Robinson Brog Leinwand Greene Genovese & Gluck, P.C. - New York City Business Litigation Attorneys


Primed for a Rebound and Poised for Expansion; Restaurants

by David Cykiert

Where We Thought We Were

A few months back a restaurant client asked us to review and comment on a lease agreement for a food court-esque space in one of New York City’s newest (and perhaps most buzzed about) food halls. When the transaction was finalized, we were presented with a preliminary roster of our client’s new food-neighbors. Among them, a veritable who’s who of that notorious class of “new york neighborhoody restaurants” that can (almost) do no wrong. The Midases of the NY culinary scene, if you will…

There were a few exceptions (and in the interest of legalese, exceptions to the exceptions). None perhaps more notable than a particular Asian restaurant chain, and not in the sense that P.F. Changs is an Asian restaurant chain, but a restaurant chain actually from Asia.

I thought:


… Depressed economy;

… vast abandonment of major urban centers;

… an already saturated pool of restaurants with similar offerings;

… people having more time to exercise and being less inclined to eat fried food…

Things (hereinafter, the “Why Factors”) didn’t add up… until they did.

Where We Nonetheless Seem To Be

NOW MUST BE THE TIME. Rents are low. Staples (but surprisingly, not “Staples”) are gone. At least in Manhattan there is not only pent-up desire to get out, eat, drink, socialize, etc. But pent-up liquidity (respectfully, among some and unfortunately not all, of course). Maybe, instead of deterrents, this Asian food chain saw the Why Factors as an invitation to tackle new markets. And maybe they were right. Bring on the Bacon!

Since then, a major commercial landlord has extended another client an invitation to open up an ethnic restaurant out in San Francisco (use of the term “ethnic” intended to avoid disclosure of the undisclosable). The client is a renowned chef in many circles, who has headed many successful New York kitchens and launched other food verticals on the back of his success in the “back of the house.” But he has no San Francisco notches on his belt. Nonetheless the LOI from the landlord came with the scope of concessions and benefits of which only one or two would leave a lawyer looking like the master of the deal. “Take the space, build it out on us, and if it doesn’t work out, well then we’ll thank you for your time…” said no commercial lease ever. Until now.

Take a walk down 2nd avenue on the upper east side of Manhattan and depending on your perspective you will see one of two things: (i) Atlantis (not the resort). A city forgotten, its avenues boarded up, devoid of the hustle and bustle that made its apple “big.” Or, (ii) a blank slate.

If you see the former, you’re not of the (New York) state of mind to take advantage. If you see the latter, then, what’s next? And if you believe that same paradox exists in nearly every major city today, then there is no limit.

Next Moves

Of late, commercial leases appear more littered with incentives and protections and deferrals and whathaveyous then at any prior point of my (albeit young) law career. Indeed the perfect storm to test a new market, try a new model, or explore a new concept. And with proper representation, aware of the incentives to be had, the actual cost of such a leap can be kept in check. But recall, that clearance sales don’t last forever. Eventually, the store goes out of business. Here, COVID will (hopefully) eventually end (or cease to be as prevalent). When that happens, stores will fill up again. The bargaining power will again be in the hands of the landlord and the cost to start something new, or in some new market, will again be cost prohibitive to all but the most brazen. Carpe Diem.