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#31 joethefoodie

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Posted 24 June 2014 - 01:32 PM

This is kinda the issue we've been arguing about...

In a small space, you can make money by serving a few people expensive food, or serving hundreds of people tacos or Cuban sandwiches, Mr. Daley said. Its the middle places that are losing ground.

#32 Anthony Bonner

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Posted 24 June 2014 - 01:34 PM

yep.

 

Its quite remarkable. 


"This is a battle of who blinks first, and we've cut off our eyelids"


#33 Wilfrid

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Posted 24 June 2014 - 02:03 PM

Right, right.  Many years ago I heard the British restaurateur Alastair Little say, "If I was in this business to make money, I'd sell sandwiches."

 

This is a story with deep ramifications, beyond USC (although it was interesting to see that the Meyer's company is structured so that restaurants can't survive through cash infusions from Shake Shack).

 

Six years ago I was citing this NY Observer inteview with Canora and Grieco:

 

 

Mr. Canora: When we signed the lease for this place five years ago, we caught the real estate market in the East Village at the very last little moment of affordable rents. We got very lucky. I think we both agree it was a great deal for this space.

 

 
And those were the days when food forum members from the UES complained about having to go to the EV for dinner.  The luck ran out.


#34 Sneakeater

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Posted 24 June 2014 - 02:20 PM

The last sentence of that Times piece is a killer.
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#35 oakapple

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Posted 24 June 2014 - 02:23 PM

This is a story with deep ramifications, beyond USC (although it was interesting to see that the Meyer's company is structured so that restaurants can't survive through cash infusions from Shake Shack).


Interesting that, until last night, this MF thread had just 1½ pages of posts. This once-iconic and influential restaurant was completely off the grid, as far as "people like us" were concerned.

 

I think that's the real story here. There was a write-up recently that, in the early days, Shake Shack was staffed with coat-check people from Eleven Madison Park, who naturally had no work to do during the summer. To say that there is no cross-polination across the Meyer properties is probably not the entire story. The article insinuates that if Meyer really wanted to keep USC going, he could. He doesn't exactly deny that.

 

I think the space hasn't been renovated in a long time, and would require a lot of investment to remain viable. Meyer clearly decided to make that investment somewhere else.


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#36 Sneakeater

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Posted 24 June 2014 - 02:27 PM

I think you're right in your conclusion -- but I do have a feeling that the Danny Meyer organization (or at least Shake Shack as an entity in it) has been substantially reconfigured since the early days of Shake Shack (which, as you know, started out as a row of tables in the park across from EMP).
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#37 Josh Karpf

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Posted 24 June 2014 - 02:29 PM

On my first trip to Japan this past spring (Osaka, Hiroshima, and in between), I discovered many restaurants tucked away on higher floors of office towers.

 

One block away and a hundred feet up, 19 Union Square West's whole twelfth floor is looking for a renter. Why do NYC building codes never seem to allow such a location, aside from Japan's WW2 flattening having encouraged new construction there?

 

The day I move away from Union Square will be the second happiest day of my life. (The wedding that led me to live in this area was the first.)



#38 Anthony Bonner

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Posted 24 June 2014 - 02:32 PM

I have no idea how USHG is funded, but Meyer is certainly being a bit careful with his description of his inability to cross-subsidize businesses.

 

Its good legal practice not to do mix the cash flows from the different restaurants- especially as they may have different investors.

 

 That doesn't mean he couldn't inject equity if he wanted to.  Either have USHG take a bigger share of the equity or just make a capital call.

 

USC was still popular - it was just boring as hell. That's why no one here was posting on it. We aren't the audience.


"This is a battle of who blinks first, and we've cut off our eyelids"


#39 mitchells

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Posted 24 June 2014 - 02:37 PM

While he couldn't fund it using Shake Shack because of different investors, he could fund it personally. But the bottom line is if running the restaurant at $600k of rent doesn't make business sense, the funding is irrelevant.

All are lunatics, but he who can analyze his delusions is called a philosopher.
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#40 oakapple

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Posted 24 June 2014 - 02:38 PM

On my first trip to Japan this past spring (Osaka, Hiroshima, and in between), I discovered many restaurants tucked away on higher floors of office towers.

 

One block away and a hundred feet up, 19 Union Square West's whole twelfth floor is looking for a renter. Why do NYC building codes never seem to allow such a location, aside from Japan's WW2 flattening having encouraged new construction there?

 

It is possible to put restaurants on the upper floors of buildings, but most operators are looking for street frontage. One of the oft-recited flaws at SHO Shaun Hergatt was its second-floor location, in a building where there was no overt indication that a Michelin 2* restaurant was hiding upstairs.

 

Some have made it work. Kurumazushi is on an upstairs floor, with no exterior signage. They're the exception. I can't think of any well-known restaurants on a 12th floor, though.


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#41 Anthony Bonner

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Posted 24 June 2014 - 02:38 PM

While he couldn't fund it using Shake Shack because of different investors, he could fund it personally. But the bottom line is if running the restaurant at $600k of rent doesn't make business sense, the funding is irrelevant.

right. absolutely.


"This is a battle of who blinks first, and we've cut off our eyelids"


#42 TaliesinNYC

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Posted 24 June 2014 - 02:39 PM

Someone on Twitter remarked that this is the beginning of the end of NYC as the capital of the restaurant world.

 

What do you think? 

 

(I'm sorry I didn't save a screenshot of that tweet...)



#43 Anthony Bonner

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Posted 24 June 2014 - 02:43 PM

probably more like the end of the beginning of the end. Commercial Real Estate prices have been an issue for at least ten years.

 

Maybe if interest rates every go up we'll solve that problem.  Of course that probably puts NYC into a death spiral.


"This is a battle of who blinks first, and we've cut off our eyelids"


#44 oakapple

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Posted 24 June 2014 - 02:44 PM

USC was still popular - it was just boring as hell. That's why no one here was posting on it. We aren't the audience.

 

That's exactly right, but the lack of posts here is indicative of a large class of guests that USC couldn't attract any more. This in turn limited his ability to jack up the price to make up the rent increase.

 

Its "boring-ness" is somewhat over-stated. There's nothing pathbreaking here, but there's nothing pathbreaking at most restaurants, and very few of them execute better than USC.


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#45 joethefoodie

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Posted 24 June 2014 - 02:45 PM

Was that Bobby Flay?