Typically, landlords recoup their tenant improvement allowance by charging higher rents. If a you receive $100,000 in funds from your landlord and have a ten-year lease, the landlord may charge an additional $10,000 per year in rent. This ensures that by the end of the lease, landlords have recouped their initial $100,000 investment. Rent increases can be especially burdensome during the first years in operation as you build your brand and business.
Additionally, allowances are usually determined based on construction status. For example, you might receive 50% of the total funds when your architect signs off on the project being complete, and another 50% once you're open for business. This can often be a financial burden to as you'll likely face additional costs during the construction process. Without access to the full funds from the start, you might need to seek out additional sources of funding just to get started.
Ultimately, if a landlord is seeking to recoup their initial tenant improvement throughout a lease, they will be taking a risk that the restaurant will not go out of business. A landlord will therefore want to scrutinize the financial stability of potential operators to ensure this large upfront capital will be repaid.