Caffe Dante West Village was supposed to be one of New York’s major spring 2020 openings. It was an outpost of Dante, the Greenwich Village hangout that had been crowned the Best Bar in the World in 2019 by the Tales of the Cocktail Foundation. Its owner, Linden Pride, had spent 18 months and more than $1.6 million building the 74-seat restaurant in anticipation of welcoming its first paying guests on March 16.
But when Andrew Cuomo requested density control measures on March 15, Pride realized a formal opening was out of the question. He immediately sent an email to his landlord, William Gottlieb Real Estate, asking to negotiate the terms of his rent.
Simply put, he didn’t have enough money to pay it—for March or April. “We put everything of our savings into the buildout of the new restaurant,” Pride says. “We got to the starting line with enough money in the bank to pay the first week’s payroll and suppliers.”
Worse, he says, the new restaurant doesn’t qualify for stimulus money from the federal government’s $2 trillion package, because it has no history of payroll.
After some back-and-forth between Pride and Gottlieb representatives, on April 7 the landlord served a notice of default. If Pride doesn’t pay past-due rent and fees by April 14 (the technical term is “curing the default”), the landlord can initiate legal action. In a worst-case scenario, once the 90-day moratorium on evictions lifts in mid-June, Pride's new restaurant could close before it ever opens. “If I don’t ‘cure’ this, they can come after me personally,” Pride says. “I’ve just spent all this money on the space, which they could take back in possession, and our money would be down the drain.”
In an emailed response, Brian Ullman, a lawyer who represents Gottlieb’s 551 Hudson Street Property, LLC, wrote that “this tenant has been in arrears since prior to the Governor’s administrative order closing New York businesses. The notice sent relates to the prior and ongoing arrears.” The owner, Ullman continues, “is considering all tenant rent issues on a case by case basis.” (The arrears, which Ullman says date to January 2020, were for legal fees that were under dispute, Pride says. He says March and April are the only months he didn’t pay agreed-upon rent.)
Pride’s experience underscores the precariousness many restaurateurs face across the country: Often, the only thing standing between their business and bankruptcy is a landlord’s largesse.
Outliving a Crisis
“Rent is never a suggestion,” says Lee Jacobs, a partner in Helbraun & Levey LLP, which specializes in the restaurant industry. “My fear is that hundreds of thousands of unsophisticated small-business owners think that because we’re in a pause, or a shelter-in-place, that that excuses them from paying rent. Unfortunately, it doesn’t.”
Many landlords, Jacobs says, have been willing to work with tenants, particularly “landlords that are mom-and-pop—either family-owned or owned by someone who has a handful of buildings,” he continues. “Larger institutional landlords are less likely to negotiate or be helpful because they have the cash to outlive this crisis, and they can outlive having empty retail space.”
Should restaurants simply stop paying or fail to successfully negotiate, “consumers could see empty storefronts change from ‘closed’ to ‘for lease’ as early as June, and most likely in July,” Jacobs says.