Should I stay or should I go now?
March 16, 2010 9:02 PM   Subscribe

Business dilemma: I own a small but popular bar in NYC. The lease is coming up for renewal very very shortly. The landlord had previously told me that they would extend the lease for a certain amount of money, but has now changed that amount to be unreasonably high. Very long complicated situation inside.

We (my manager and myself) have been looking for another location to move the bar to, but haven't found one yet, so if we are able to move it it would mean that the bar would not exist for several months until the new space is completd, leaving staff out in the cold, and customers looking for a new favorite hang out.

1)The landlord has a history of forcing out bars in their buildings and buying from them the liquor license (cheaply) and transferring it to a new tenant, who has paid them significant key money.

2) I received a letter in the mail from landlord saying that they did some repairs in the basement that resulted from a leak coming from our premises. The letter stated that they had already taken $3200 from our security deposit, and to replenish that amount as soon as possible In addition, further repairs are needed to the amount of $8500, and they are waiting to get that from us until they do them.
We did in fact have a leak, and fixed it when notified as soon as we were told about it. We do not have free access to the basement. This is the first I have heard of any repair being necessary. There has been 6-8 inches of water leaking into the basement for years, that when we did have access to basement 5 years prior, we notified the landlord about repeatedly (after confirming that it was NOT coming from our business). They did nothing about it. In addition to the standing water, there was a boiler explosion that damaged a good part of the rear area of the basement. Since I haven't seen the repaired area, I don't know if this is in the same area or not.

3) In negotiations with the landlord re the amount of the upcoming rent, I told them that what they are asking is far above market rates (it is, I have been looking at spaces in the area), they have been coming down, but not to a reasonable level.

4)During this conversation, the landlord asked if I would be interested in selling the license to someone else who was interested in the business. I said that I wasn't totally opposed, and to give my number to the person.

5) I received a phone call from the tenant who has the space behind us on the ground floor. I had spoken to him a month or two ago when he called me and asked me if I was interested in selling him the business. I told him I was not interested at all. I wondered how he got my telephone number, as no one at the bar admitted to giving it to him.
During this more recent conversation, he told me that he would be interested in buying my license and continuing the business as is, at the ridiculous rent that the landlord wanted to charge, but only for a year or two.
The space is very small, there is a very very small chance that a bar would be able to break even at that rent When I threw out a ridiculously high number for the liquor license, he said that he was still interested. I then told him that based on my experience (I have other bars and restaurants and have been in the business many years)it would be virtually impossible for him to not lose money doing what he was telling me he wanted to do. He didn't seem concerned. He has never been in the bar business, and I got the impression that he has money to burn.
I told him I might transfer the license to a new location regardless, so I might need it, so it would not be available for sale, but also told him that if I couldn't transfer the license I might be interested in selling it.

Dwelling on this over the weekend, it occurred to me that he is probably in cahoots with the landlord to take over my business, and the landlord seeing an opportunity to make a wad of cash is going along with it.
Now, I don't believe in screwing people over, and I don't like being screwed over myself. I am very tempted to not sell the license even if I no longer need it, just because I find this behavior odious. However, the amount we are talking about here would go a very long way towards the buildout of a new space.
I am confused, and torn up emotionally about the right thing to do.
I am very tempted to just shutter it at the end of the lease, essentially saying fuck you to both landlord and potential buyer (getting a new liquor license at this location would be next to impossible). Dealing with the repair claims (which I don't think would have come up had the lease not been up iin the air), the negotiatons, the potential closing of the business, etc, has been very stressful to both me and my manager, which I think is the intended effect. Like I said, the landlord has used this tactic at least once before towards another bar owner in one of their buildings. Another option is to double the amount of the original price I threw at the potential buyer for the license, in which case I would feel okay about selling it, but it goes against what I believe is right (don't reward the bad guys) and he probably wouldn't go for it anyway.
To further complicate matters, I am in the middle of nursing along a completely separate fledgling business that requires the bulk of my time for now. That load should lighten up soon.
I have never made a lot of money from this particular business, but it is one of my favorites for other reasons. I have income from my other businesses, so that really doesn't play much of a role in my considerations.
I'm probably leaving out some pertinent facts and rambling a bit, but will fill in any details if asked.
So the big question, what would you do?
posted by anonymous to Work & Money (13 answers total)
This is a situation that very much calls for you to locate a good lawyer and retain his or her services – the answer is not going to lie in any responses that follow.
posted by WCityMike at 9:16 PM on March 16, 2010

One question immediately comes to mind for me. Why do you have this business? From your question, are you maintaining this business because:

-You need/want the money
-You enjoy the business
-You want to keep your manager / staff in a job

More than one reason is OK, but I find it helpful to put down percentages for each of these.

If you want to make money, staying at that location is out of the question. But if you can break even or if this costs you an acceptable amount of money each month, then it may be worth it if you enjoy it and want to keep the staff.

If you are in it mainly for the money (or if you can't subsidize the bar) then you have to move or close down. It seems like an unfair situation, but that seems to be the only way to deal with it.

The ideal situation would be to renew the lease for a short amount of time while you find/renovate a new location, and then transfer over the staff and clients. This may or may not be possible based on the landlord. It will also cost more money initially (renting out 2 places at once so that the new space can be completed) but it looks like the best solution in the long run (if possible). Good luck!
posted by Peter Petridish at 9:19 PM on March 16, 2010

I certainly would make the landlord prove the water damage was a result of some negligence on your part. Laws vary I'm sure, but I doubt he can just fleece a tenant for damage to his building unless he can convince a judge it's your fault.

As far as the lease, if he wants to run you out it's his perogative but I certainly wouldn't make it easy for him by selling your license. You're in a negotiation. You've led him to believe you'll sell your license to the neighbor and the neighbor will pay him a higher rent. Of course he's going to try to make that happen. You know the neighbor wants your business. So that's his motivation. Buck up and let him know that if he loses you, he'll be losing a successful business, an irreplaceable liquor license, and will have to find a new tenant which will be tough to do at his exhorbitant amount.

Sounds like he's just trying to bully you.
posted by shopefowler at 9:24 PM on March 16, 2010 [1 favorite]

Lawyer, now.

You own a bar that is making money. You have to protect that. Negotiate slightly higher base rent for a few more months, and back it up with a good real estate lawyer, esp, landlord-side, if you know what I mean. Delay is your friend and I would pay a lawyer to get it. Meanwhile, negotiate for new lease under less pressure. Plus enlist local councilmember on your side as responsible business leader who wants to stay in the neighborhood.

I'm not a lawyer and this is not legal advice. Seek competent legal advice in yout jurisdiction.
posted by Ironmouth at 9:41 PM on March 16, 2010

You're playing a very weak hand. Your suspicion that the landlord and the other tenant are conspiring against you fits the facts. You can screw them on the liquor license and walk away with nothing but scorched earth behind you, or you can sell it for a very nice price and use the money to turn one of your other establishments into your favorite business. Going the lawyer route is going to be very expensive, especially if the other interested party has, as you surmise, money to burn. Plus, it ain't your building so ultimately you're going to lose. Take the cash.
posted by Crotalus at 9:57 PM on March 16, 2010 [2 favorites]

If you have a good thing going where you are, I'd be reluctant to move. As someone who spends a lot of time drinking in bars, I'll give you my patron's point of view in descending order of importance.

1.) Location matters. If it's not walking distance from my flat, I will generally not frequent it.

2.) Clientele matters. Who else is in the bar? Do they contribute or detract from the drinking environment? The neighborhood counts for a lot.

3) Size matters. A place that's too big is not intimate, a place that's too small is too much so. When I'm drinking I want to be in a place big enough to permit me some private space and small enough so I don't feel lost in a crowd.

4) Tap selection. Every bar has the same bottles. Tap selection is a differentiator.

5) Bar staff. A top-notch bartender is invisible and always friendly. Chats with you when you want to chat, leaves you alone when you don't. And she can tell from the moment you sit down what mood your in. And regardless of mood, she keeps you in the corner of her eye to make sure your glass doesn't get empty. I don't ask or want more than that, but recognize that it is a rare talent. That being said a "bad" bartender won't keep me out of a "good bar" (see 1-4) anymore than a good one will entice me to come to a "bad bar."

Everything else is non-tangible. Food, interior, etc. is secondary to the drinking environment.

Bars which I have frequented and moved across town are forgotten as quickly as some girlfriends who've dumped me. ('cause that's what you're doing - abandoning your loyal patrons!) I move on to the next. I can think of only one case - where I followed the staff when they moved house - and only because the moved to a location closer to my flat. God bless 'em.

So in short, whether you leave has much to do with where you might go.

If you move close by to similar digs, you can expect some/most of the regulars to follow you with no hurt feelings. If you move across town, regardless of everything else, you're starting from scratch.

Good luck to you! A publican's life is not an easy one.
posted by three blind mice at 10:02 PM on March 16, 2010

First, you're talking about real estate. Second, you're talking about landlord/tenant relations.

Sit down and take as long as you need to get rid of your sense of fair play for this situation. Fair play has nothing to do with it. They're out to fuck you. You know that they're out to fuck you. That doesn't mean you should try to fuck them back, but "doing the right thing" should simply not be one of your considerations. You should be in this for yourself, and only yourself. Maybe that means taking the money and running. Maybe that means getting a lawyer and suing them. Maybe it means eating the stress of moving the bar. That's up to you.

At the very least, a consultation with a lawyer is probably worth it, and doesn't have to go beyond a couple hours of research to get a sense of the situation you're in.
posted by fatbird at 10:38 PM on March 16, 2010

Sorry, I meant to say: I am a lawyer, but I am not your lawyer and this is not legal advice.
posted by Ironmouth at 11:36 PM on March 16, 2010

A friend of mine had similar problems at her bar on the Upper West Side, and they ended up moving the bar to another location 6 blocks away without losing their regulars even though they were closed for 5 months or so. Jack the license as high as they'll pay, pay a lawyer to stall them while you find a new place, and go live your life with a little resentment but without the daily headache. You can't really beat them anyway.

(I have another friend whom I know has vacant bar spaces in a couple of his buildings in the Village, so MeFi mail me if you want to talk to him — not that I can promise he's any nicer a landlord than your current one!)
posted by nicwolff at 11:56 PM on March 16, 2010

Another option is to double the amount of the original price I threw at the potential buyer for the license, in which case I would feel okay about selling it, but it goes against what I believe is right (don't reward the bad guys) and he probably wouldn't go for it anyway.

Taking as much of the bad guys' money as possible and leaving them in a position where it will be impossible to turn a profit is not "rewarding" them.

It sounds to me like selling the license and walking away will make a lot of stress vanish and leave you with money in the bank.

I am very tempted to not sell the license even if I no longer need it, just because I find this behavior odious.

This sounds like cutting off your nose to spite your face.

It can be difficult to see your own situation clearly when you're under a lot of stress, and I think that's what's happening here. In addition to all the good advice already posted here, I'd encourage you to take a quiet moment to sit down and make a list of the pros and cons associated with each of the outcomes that you can envision, just to help yourself prioritize. And I'm not suggesting that you need to ignore intangibles, like the ability to maintain a business that gives you personal satisfaction, but that needs to be weighed against the negatives.
posted by adamrice at 7:16 AM on March 17, 2010

I'm with fatbird and adamrice. Step away from your emotions and your ideas about morality and just do what's in your own best interest. That's all the other parties are doing. If you act out of emotion or assume the role of Minister of Justice, you'll wind up on the losing end for sure.
posted by markcmyers at 7:53 AM on March 17, 2010

I am a New Yorker who is tired of seeing every small business have the life squeezed out of it by landlords who see dollar signs everywhere they go. So I understand wanting to get justice here. As a bar owner in NYC, you have seen everything and been through hell and back again.

In terms of how this story is going to play out, I'd suggest you browse Curbed or EV Grieve and see what landlords have done to small businesses.

No matter what, whether you keep or you sell, you have to lawyer up. You have to lawyer up with someone who has gone through this before. You also should talk to someone in your shoes, another bar owner, if for no other reason than just pure sympathy.

The justice you will get, if indeed the other space owner is in cahoots with the landlord, is that their business will likely fail quickly.
posted by micawber at 9:27 AM on March 17, 2010

You also should talk to someone in your shoes, another bar owner, if for no other reason than just pure sympathy.

That's not a bad idea — if you want to talk to my friend who had to move her bar from a legendary corner on Broadway (you probably know the one) let me know.
posted by nicwolff at 4:42 PM on March 17, 2010

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