This is nuts. I spoke with him at his office about a month and a half ago and he said he thought the concept was a great idea. I showed him our business plan, talked about the fact that we have enough in reserves to pay rent during our 'growth' period of the first year or so, and everything seemed fine on that end.
He is kind of a crazy old guy, with a storefront office in an old apartment building that looks like it hasn't changed since about 1958 or so, right down to the pictures hanging from the faux-wood paneling in his office. I got the impression then that he didn't care at all who was sending him the checks, as long as they kept coming in, and when I gave him the business plan I had worked up, he tossed it onto a pile on his cluttered desk in a way that made me feel like the chances of him reading it were pretty slim.
Back then, I was confident we were going to get him to make some significant accommodations on the rent and the terms of the lease, given the current economy, but he took a hard line and would hardly budge at all. After talking to a friend who is an experienced commercial real estate guy, and, as it turns out, who negotiated with this same old landlord himself, I realized that the terms being offered weren't really too bad, and that he had a reputation for not budging on deals. So I resigned myself to signing a lease that was more or less what he had offered me back then.
Now, all of a sudden, he tells me today on the phone that he doesn't think the concept is right for the neighborhood, that all of the other restaurants around don't do very well at lunch, etc, etc,.... This from a guy who's leased to three different restaurants in the past four years. All of a sudden, he's all picky about who's paying him rent?
He asked me if I'd spoken to the seller recently, and then, when I said "no", he told me that he wasn't interested in renting to me. I was incredulous. I kept asking him what the problem is, and he wouldn't really say. He kept telling me to talk to the seller, but I'm not sure what I'm supposed to be asking the seller about this; he's got nothing to do with the lease situation.
The only possible explanation for this is that the seller called the landlord and told him not to rent to me, so he can either back out of the deal or try and hit me up for more money. My suspicion is that the seller owes quite a bit of money on back rent and is now telling the landlord that, unless he can get more money out of me, he won't pay him. So they're teaming up to squeeze me.
The other possibility is that he got another offer that he's contractually not permitted to accept, so is trying to get me to quash the deal so he can take the other offer.
Either way, this is not good. I've put about four or five months of work into putting this deal together and preparing for the restaurant, and now it might all be for nothing. A complete waste of time.
I'm trying not to panic here because this is about the fourth time this seller has done something to try and make me nervous or panicky and then tried to hit me up to either move faster or pay him more. As soon as I got off the phone with the landlord, I put calls in to the seller, my lawyer, and the real estate guy that I mentioned above, but nobody's called me back yet.
One thing that's making it a bit easier not to completely panic about this is that I looked at another space last week. A neighbor of mine, who had originally considered investing in my restaurant, owns a building that houses a restaurant whose owners are looking to get out of the business. They're deep in debt, due to overextending themselves on the buildout of the place.
The upside of that is that it's completely brand new; a fully up-and-running restaurant--far nicer than I was planning on making Automatic. But this leads me to question whether the concept is right for the space; is it too nice? Will the simple concept I've been envisioning work in the almost corporate-feeling new construction space? Can I kind of "trash it up" a bit to make the space feel right for the concept?
The other upside is that the asking price is incredibly low; half of what I was offering the Lincoln Square seller.
Downsides of this other place are:
- Rent. It's higher by about $1000/month.
- Location. It's very different than the Lincoln Square location, and doesn't seem as much like a sure thing. It's on a major street with tons of traffic, but lacks the affluent housing and foot traffic of the original location.
- Layout. The place has kind of an odd diagonal shape and the kitchen is laid out more for table service than for a quick-serve operation.
- Concept. I'm not sure the concept I've worked up will translate to this neighborhood, although I do believe it could if I tweaked it. A big part of the concept, though, was that it'd be lunch-only, and that was driven by me trying to achieve a balance between my work life and family life. This new location lends itself more to later hours
So my mind is spinning right now. I'm going to wait and see what the seller and landlord have to say, but I also have to plan for this deal to fall through and start thinking about looking for other possibilities.