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What Happens When a Restaurant Dies
- jccooper 12y agoMaybe it's just rhetorical flourish, but the article takes a hit on the ol' credibility meter when the opening paragraph says: "The IRS comes after you because you're behind on sales taxes." IRS doesn't give a hoot about your sales taxes, except to the extent you deduct them.
- emodendroket 12y agoThe guy's not a tax expert; he's probably muddled the difference between state and federal tax authorities. That's not really the focus of the article at all.
- ChuckMcM 12y agoAgree with this. People forget that if they have no sales they still have to file their quarterly sales tax forms with 0 filled in. The tax service never 'assumes' if they didn't get the form you didn't have any sales. Unwinding that can be challenging.
- rgbrenner 12y agoNY charges sales tax on food/drinks sold in restaurants.. so they wouldn't have been filing a 0 return anyway.
- keithpeter 12y agoFerris Restaurant, Edinburgh. I went there in 1990s and again a few years ago. Family run Scottish Italian restaurant. It was a bit strange seeing the same waiter after a 20 year gap (glamorous sharp suited younger man, plump slow ponderous but amusing older man, same as me except for the suit). Closed. Overnight. A (no doubt fine) Lebanese opened instead. http://en.wikipedia.org/wiki/Kitchen_Confidential_%28book%29 http://en.wikipedia.org/wiki/Kitchen_Confidential_%28book%29
- speeder 12y agoThe theme of the article is in part how Real State can royally screw over business... A sad, really sad thing happened in Rio de Janeiro, in Brazil. The city center, had multiple very old business, a particular square, that had been a hotspot in imperial times when Rio was the Imperial Capital, had many business opened at those times, and that were still open... Business that survived many depressions, crisis, regime changes, world wars... Then because of the recent real state price boom (example: in São Paulo prices on average rose 300% in 4 years), they all got outpriced in their rent... There was 250 year old shops that were still only a single location, and still renting their original location, but landowners just bumped the rent prices up by like 100% in a single year, and kicked out all those multi-hundred year shops out. The end result looked like a sort of historic defacing, lots of shops that were there since the monarchy times, that had lots of history (for example a library where famous writers, poets and musicians used to hang out for about 200 years) were just shut down without mercy. Some people even tried to ask the government to help... But it didn't work.
- sokoloff 12y agoIt's unfortunate for those business who were unable to afford (or decided not to pay) the new rent, but IMO it would be a greater tragedy for property rights if the owners of the buildings were exposed to all the downsides of a market where rents might fall but unable to participate in the upside if rental demand and rents turned to the upside. "Heads I lose; tails nothing changes" isn't a stable economic system either.
- WalterBright 12y agoIn the US, buildings can be designated as historic landmarks and so cannot be altered in a way that would destroy that. Often it's the building owner himself getting it so designated, in exchange he gets tax breaks. It's not perfect, but it's a workable system.
- ics 12y agoLandmarks are extremely contentious and doesn't always prevent the shady actions suggested in the original article. One example from recent memory: http://www.ibtimes.com/save-rizzoli-bookstore-effort-heats-57th-street-building-defaced-critics-say-nyc-landmarks-1567229 http://www.ibtimes.com/save-rizzoli-bookstore-effort-heats-5... http://gothamist.com/2014/04/04/everybody_has_been_bought_off_-_bre.php http://gothamist.com/2014/04/04/everybody_has_been_bought_of... > Sources say Vornado Realty Trust (NYSE:VNO), which co-owns the three properties at the center of the dispute, deployed contractors to deface the exterior of the buildings in a premeditated effort to derail the landmark-evaluation process. “Preemptive demolition,” as the tactic is known, is not an uncommon strategy for property owners, which have been known to purposely disfigure a building’s distinctive features after catching wind of an effort to designate a property for landmark protection. Once the building is defaced there is no going back in the eyes of the LPC (rumours of the LPC being bought off is another matter, but even proof of such actions would not reverse this point). Generally though it is indeed a "workable system".
- patmcguire 12y agoWas struck by how they got them out despite the lease - sure, on paper you're supposed to pay x, but we want more...
- ufmace 12y agoThat sounded a bit odd - I can see the issue from either side, but why were they still paying a rent negotiated 15 years ago? Did the landlord actually sign a 15+ year contract? Did they fail to bump the rent over a couple of renewals? I'd think there's gotta be a better solution before things come to that.
- patmcguire 12y agoCommercial leases are long. 30 years isn't unheard.
- emodendroket 12y ago> I'd think there's gotta be a better solution before things come to that. Well, for whom? If you have the contract that says the rent is a quarter of the market rate why would you agree to pay more?
- ufmace 12y agoBetter for both parties, if they have a long-term outlook. I'd say you want to be paying a market rent so that your landlord is happy with you. It's in their incentive to keep you there and happy, and they're likely to go out of their way to keep you happy. If you manage to get locked into a contract to pay under market rent, then they will be unhappy with you and motivated to go out of their way to hurt your business and make your life difficult. Granted, this may not be that common of a viewpoint in the restaurant industry, though. Or in the NYC rental industry.
- arjunnarayan 12y agoBecause you should think of contracts as underspecified interfaces between two parties. If I'm actually unhappy with you and want out, I can perform my side of the deal adversarially - technically and legally in line with the contract, but otherwise not exactly what you expected. So you have some incentive to keep me happy and renegotiate up the rate voluntarily, since otherwise I will act adversarially on all the things that are not explicitly specified in the contract. This can work depending on the extent to which the contract is underspecified. You will note, for instance, that the hotel cut off room-service access to this restaurant. Clearly they didn't specify room-service availability in the contract, and so on.
- flyinghamster 12y agoIf you're in it for the long haul, then sock away money to either buy the property, or buy property elsewhere to relocate. That will go a long way towards preventing the "hey, I want a bigger cut of your action" scenario, and provide a cushion against hard times. Of course, there's also the possibility of the local government jacking up your property taxes (something that happened to a place near me).
- taion 12y agoThis really isn't practical in New York City. Almost all of these spaces are leased, even the ones for institutions like Union Square Cafe. There are very few restaurants here where the owners own the building as well.
- WillNotDownvote 12y agoMy brother is a restaurant owner. He bought the building one of his places was in, along with several other businesses. Initially it was a struggle to keep the mortgage payments going, but over time the other shops faded out and he replaced them with higher rental rate tenants. His restaurant there eventually died a slow lingering death, but even then he just got in a new tenant with higher margins that could afford more than the rent he was paying himself anyway. In any case, he's now got a lot of equity and a steady stream of income from the building. His partner in his other restaurant owns the building they're in, and also owns 3 of other 5 businesses in the building. Nice setup if you can get it.
- keevie 12y agoYeah buying space for a restaurant in new york city...doesn't happen.
- grandalf 12y agoJust logged into Yelp today to discover that some of my favorite restaurants in SF have closed!
- spiritplumber 12y agoYeah, SF is really changing face. Not sure it's a good thing.
- michaelochurch 12y agoFirst came an offer to buy out the lease from the restaurant. Once the restaurant dismissed that, the hotel's strategy changed: Starve 'em out. They cut off its room service business, then started renovations on the building during the summer (tourist season), obscuring the restaurant from public view. When that failed to drive the restaurant out, mysterious complaints to the Department of Health started coming on a weekly basis; the restaurant was shut down by the DOH no fewer than three times. OP should have outed the hotel, and given names and, if available, addresses of its owners and management. That shit may be technically legal, but it shouldn't fucking be safe.
- arjunnarayan 12y agoI mean, if DoH actually shut down the restaurant, presumably the restaurant was in fact in violation of various (at least three!) health code regulations.
- hayksaakian 12y agoThe DOH might shut down restaurants, per-emptively based on reports, before actually investigating.
- icantthinkofone 12y agoWhere? Source? I've been in the restaurant business for 30 years and have never seen or heard of that.
- deleted 12y ago[deleted]
- hayksaakian 12y agoironically, in my attempt to find a better published source, i was led to my own comment.
- llamataboot 12y ago
- arbuge 12y ago>> The IRS comes after you because you're behind on sales taxes. Nitpicking here, but that would be the state revenue department, not the IRS. The IRS doesn't collect any sales taxes afaik.
- js2 12y agoFor the past decade, the café hasn't had a lease with its landlord, the Edison Hotel. Its owner was another Holocaust survivor who said the café could stay as long as it wanted. Then, Strohl says, he died and his son took over. "He decided that he didn't want us here; he didn't want Café Edison and he wanted a white tablecloth restaurant, with a name chef," Strohl says. http://www.npr.org/blogs/thesalt/2014/12/08/369359855/dont-let-the-kasha-vanish-diners-band-together-to-save-caf-edison http://www.npr.org/blogs/thesalt/2014/12/08/369359855/dont-l... Just two weeks after Cafe Edison was forced to shutter, Jeremiah Moss finds the legendary Times Square lunch counter barren. Booths have been torn out, signage is down, and swivel stools at the lunch counter no longer have their seats. Everything is packed up in storage, with the hope that it will make an appearance if Edison owner Jordan Strohl can find an affordable new home for the restaurant. http://ny.eater.com/2015/1/5/7493575/weeks-after-closing-times-square-classic-cafe-edison-has-already-been http://ny.eater.com/2015/1/5/7493575/weeks-after-closing-tim...
- viame 12y agoIn 2007 my mom and I opened up a deli/cafe. We had previous experience in this industry so we didn't think we would struggle. We went bankrupt two years after that. It was an awesome experience. It is true the rent can kill a business but it also comes down to its location, parking, getting in a out of the parking (which pisses people off if its a busy street and they have to wait because of traffic), everything needs to be running smoothly. Starting such business is also super expensive. The good thing is that we only had to purchase the equipment. I have a construction company so the reno and everything that needed to be done was done by us. I also have a web design and marketing company so all the advertising was done in-house. These probably helped us save 50k if not more. I remember, we had snitches coming in an out who were hired by our competitors. They would also come in and look at the expiry date of every produce in hope to find something that has expired so they can make it public. In the end, we were about 100k out. Anyhow, it was an awesome businesses and people loved it, however, it just wasn't enough to keep it running.
- sumedh 12y ago> we had snitches coming in an out How did you figure out that they were snitches?
- marincounty 12y agoThe selfishness that fuels Capitalism I find sad. I know the other systems didn't pan out(yet), but the level of abject greed seems, in the long run, counterproductive? I understand making a profit; I don't understand greed. Yea--"Greed is good!" It was a movie quote. Why do I feel some people actually think it's cool now? I'm not commenting on this particular resturant, but business--even personal financial transactions seem to have gotten too cut throat? Maybe I never noticed just how greedy some entities and people are, but it seems to have gotten worse? I can't blame it on the Internet. I saw the change in the 80's. I'll give one example I see going on in this county. A person buys a house. They rent out a room. They become friends with the tenant. The tenant helps the landlord on a personal level--like taking them to doctor's appointments, they socially interact, they are kind of like family. But the Landlord continually raises rent to market rates. Well, eventually the tenant loses respect and moves out. Who won? The Doctor who drags in patients for unnesarry office visits? The Veterinarian who jacks up their prices when an "animal lover walks in". (Yea, I had a girlfriend who worked at a veterinarian hospital and they had a code they threw around the office when they thought they could "financially milk" a pet's owner.) I mortgage broker who knows the deal is horrid, but smiles right through the bankruptcy. I'm not a religious person, but I was brought to a Lutheran Church as a kid for years. I sat there thinking how can I incorporate this selflessness that guy up there is talking about into the real world. I never found a fool proof plan, but I was never greedy. I will die knowing I tried to do the right thing, and it was not about the money. The problem is I might die Homeless, and I know that's no way to live a life. I just wish the people who call the shots--would show a little bit of compassion. A little bit? Enough so when you do die--the people at your funeral are there because they truly loved, and respected you. I'm not preaching. I just don't think maximizing profits in every situation is copacetic! And just because it's legal, doesn't make it right, at least in my little world. I'm feeling nauseous. It's this post I'm writing, or something is wrong with my liver? If there is a God please give me a few more years, or take me out without the pain my father went through.
- SocialMusker 12y agoIt just horrible ! This type of incidents happens to me. I was thinking that our nearby restaurant was alive and open ! but one of my emergency reasons I went to eat at my nearby one, but unfortunately that was closed forever ! I becomes upset ! this is the moment I never forget !