Before even getting to the use of the first floor, I found myself wondering if the Historic Tax options had been explored. As it was built in 1904 and as it seems it was always first floor commercial and two floors residential, can you qualify for Landmark status? If so, then you also have available the tax credits that if you can't use them yourself, you can indeed sell to help reduce the cost of the renovation. I think that while most think that the larger, more architecturally significant buildings are what should be landmarks, the little everyday type buildings are just as important to the urban core, downtown in this case, and so need to be considered important enough to save and protect as well.
As already stated, restaurants are so risky that including one in a plan to insure you can make the payments seems, well, too risky. It just appears that your first priority is to find a way to reduce the renovation costs and future ownership costs so that you have more options with funding the payments.