost is decorating. 2.1% average net profit for food retailers in 2025 (FMI Speaks sample) is channel context. 3.38 average earnings multiple on grocery/supermarket businesses sold on BizBuySell in 2025 is a sold-sample multiple, not a definition of Co-tenancy clause.
If Co-tenancy clause changes cash at close, write the mechanic into the LOI. If it is only vocabulary, put it in a footnote and move on.
Related terms
Read EBITDA, add-backs, shrink, turns, SNAP authorization, asset sale, and DSCR as needed. The glossary hub lists the rest.
| Topic | Grocery reading | Link |
|---|---|---|
| Earnings | Recast SDE or EBITDA | SDE |
| Stockroom | Inventory at cost | inventory |
| EBT | New owner application | SNAP |
| Debt | DSCR on the recast | DSCR |
Illustrative, not a quote. For a Co-tenancy clause, recast SDE of $194,203 at 1.63×–3.15× plus $181,853 inventory at cost frames a going-concern band of about $498,404 to $793,592. The 2.32× midpoint lands near $632,404. Lease remaining term and license lag can move the check more than the multiple.
Checklist: Co-tenancy clause
- Recast the P&L into SDE
- Separate inventory at cost
- Abstract the lease
- List SNAP, alcohol, food, WIC, tobacco
- Read the wholesaler agreement
- Write license conditions into the LOI
Illustrative, not a quote. Keep the conversation on Co-tenancy clause, scan data, and license clocks — not on a neighbor’s rumor multiple.
Wholesaler over-advances are debt. They are not a cute add-back. See also SDE, inventory at cost, shrink, SNAP authorization.
SNAP authorization does not transfer. Budget downtime in cash and in the story you tell the landlord. Put it in the CIM or it will show up as a re-trade.
Unreported cash does not survive SBA. It also does not survive a serious conventional buyer. That is how a grocery file is actually read.
Ethnic mix without language on the floor is a shrink plan.
Seller notes often sit on standby behind SBA. Read the standby, not the folklore. See also turns, DSD, wholesaler, asset sale.
A CIM that omits the lease abstract is a brochure. Put it in the CIM or it will show up as a re-trade.
Selling to family or a manager still needs a real price and a real note. Soft language creates hard lawsuits. That is how a grocery file is actually read.
DSD vendors will keep delivering after a sloppy close only if someone is paying them.
Owned real estate is a second asset. Recast the store on market rent, then cap the building. See also lease diligence, liquor transfer, recasting a P&L.
Tax clearance belongs in escrow language, not in a handshake. Put it in the CIM or it will show up as a re-trade.
A rural box can be a good living and a terrible loan. Those are different questions. Put it in the CIM or it will show up as a re-trade.
DSCR is annual cash flow over annual debt service. Hope is not a ratio. See also SDE, inventory at cost, shrink, SNAP authorization.
Read DSCR, seller note, tax clearance, bulk sales. Cross-check how a sale works and the FAQ. Format pages live under sell an independent supermarket and buy an independent supermarket. Tools: valuation calculator, cash-to-close, rent checker.
SNAP authorization does not transfer. Budget downtime in cash and in the story you tell the landlord. Put it in the CIM or it will show up as a re-trade.
Unreported cash does not survive SBA. It also does not survive a serious conventional buyer. See also turns, DSD, wholesaler, asset sale.
Ethnic mix without language on the floor is a shrink plan.
Seller notes often sit on standby behind SBA. Read the standby, not the folklore. That is how a grocery file is actually read.
A CIM that omits the lease abstract is a brochure. Put it in the CIM or it will show up as a re-trade.
Selling to family or a manager still needs a real price and a real note. Soft language creates hard lawsuits. See also lease diligence, liquor transfer, recasting a P&L.
DSD vendors will keep delivering after a sloppy close only if someone is paying them.
Owned real estate is a second asset. Recast the store on market rent, then cap the building. That is how a grocery file is actually read.
Tax clearance belongs in escrow language, not in a handshake. Put it in the CIM or it will show up as a re-trade.
A rural box can be a good living and a terrible loan. Those are different questions. See also SDE, inventory at cost, shrink, SNAP authorization.
DSCR is annual cash flow over annual debt service. Hope is not a ratio. That is how a grocery file is actually read.
Comparing offers means cash at close, note terms, inventory treatment, and license risk — not the headline price.
Multi-store sales need a shared recast and a shared license calendar, or they unravel store by store. See also lease diligence, liquor transfer, recasting a P&L.
Turns are not one number. Center store and wine do not share a clock. Put it in the CIM or it will show up as a re-trade.
A below-market related-party rent juiced the earnings and will reverse on day one. That is how a grocery file is actually read.
Bulk-sale or successor-liability practice can still exist after UCC Article 6 died.
WARN and union contracts are calendar items on larger headcount files. See also SDE, inventory at cost, shrink, SNAP authorization.
Revenue multiples hide rent and labor. Use them to sanity-check, then return to SDE. Put it in the CIM or it will show up as a re-trade.