7 ms·

Trying to open an S.F. ice cream shop, was no match for city bureaucracy

126 points by jseliger 6y ago

pvarangot 6y ago
He was one block away from Garden Creamery and across the street from Smittens. The article mentions that a competing shop was the first one to object, but that didn't work. I wouldn't be surprised if the same people were "motivating" the city to be strict with permits the whole time.
- nickff 6y ago
  Entrenched market participants often participate in the regulation process, and use it to build a defensive 'moat' around their business.
  - antiterra 6y ago
    Such a moat is possibly to their own detriment, due to the success business clustering can bring.
    - munk-a 6y ago
      I think it's unimpeachable to say that this sort of anti-competitive behavior is to the public detriment but companies continue to pursue it due to the fact that it is an effective (if slimy) way to protect revenue.
      - antiterra 6y ago
        Successful may not mean optimal, business clustering is generally considered to provide mutual benefit. I would guess there is a point of diminishing returns, so maybe there’s rational motivation to gatekeep when the cluster hits a certain size. https://www.npr.org/templates/story/story.php?storyId=121304873 https://www.npr.org/templates/story/story.php?storyId=121304... https://www.planetizen.com/node/65765 https://www.planetizen.com/node/65765
- HarryHirsch 6y ago
  You see that very much anywhere where an outsider wants to disrupt entrenched market participants - they have a friend on the city council while you do not. This sort of corruption isn't at all confined to San Francisco. In my corner of the forest, someone tried to get permits for an apartment complex that would have relieved pressure on the rental market and cut into the profits of the established landowners. No permits for him, and the rent remains too high!
  - bombcar 6y ago
    It’s exacerbated by the fact that those against it will go and bitch to the city, but those who don’t care will do and say nothing. It’s rare to find rabid fans of a new building to come out in support.
    - dwaltrip 6y ago
      I wonder if there are any ways to modify processes to account mitigate dynamics like the one you describe.
- senkora 6y ago
  It seems like it did work end in end, by sapping his funds until he was unable to enter the market.
yhoneycomb 6y ago
Sick paywall
- llacb47 6y ago
  Quit whining and comment about the substance of the article instead
  - deleted 6y ago
    [deleted]
- advisedwang 6y ago
  https://archive.is/mNiPp https://archive.is/mNiPp
- benatkin 6y ago
  I read it in Chrome Inspector.
jppope 6y ago
When I read stories like this I am always curious how "real" they are... surely San Francisco would fall into the ocean if everything was like this story. But... when I talk to people in San Francisco it sounds like this sort of thing is somewhat normal. Any SF people want to register an opinion?
- ngokevin 6y ago
  Seems like in America (or the world, or capitalism in general), incumbents have a strong grasp on everything, from business to government to land. In SF, it's magnified with the amount of space being scarce. People who were there first, whether they are homeowners or business owners, and benefit from obstructing newcomers.
  - parineum 6y ago
    The incumbent control is executed through regulations. Cities more friendly to regulation have this type of problem more often. I see this sort of thing attributed to capitalism all the time when, really, it's just corruption of the regulatory process. Corruption isn't a bug in capitalism, it's a trait of humans. Corruption has crippled bodies of all types, from the UN to my HOA. With zero regulation this problem wouldn't exist. The guy would rent the space and open an ice cream shop in days, if not weeks. There might be rat feces in the chocolate chip but he'd be selling it.
    - munk-a 6y ago
      Well, with zero regulation this guy would open up his shop and the other business owners would just dump trash outside of his door until he's forced to move away (or, like, worse). Regulations work both ways and even the regulation here (restricting the opening of a new business) is something that can and has benefited small business - lest we forget when Walmart aggressively forced out competitors with heavy market saturation before consolidating services into infrequent super-stores.
      - username90 6y ago
ghughes 6y ago
> That’s when Yu started having second thoughts. Even after spending $200,000 on rent, an architect, a lawyer, equipment and fees, he’d still need to pay at least $120,000 in construction on his space. And he knew he’d have to hold his grand opening in the middle of a pandemic when capacity is still limited. The article tries hard to pin the failure of this project on SF’s tedious permitting process, but it sounds like the real reason was poor timing and an unrealistic budget.
- brianwawok 6y ago
  Should it cost 200k in legal fees and 18 months of politics to open an ice cream shop? Is that the kind of world you want to live in? I could open an ice cream shop in 90 days here... seems a bit more sane.
  - s17n 6y ago
    I think the 200k was mostly rent.
    - dionidium 6y ago
      You have to pay rent while you navigate the permitting and inspection process. Edit: What I'm saying is that if you spend a year paying rent on an unopened shop while waiting on a permit, then that is properly understood as a cost of the permit.
      - est31 6y ago
        Should it take a year to open an ice cream shop? I get it when you want to build a GW scale nuclear reactor or a vaccine manufacturing plant that it takes a year of permits or longer. But an ice cream shop.
        dionidium 6y ago
        No, obviously not. That's what I'm saying. If you spend a year paying rent on an unopened shop while waiting on a permit, then that is properly understood as a cost of the permit. What did you think I was saying? (I'll just edit the comment to make that clear.)
influx 6y ago
This isn't even the first ice cream parlour in SF that has had this happen: https://boingboing.net/2012/02/04/on-the-horrors-of-getting-appr.html https://boingboing.net/2012/02/04/on-the-horrors-of-getting-...
s17n 6y ago
The article does not do a good job of explaining the issue, as far as I can tell what happened is: 1. SF allows neighborhood objections to new businesses, in this case his potential competitors used the objection process to cost him 6 months. 2. After making it through the objection process, it took another 6 months for the city to issue all the permits that he needed. Rent on the space is $7300 a month so this cost him $87600 in addition to whatever he spent on lawyers and his own energy.
- fridif 6y ago
  Sounds like a place that really doesn't want small businesses.
  - Apes 6y ago
    Big businesses are banned too, so really it's just about making sure those who were here first are sheltered from any newcomers. It's like Trumpism for liberals. edit because hacker news won't let me reply: Big Businesses are literally banned from most places in San Francisco. If a business is over a certain size, they cannot open a franchise in around 90% of San Francisco. Last I heard, the cutoff was 6 franchise locations -- any bigger any you can't get approval. There are a couple of areas in the city where exceptions are made, but that's a very small part of the city.
    - throwaway8581 6y ago
      Big businesses can afford to swallow upfront costs like that. Individual people using their savings to start a small business can't.
    - solarkraft 6y ago
      Big businesses are more likely to be able to clear that cost of entry.
    - boringg 6y ago
      My favorite example is that Blue Bottle a san francisco based coffee company that started as a super tiny shop ended up becoming one of the big companies and had a difficult time opening up coffee shops in the neighborhood due to the 6 franchise location. To be fair - it did take a lot of VC money to build out the company and it has a pretty impressive footprint. Still kind of funny to get kicked out of your own home turf. FWIW - as a former SF resident I love the diversity of stores without all the large chains coming in.
Quarrelsome 6y ago
Sooooo idk about this stuff but isn't starting to pay the rent before you have permission a bit questionable?
- parineum 6y ago
  I imagine it'd be hard to get a permit to open up a shop at a property you don't own/rent.
  - Quarrelsome 6y ago
    right but this dude has basically hired a place for a year to do something he isn't allowed to do. Are we looking for reforms that would allow one to apply for a place you don't currently own to avoid this glum state of affairs?
    - fredophile 6y ago
      You'd apply for permits on a place you aren't renting just in the hopes that its still vacant and available when you get the permit?
    - parineum 6y ago
      That creates an entirely different set of problems though. You'd have to predict a space that was opening to apply for the permit. Then "local" businesses can object so you couldn't just get a blanket permit, it'd have to be for the specific place, so you just have to wait around until that storefront is vacant? If you start while it's vacant, it'd be pretty terrible if you went through the whole process only to have someone else beat you to it. If you only allow one process at a time, you're stopping the property owner from collecting rent during that process. Any regulatory process that takes time shifts some cost onto someone.
    - eklitzke 6y ago
      There is Prop H which recently passed which seeks to expedite the process of opening a business in SF when it goes through the planning council phase. I don't think it's realistic to allow people to get permitting when they don't have an address yet for the business, since the precise business location is needed to assess the business application.
failwhaleshark 6y ago
What aspects of this are actually SF-specific ice creamism, is there political chicanery preventing this category of business, not understanding the permitting process/timeframe, or spending lots of money without derisking the project? Or is it/also a "gubberment regulation always bad," "anarchism/libertarianism small gubberment always good" hit piece?
- whydoineedthis 6y ago
  The SF permit process allowed nearby businesses to object for whatever reason, creating an almost 1 year waiting period for the trial. The city also drags its feet in issuing permits. All that time a tenant has to pay rent, business or no business, so these anti-competitive rules and waiting periods really are bad for starting small businesses. With SF rent prices, 2 year is about $180,000.....and that's before you even purchased equipment and furniture. I think it changed now that Prop-H passed, but he was already broke and tired by then.
  - failwhaleshark 6y ago
    Nearby businesses objecting.. That's like In-N-Out saying Whataburger can't open near it. Wow, that is/was such an incumbent advantage. Yeah, the rent in Manhattan/SF/etc. is sometimes more costly that the entire staff for a year AND the fixtures. There's motivations to throw those kinds of places together ASAP with contractors working 24/7 until it's ready to launch. Not having the permits together, aggressive timeline, and everything lined-up to launch ahead-of-time is just too risky.
whydoineedthis 6y ago
if you google, you can find a reddit thread that has the full text. The tl;dr is that he paid $7,500 * 24 months ($180,000) in rent before deciding to give up. 1 year of that was held up by competitors directly nearby filing to block his permits, so he had to wait for court case. The other year was in architecture planning and permits (which included health permits since it was food related). And he then estimated an additional $120k (plus ongoing rent) to actually build, so he gave up. Prop-H apparently did away with the anti-competitive allowance of nearby businesses to object and it forces the city to respond to permit request in 30 days. But unfortunately, he has already enriched a landlord for two years in the process.
- boringg 6y ago
  Where was the ice cream shop located? In Hayes Valley or on Divisadero (couple shops already up there)
  - crooked-v 6y ago
    The funny/sad part about the direct objections by competitors is that business clustering is usually a good thing for all the businesses involved, in part because people more distinctly remember the area ("that block with the ice cream shops", "that place out by the mall with those furniture stores", etc).
- nipponese 6y ago
  What happens if the city doesn't respond to permit requests in 30 days?
  - mywittyname 6y ago
    Presumably they can be sued for economic damages.
    - benatkin 6y ago
      As a taxpayer, it's kind of like suing yourself. The only recourse is to move out of SF.
undefined1 6y ago
building in SF is all but illegal. related; "San Francisco Man Has Spent 4 Years and $1 Million Trying to Get Approval to Turn His Own Laundromat Into an Apartment Building" https://reason.com/2018/02/21/san-francisco-man-has-spent-4-years-1-mi/ https://reason.com/2018/02/21/san-francisco-man-has-spent-4-...
- hitekker 6y ago
  > When Tillman said he saw his project as necessary so people like his daughter could afford to come back and live in the city, one particularly motivated activist said she wished his daughter was killed in a terrorist attack Jesus. I thought Reason was being melodramatic but the less partisan Curbed was even more explicit: > According to Tillman, the commenter asked him where his daughter lived and, when he answered Boston, she reportedly said that she wished his daughter had been blown up (presumably in the Boston Marathon bombing).
mbostleman 6y ago
That is takes $320k and 12-18 months to stand up a new retail space with a full interior refresh in a city like San Francisco is not that surprising. Also, not that it takes anything away from the point of the article, but it seems like Mr. Yu may have committed more cash up front than was necessary. I could be wrong but rent, legal, and architect seems like it could have been half that. Sweat equity excluded of course.
- tango118 6y ago
  Rent alone was almost $200k. You're saying that he could have gotten the space for half the rent he actually paid? How did you determine this?
blobbers 6y ago
He probably should have negotiated (ahead of time) with the landlord. The landlord isn't making any money with the building sitting empty, so doing some kind of venture debt or profit share with the landlord w/ lower rent during the permitting phase would have made sense. The alternative is the landlord had other tenants lined up, in which case the free market problem is more that there is not enough commercial space available in SF (probably true) or that the income from an ice cream parlor isn't sufficient to support a $7300 / month location (which in pandemic times it isn't, hence him giving up).
- username90 6y ago
  The city didn't allow his shop to open, the merit of the business was never tested. After two years they still hadn't sorted it out, and he has to pay rent throughout the process. After that he had so much debt he gave up.
SquibblesRedux 6y ago
After looking through the San Francisco Planning Department Discretionary Review (Abbreviated Analysis)[1] on this case, I feel like the article in the San Francisco Chronicle did a very superficial job of covering the issues involved. Like many other news stories, there is quite a bit more detail to the story that was not addressed. [1] https://commissions.sfplanning.org/cpcpackets/2020-000909DRP.pdf https://commissions.sfplanning.org/cpcpackets/2020-000909DRP...
- rdtwo 6y ago
  Minor issue of lies on the application
munk-a 6y ago
I must say I am a tad bit confused why the business has a not insignificant social media presence including testimonials if they were never able to open. I understand that marketing is part of running any sort of public facing service these days but that's got to cost a fair amount of spend to build up.
sombremesa 6y ago
This is one reason why the "launch now" and "stay nimble" ethos is so powerful. Instead of wasting time and money like this, one could start a simple stall or a food truck and spend some time reducing operational risk and building a brand before going for the big time.
- grandmczeb 6y ago
  SF is one of the most difficult cities in the country to launch a food truck[1]. It's not atypical to take a year to get the permits to operate. [1] https://www.foodtrucknation.us/wp-content/themes/food-truck-nation/Food-Truck-Nation-Full-Report.pdf https://www.foodtrucknation.us/wp-content/themes/food-truck-...
  - sombremesa 6y ago
    Where do you think this person would be today if they'd tried to open a food truck instead?
    - grandmczeb 6y ago
      It’s pretty likely they’d still be waiting for permits. The “nimble” option isn’t opening a food truck in SF, it’s opening in a different city/state that’s easier to do business in.
ijustwanttovote 6y ago
Seems like he had some unrealistic expectations, though. He spent 200k on an ice cream shop without any construction? When you get a lease, you try to get the landlord to offer you free rent until you open or at least 3-6 months. I owned and operated an ice cream shop before, I just think 200k is unbelievable. But it should not take 18 months to open a shop either. I fault SF for that.
djohnston 6y ago
I feel bad for this guy. One question: > He spent several months searching for the perfect space and landed on the 20th Street site in June 2019, signing a lease for $7,300 a month. He hired an architect to draw up plans to upgrade the electrical and plumbing systems, build a front counter and install kitchen equipment. He planned no structural changes or modifications to the building’s exterior. If you're leasing the space why are you responsible for these sort of renovations? Shouldn't they be on the owner to upgrade things like plumbing, electrical, etc?
- pvarangot 6y ago
  It depends on your agreement with the landlord. He probably negotiated a lower rate in exchange for doing the renovations.
- sethhochberg 6y ago
  I've posted about it elsewhere in the comments here, but it is extremely common for commercial leases to be "shell" leases - basically, leasing an unfinished interior that the tenant customizes to their requirements. Different businesses have radically different interior needs, so if a space can have multiple potential uses the landlord often won't bother trying to commit the space to a particular business like a restaurant space, retail space, etc. Tenants get exactly their finishes and furnishings to spec, landlord doesn't have to guess how tenants will want to use the space. Others have posted about how it is also somewhat common for landlords to cover some of these conversion expenses as a concession. "Warm shell" would typically be a space which is mostly ready for occupancy, has HVAC and lighting and bathrooms, etc. "Cold shell" means the utility hookups exist but don't go anywhere and there is essentially nothing in the space.
DoreenMichele 6y ago
At $7300/month rent, you would need to average about $243.33 per day in profit just to cover the rent, not counting staff wages or other overhead. Restaurants are notoriously hard to start. They have slim profit margins and other challenges. It's part of why franchises thrive in the food industry: A franchise has a proven model that can work and, even so, it's not guaranteed to work. I know it may be due at least in part to spin -- because the article is about San Francisco and Prop H -- but not one word was said about how much research was done to pen out potential costs, demand, etc. It says he spent time looking for "the perfect" storefront and signed a lease. How perfect was it when there were two nearby competitors and a process that let them actively hinder its opening? I'm not trying to blame him. I'm kind of thinking out loud here. I'm not in San Francisco. I don't know how easy it was for any random person to be able to predict some of these critical factors. But I feel like if you actually pen this out and determine you need $xxx in daily sales in a neighborhood with two competitors, it only makes financial sense if they have lines out the door and down the block because no one can get enough ice cream in that neighborhood. Green tea ice cream is also something that sounds crazy to me. It sounds like one of those things only the person dreaming it up sees any real value in. I've never heard of green tea ice cream before. Now I'm curious where you would find solid info on how to actually plan out a restaurant opening that has some hope of success.
- username90 6y ago
  > but not one word was said about how much research was done to pen out potential costs, demand, etc. Because it doesn't matter, he didn't even get a chance to open before burning through those 200k on rent for two years when the legal process was blocking him from opening.
  - DoreenMichele 6y ago
    He was blocked by two nearby competitors. Everyone here seems to think they are just being greedy and corrupt and don't have a valid objection. Maybe there simply isn't enough demand to support three ice cream shops. Alternate story in a universe where he got to open: "All three shops have died, unable to survive the pandemic and general lack of demand for ice cream. The other two might have survived the pandemic had a third shop not opened in the neighborhood. Now he's just as deeply in debt as in this universe and other lives were also ruined." You don't know that the alternate path is all happy, shiny success and only did not happen because evil bureaucracy, bwa ha ha.
rdtwo 6y ago
The actual accusation is that they lied on the application and misrepresented themselves as a business but were actually a franchise
- pvarangot 6y ago
  There's an ice cream franchise across the street using the same "trick" they tried to use were they say they operate independently of the other stores. Also Everlane, a clothing brand, is allowed to operate in Valencia for whatever reason, they have seven stores, three of them in malls, and do most manufacture in Asia... The whole non-franchise thing is completely broken, it's actually used by franchises already on the street to stop competition from settling in.
- username90 6y ago
  If so why did it take two years and not two weeks to tell him he wasn't allowed to open? Such a small error should be cleared up in no time.
gazoakley 6y ago
Wherein San Francisco wants to confiscate your ice cream cones: https://www.youtube.com/watch?v=QOreHYVTHGA https://www.youtube.com/watch?v=QOreHYVTHGA (from https://www.dnalounge.com/backstage/log/2011/08/19.html https://www.dnalounge.com/backstage/log/2011/08/19.html)

126 points by jseliger 6y ago

He was one block away from Garden Creamery and across the street from Smittens. The article mentions that a competing shop was the first one to object, but that didn't work. I wouldn't be surprised if the same people were "motivating" the city to be strict with permits the whole time.

nickff 6y ago
Entrenched market participants often participate in the regulation process, and use it to build a defensive 'moat' around their business.
- antiterra 6y ago
  Such a moat is possibly to their own detriment, due to the success business clustering can bring.
  - munk-a 6y ago
    I think it's unimpeachable to say that this sort of anti-competitive behavior is to the public detriment but companies continue to pursue it due to the fact that it is an effective (if slimy) way to protect revenue.
    - antiterra 6y ago
      Successful may not mean optimal, business clustering is generally considered to provide mutual benefit. I would guess there is a point of diminishing returns, so maybe there’s rational motivation to gatekeep when the cluster hits a certain size. https://www.npr.org/templates/story/story.php?storyId=121304873 https://www.npr.org/templates/story/story.php?storyId=121304... https://www.planetizen.com/node/65765 https://www.planetizen.com/node/65765
HarryHirsch 6y ago
You see that very much anywhere where an outsider wants to disrupt entrenched market participants - they have a friend on the city council while you do not. This sort of corruption isn't at all confined to San Francisco. In my corner of the forest, someone tried to get permits for an apartment complex that would have relieved pressure on the rental market and cut into the profits of the established landowners. No permits for him, and the rent remains too high!
- bombcar 6y ago
  It’s exacerbated by the fact that those against it will go and bitch to the city, but those who don’t care will do and say nothing. It’s rare to find rabid fans of a new building to come out in support.
  - dwaltrip 6y ago
    I wonder if there are any ways to modify processes to account mitigate dynamics like the one you describe.
senkora 6y ago
It seems like it did work end in end, by sapping his funds until he was unable to enter the market.

yhoneycomb 6y ago

Sick paywall

llacb47 6y ago
Quit whining and comment about the substance of the article instead
- deleted 6y ago
  [deleted]
advisedwang 6y ago
https://archive.is/mNiPp https://archive.is/mNiPp
benatkin 6y ago
I read it in Chrome Inspector.

jppope 6y ago

When I read stories like this I am always curious how "real" they are... surely San Francisco would fall into the ocean if everything was like this story. But... when I talk to people in San Francisco it sounds like this sort of thing is somewhat normal. Any SF people want to register an opinion?

ngokevin 6y ago
Seems like in America (or the world, or capitalism in general), incumbents have a strong grasp on everything, from business to government to land. In SF, it's magnified with the amount of space being scarce. People who were there first, whether they are homeowners or business owners, and benefit from obstructing newcomers.
- parineum 6y ago
  The incumbent control is executed through regulations. Cities more friendly to regulation have this type of problem more often. I see this sort of thing attributed to capitalism all the time when, really, it's just corruption of the regulatory process. Corruption isn't a bug in capitalism, it's a trait of humans. Corruption has crippled bodies of all types, from the UN to my HOA. With zero regulation this problem wouldn't exist. The guy would rent the space and open an ice cream shop in days, if not weeks. There might be rat feces in the chocolate chip but he'd be selling it.
  - munk-a 6y ago
    Well, with zero regulation this guy would open up his shop and the other business owners would just dump trash outside of his door until he's forced to move away (or, like, worse). Regulations work both ways and even the regulation here (restricting the opening of a new business) is something that can and has benefited small business - lest we forget when Walmart aggressively forced out competitors with heavy market saturation before consolidating services into infrequent super-stores.
    - username90 6y ago

ghughes 6y ago

> That’s when Yu started having second thoughts. Even after spending $200,000 on rent, an architect, a lawyer, equipment and fees, he’d still need to pay at least $120,000 in construction on his space. And he knew he’d have to hold his grand opening in the middle of a pandemic when capacity is still limited. The article tries hard to pin the failure of this project on SF’s tedious permitting process, but it sounds like the real reason was poor timing and an unrealistic budget.

brianwawok 6y ago
Should it cost 200k in legal fees and 18 months of politics to open an ice cream shop? Is that the kind of world you want to live in? I could open an ice cream shop in 90 days here... seems a bit more sane.
- s17n 6y ago
  I think the 200k was mostly rent.
  - dionidium 6y ago
    You have to pay rent while you navigate the permitting and inspection process. Edit: What I'm saying is that if you spend a year paying rent on an unopened shop while waiting on a permit, then that is properly understood as a cost of the permit.
    - est31 6y ago
      Should it take a year to open an ice cream shop? I get it when you want to build a GW scale nuclear reactor or a vaccine manufacturing plant that it takes a year of permits or longer. But an ice cream shop.
      - dionidium 6y ago
        No, obviously not. That's what I'm saying. If you spend a year paying rent on an unopened shop while waiting on a permit, then that is properly understood as a cost of the permit. What did you think I was saying? (I'll just edit the comment to make that clear.)

influx 6y ago

This isn't even the first ice cream parlour in SF that has had this happen: https://boingboing.net/2012/02/04/on-the-horrors-of-getting-appr.html https://boingboing.net/2012/02/04/on-the-horrors-of-getting-...

s17n 6y ago

The article does not do a good job of explaining the issue, as far as I can tell what happened is: 1. SF allows neighborhood objections to new businesses, in this case his potential competitors used the objection process to cost him 6 months. 2. After making it through the objection process, it took another 6 months for the city to issue all the permits that he needed. Rent on the space is $7300 a month so this cost him $87600 in addition to whatever he spent on lawyers and his own energy.

fridif 6y ago
Sounds like a place that really doesn't want small businesses.
- Apes 6y ago
  Big businesses are banned too, so really it's just about making sure those who were here first are sheltered from any newcomers. It's like Trumpism for liberals. edit because hacker news won't let me reply: Big Businesses are literally banned from most places in San Francisco. If a business is over a certain size, they cannot open a franchise in around 90% of San Francisco. Last I heard, the cutoff was 6 franchise locations -- any bigger any you can't get approval. There are a couple of areas in the city where exceptions are made, but that's a very small part of the city.
  - throwaway8581 6y ago
    Big businesses can afford to swallow upfront costs like that. Individual people using their savings to start a small business can't.
  - solarkraft 6y ago
    Big businesses are more likely to be able to clear that cost of entry.
  - boringg 6y ago
    My favorite example is that Blue Bottle a san francisco based coffee company that started as a super tiny shop ended up becoming one of the big companies and had a difficult time opening up coffee shops in the neighborhood due to the 6 franchise location. To be fair - it did take a lot of VC money to build out the company and it has a pretty impressive footprint. Still kind of funny to get kicked out of your own home turf. FWIW - as a former SF resident I love the diversity of stores without all the large chains coming in.

Quarrelsome 6y ago

Sooooo idk about this stuff but isn't starting to pay the rent before you have permission a bit questionable?

parineum 6y ago
I imagine it'd be hard to get a permit to open up a shop at a property you don't own/rent.
- Quarrelsome 6y ago
  right but this dude has basically hired a place for a year to do something he isn't allowed to do. Are we looking for reforms that would allow one to apply for a place you don't currently own to avoid this glum state of affairs?
  - fredophile 6y ago
    You'd apply for permits on a place you aren't renting just in the hopes that its still vacant and available when you get the permit?
  - parineum 6y ago
    That creates an entirely different set of problems though. You'd have to predict a space that was opening to apply for the permit. Then "local" businesses can object so you couldn't just get a blanket permit, it'd have to be for the specific place, so you just have to wait around until that storefront is vacant? If you start while it's vacant, it'd be pretty terrible if you went through the whole process only to have someone else beat you to it. If you only allow one process at a time, you're stopping the property owner from collecting rent during that process. Any regulatory process that takes time shifts some cost onto someone.
  - eklitzke 6y ago
    There is Prop H which recently passed which seeks to expedite the process of opening a business in SF when it goes through the planning council phase. I don't think it's realistic to allow people to get permitting when they don't have an address yet for the business, since the precise business location is needed to assess the business application.

failwhaleshark 6y ago

What aspects of this are actually SF-specific ice creamism, is there political chicanery preventing this category of business, not understanding the permitting process/timeframe, or spending lots of money without derisking the project? Or is it/also a "gubberment regulation always bad," "anarchism/libertarianism small gubberment always good" hit piece?

whydoineedthis 6y ago
The SF permit process allowed nearby businesses to object for whatever reason, creating an almost 1 year waiting period for the trial. The city also drags its feet in issuing permits. All that time a tenant has to pay rent, business or no business, so these anti-competitive rules and waiting periods really are bad for starting small businesses. With SF rent prices, 2 year is about $180,000.....and that's before you even purchased equipment and furniture. I think it changed now that Prop-H passed, but he was already broke and tired by then.
- failwhaleshark 6y ago
  Nearby businesses objecting.. That's like In-N-Out saying Whataburger can't open near it. Wow, that is/was such an incumbent advantage. Yeah, the rent in Manhattan/SF/etc. is sometimes more costly that the entire staff for a year AND the fixtures. There's motivations to throw those kinds of places together ASAP with contractors working 24/7 until it's ready to launch. Not having the permits together, aggressive timeline, and everything lined-up to launch ahead-of-time is just too risky.

whydoineedthis 6y ago

if you google, you can find a reddit thread that has the full text. The tl;dr is that he paid $7,500 * 24 months ($180,000) in rent before deciding to give up. 1 year of that was held up by competitors directly nearby filing to block his permits, so he had to wait for court case. The other year was in architecture planning and permits (which included health permits since it was food related). And he then estimated an additional $120k (plus ongoing rent) to actually build, so he gave up. Prop-H apparently did away with the anti-competitive allowance of nearby businesses to object and it forces the city to respond to permit request in 30 days. But unfortunately, he has already enriched a landlord for two years in the process.

boringg 6y ago
Where was the ice cream shop located? In Hayes Valley or on Divisadero (couple shops already up there)
- crooked-v 6y ago
  The funny/sad part about the direct objections by competitors is that business clustering is usually a good thing for all the businesses involved, in part because people more distinctly remember the area ("that block with the ice cream shops", "that place out by the mall with those furniture stores", etc).
nipponese 6y ago
What happens if the city doesn't respond to permit requests in 30 days?
- mywittyname 6y ago
  Presumably they can be sued for economic damages.
  - benatkin 6y ago
    As a taxpayer, it's kind of like suing yourself. The only recourse is to move out of SF.

undefined1 6y ago

building in SF is all but illegal. related; "San Francisco Man Has Spent 4 Years and $1 Million Trying to Get Approval to Turn His Own Laundromat Into an Apartment Building" https://reason.com/2018/02/21/san-francisco-man-has-spent-4-years-1-mi/ https://reason.com/2018/02/21/san-francisco-man-has-spent-4-...

hitekker 6y ago
> When Tillman said he saw his project as necessary so people like his daughter could afford to come back and live in the city, one particularly motivated activist said she wished his daughter was killed in a terrorist attack Jesus. I thought Reason was being melodramatic but the less partisan Curbed was even more explicit: > According to Tillman, the commenter asked him where his daughter lived and, when he answered Boston, she reportedly said that she wished his daughter had been blown up (presumably in the Boston Marathon bombing).

mbostleman 6y ago

That is takes $320k and 12-18 months to stand up a new retail space with a full interior refresh in a city like San Francisco is not that surprising. Also, not that it takes anything away from the point of the article, but it seems like Mr. Yu may have committed more cash up front than was necessary. I could be wrong but rent, legal, and architect seems like it could have been half that. Sweat equity excluded of course.

tango118 6y ago
Rent alone was almost $200k. You're saying that he could have gotten the space for half the rent he actually paid? How did you determine this?

blobbers 6y ago

He probably should have negotiated (ahead of time) with the landlord. The landlord isn't making any money with the building sitting empty, so doing some kind of venture debt or profit share with the landlord w/ lower rent during the permitting phase would have made sense. The alternative is the landlord had other tenants lined up, in which case the free market problem is more that there is not enough commercial space available in SF (probably true) or that the income from an ice cream parlor isn't sufficient to support a $7300 / month location (which in pandemic times it isn't, hence him giving up).

username90 6y ago
The city didn't allow his shop to open, the merit of the business was never tested. After two years they still hadn't sorted it out, and he has to pay rent throughout the process. After that he had so much debt he gave up.

SquibblesRedux 6y ago

After looking through the San Francisco Planning Department Discretionary Review (Abbreviated Analysis)[1] on this case, I feel like the article in the San Francisco Chronicle did a very superficial job of covering the issues involved. Like many other news stories, there is quite a bit more detail to the story that was not addressed. [1] https://commissions.sfplanning.org/cpcpackets/2020-000909DRP.pdf https://commissions.sfplanning.org/cpcpackets/2020-000909DRP...

rdtwo 6y ago
Minor issue of lies on the application

munk-a 6y ago

I must say I am a tad bit confused why the business has a not insignificant social media presence including testimonials if they were never able to open. I understand that marketing is part of running any sort of public facing service these days but that's got to cost a fair amount of spend to build up.

sombremesa 6y ago

This is one reason why the "launch now" and "stay nimble" ethos is so powerful. Instead of wasting time and money like this, one could start a simple stall or a food truck and spend some time reducing operational risk and building a brand before going for the big time.

grandmczeb 6y ago
SF is one of the most difficult cities in the country to launch a food truck[1]. It's not atypical to take a year to get the permits to operate. [1] https://www.foodtrucknation.us/wp-content/themes/food-truck-nation/Food-Truck-Nation-Full-Report.pdf https://www.foodtrucknation.us/wp-content/themes/food-truck-...
- sombremesa 6y ago
  Where do you think this person would be today if they'd tried to open a food truck instead?
  - grandmczeb 6y ago
    It’s pretty likely they’d still be waiting for permits. The “nimble” option isn’t opening a food truck in SF, it’s opening in a different city/state that’s easier to do business in.

ijustwanttovote 6y ago

Seems like he had some unrealistic expectations, though. He spent 200k on an ice cream shop without any construction? When you get a lease, you try to get the landlord to offer you free rent until you open or at least 3-6 months. I owned and operated an ice cream shop before, I just think 200k is unbelievable. But it should not take 18 months to open a shop either. I fault SF for that.

djohnston 6y ago

I feel bad for this guy. One question: > He spent several months searching for the perfect space and landed on the 20th Street site in June 2019, signing a lease for $7,300 a month. He hired an architect to draw up plans to upgrade the electrical and plumbing systems, build a front counter and install kitchen equipment. He planned no structural changes or modifications to the building’s exterior. If you're leasing the space why are you responsible for these sort of renovations? Shouldn't they be on the owner to upgrade things like plumbing, electrical, etc?

pvarangot 6y ago
It depends on your agreement with the landlord. He probably negotiated a lower rate in exchange for doing the renovations.
sethhochberg 6y ago
I've posted about it elsewhere in the comments here, but it is extremely common for commercial leases to be "shell" leases - basically, leasing an unfinished interior that the tenant customizes to their requirements. Different businesses have radically different interior needs, so if a space can have multiple potential uses the landlord often won't bother trying to commit the space to a particular business like a restaurant space, retail space, etc. Tenants get exactly their finishes and furnishings to spec, landlord doesn't have to guess how tenants will want to use the space. Others have posted about how it is also somewhat common for landlords to cover some of these conversion expenses as a concession. "Warm shell" would typically be a space which is mostly ready for occupancy, has HVAC and lighting and bathrooms, etc. "Cold shell" means the utility hookups exist but don't go anywhere and there is essentially nothing in the space.

DoreenMichele 6y ago

At $7300/month rent, you would need to average about $243.33 per day in profit just to cover the rent, not counting staff wages or other overhead. Restaurants are notoriously hard to start. They have slim profit margins and other challenges. It's part of why franchises thrive in the food industry: A franchise has a proven model that can work and, even so, it's not guaranteed to work. I know it may be due at least in part to spin -- because the article is about San Francisco and Prop H -- but not one word was said about how much research was done to pen out potential costs, demand, etc. It says he spent time looking for "the perfect" storefront and signed a lease. How perfect was it when there were two nearby competitors and a process that let them actively hinder its opening? I'm not trying to blame him. I'm kind of thinking out loud here. I'm not in San Francisco. I don't know how easy it was for any random person to be able to predict some of these critical factors. But I feel like if you actually pen this out and determine you need $xxx in daily sales in a neighborhood with two competitors, it only makes financial sense if they have lines out the door and down the block because no one can get enough ice cream in that neighborhood. Green tea ice cream is also something that sounds crazy to me. It sounds like one of those things only the person dreaming it up sees any real value in. I've never heard of green tea ice cream before. Now I'm curious where you would find solid info on how to actually plan out a restaurant opening that has some hope of success.

username90 6y ago
> but not one word was said about how much research was done to pen out potential costs, demand, etc. Because it doesn't matter, he didn't even get a chance to open before burning through those 200k on rent for two years when the legal process was blocking him from opening.
- DoreenMichele 6y ago
  He was blocked by two nearby competitors. Everyone here seems to think they are just being greedy and corrupt and don't have a valid objection. Maybe there simply isn't enough demand to support three ice cream shops. Alternate story in a universe where he got to open: "All three shops have died, unable to survive the pandemic and general lack of demand for ice cream. The other two might have survived the pandemic had a third shop not opened in the neighborhood. Now he's just as deeply in debt as in this universe and other lives were also ruined." You don't know that the alternate path is all happy, shiny success and only did not happen because evil bureaucracy, bwa ha ha.

rdtwo 6y ago

The actual accusation is that they lied on the application and misrepresented themselves as a business but were actually a franchise

pvarangot 6y ago
There's an ice cream franchise across the street using the same "trick" they tried to use were they say they operate independently of the other stores. Also Everlane, a clothing brand, is allowed to operate in Valencia for whatever reason, they have seven stores, three of them in malls, and do most manufacture in Asia... The whole non-franchise thing is completely broken, it's actually used by franchises already on the street to stop competition from settling in.
username90 6y ago
If so why did it take two years and not two weeks to tell him he wasn't allowed to open? Such a small error should be cleared up in no time.

gazoakley 6y ago

Wherein San Francisco wants to confiscate your ice cream cones: https://www.youtube.com/watch?v=QOreHYVTHGA https://www.youtube.com/watch?v=QOreHYVTHGA (from https://www.dnalounge.com/backstage/log/2011/08/19.html https://www.dnalounge.com/backstage/log/2011/08/19.html)