Powerful San Francisco Landlord With Significant Interests in Elk Grove Squeezing Small Business Owners
https://www.elkgrovenews.net/2016/08/powerful-san-francisco-landlord-with.html
August 18, 2016 |
Anyone
familiar with business knows how tough it is to launch and successfully run a
restaurant. The failure rate of restaurants is, by some accounts, 59-percent in
the first three years.
In
spite of these long odds, some restaurants break that barrier and manage to
stay open and thrive in that hyper-competitive marketplace. One such restaurant
is Sacramento 's
Tokyo Fros.
Started
in 1999 by restaurateur and small business owner
Jeff Davis, his Tokyo Fros has survived two recessions, including the Great
Recession of 2008 that shuttered many restaurants. Additionally, Davis has survived an
onslaught of discount sushi restaurants, national chains, the advent of
circumspect Yelp reviewers and has not only survived, but has developed a large
cadre of regular customers.
Having
come out of the Great Recession on both feet, Davis said starting in 2012, business
regained steam, and they were having some of their best years since opening,
that is until 2014 when they hit a wall of sorts.
The slipshod remodeling being done on the University Village
shopping center in Sacramento give customers the idea that
businesses located there are not open.
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“We
were having a great year, we were trending in a direction that was unlike I
have seen in five, six years,” Davis
said.
Was
the wall a new nearby sushi bar, or perhaps a well-funded national chain
siphoning customers away?
It was
neither, but it was something a bit more insidious - a new landlord.
In
2014 Davis' then landlord Howe
& University, LLC, sold
the University Village shopping center located on the southeast corner
of Howe Avenue and Fair Oaks Boulevard to a San Francisco-based real estate
concern, Merlone Geier, also known as M&H Realty.
It was
not long after Merlone Geier took possession of the shopping center
that Davis and other tenants saw the difference in how their new
landlords managed the property and tenant relations.
Earlier
this year Merlone Geier initiated a $10 million renovation of facility in hopes
of attracting national retail clientele. The existing tenants were offered the
chance to rip-up their current lease and leave or accept a significantly low
buyout offer. Davis, who
signed a 10-year lease with his previous landlord in 2012, was similarly offered a bargain basement buyout that was significantly less than the
goodwill and value that the restaurant has accumulated in its 17-years at its current location.
Since
that time, Davis alleges Merlone Geier has forced out other independent businesses in the University Village Shopping Center .
Davis said his
current landlords are squeezing out small, locally-owned businesses like his
for national chains which can pay substantially higher rents.
“”Why
would I leave, I have six-and-a-half years left here, I’ve been here 17- years,
and I have a huge following,’” Davis
told the Merlone Geier representative.
Once surrounding
business were vacated and torn down, University
Village has undergone
massive reconstruction leaving Tokyo Fros in the center of loud and disruptive
construction. Merlone Geier
tore down a portion of the former Eastern Empire Chinese Restaurant, who was forced
out, and has not resumed construction for several months, which gives customers
the impression that the shopping center, most notably Toyko Fros, is either closed
for business or not an ideal location
to enjoy a meal considering the numerous other restaurant options in the area.
Consequently,
Davis says business
has significantly decreased hurting his bottom line.
Prolonged demolition and remodeling has not only caused
visual blight for diners at Tokyo Fros, it has affected the day-
to-day operations of the restaurant.
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After
refusing to accept Merlone Geier’s unreasonably low offer, Davis quickly found himself in the midst of a
pattern of escalating tensions with management. Merlone Geier completely removed
his outdoor patio and furniture without his consent, erected fencing blocking
off his only rear access door where deliveries are made and employees remove
trash.
Employees
were forced to carry deliveries and unsightly trash through the restaurant in
view of customers. Only after repeated demands, management permitted limited
access to the rear door by erecting an unsightly makeshift tunnel that still
does not allow him to make weekly deliveries. The tunnel serves no purpose and is
adjacent to his windows where customers sit and blacks out lighting coming into
the restaurant rendering parts of Tokyo Fros’ seating areas unusable.
Since current management took over in 2014, Davis noticed an
increase in crime and vehicle break-ins in at University Village
due to inadequate security. His repeatedly requests for additional security for
his customers and employees leaving the restaurant late at night were largely
ignored until earlier this year when Merlone Geier began construction and
needed security on the premises to protect their own construction assets that
were being left overnight. Davis reports that
Merlone Geier’s security has ticketed his vehicle for no reason, harassed him
in the parking lot, and followed Davis
into his own restaurant before bumping into him with his body.
“It’s intimidation,”
he asserted. “They are trying to force me to capitulate and leave through pressure tactics while destroying
my goodwill. I do not want to leave. This is my passion. I don’t know what I
would do if I were forced to leave.”
Also Merlone
Geier is now charging Davis
for sewer and water fees which were not part of his last lease. Adding insult to injury, Merlone Geier is
charging utility fees for his Tokyo Fros’ patio space that management removed
and he is unable to enjoy. And to up the pressure, Davis was recently issued a three day quit
notice regarding a water and sewer bill two weeks before its due date.
“It’s
maddening” Davis
said. “Instead of having a cooperative business partner interested in helping
me succeed, I’m constantly concerned about how to deal with them and their
attorneys next threat. This is no way to do business.”
“Landlords
like Merlone Geier have a responsibility to their tenants as business partners,”
Tokyo Fros’ attorney Scott Radcliffe of the Sacramento based law firm Alves Jacobson
Radcliffe said. “When they blatantly disregard that responsibility and cause
their tenants damage, it should be no surprise that they are faced with a
lawsuit.”
Merlone
Geier, also known as M & H Realty, is a familiar name to Elk Grove
political observers. Aside from being generous financial contributors to Elk
Grove City Council Members, as M & H, they pursued litigation, which was
settled out of court, against the City of Elk Grove and the Howard Hughes Corporation
over development rights near the unfinished Outlet Collection at Elk Grove.
“They
are putting the squeeze on small business owners in favor of the national
chains,” Davis
said. “If Elk Grove ever wants to get in on the farm-to-fork and craft brewing
movement in a serious way, I hope that city isn’t overrun with landlords like
Merlone Geier.”
19 comments
Chairman Maonasky's proposed $15 an hour minimum wage in Elk Grove will save us from corporate greed and help these small businesses succeed.
Sad to see this when Davis put some much time, energy & money into making his business work
This is ridiculous. Another example of giant corporation squeezing the small independent business owner. They want to fill the whole shopping center chains. Yeah, just we need. This is sad.
Good luck Tokyo Fros. And good for you for standing up to these bullies.
This is ridiculous. Another example of giant corporation squeezing the small independent business owner. They want to fill the whole shopping center chains. Yeah, just we need. This is sad.
Good luck Tokyo Fros. And good for you for standing up to these bullies.
As a former employee of Tokyo Fro's, this is very difficult to see!!!
The way Davis and Fro's is being treated is absolutely deplorable. Fro's is my go-to sushi joint when I"m in town and it's shocking that any property management organization would strong-arm a 17 year successful restaurant business, especially considering how difficult the restaurant business is to begin with.
17 years people...that's a huge accomplishment, especially when it was up-trending prior to the landlord change!
What happened to ethics? Have written agreements become as dismissible as the once-honored handshake? Shameful.
Way to stand up for yourself Jeff. I hope your fellow restaurant colleagues are paying attention and your customers rally at your side in support of Fro's!
I love Tokyo Fro's!! I would hate to see it go under for something like corporate greed. Save the small business!!
I love Tokyo Fro's!! I would hate to see it go out of business due to corporate greed. Save the small business!! You go Jeff and Tokyo Fro's! Best sushi place in town
This is absolutely devastating not only for Jeff "Fro" Davis but also for small businesses in the Sacramento area. As a former employee of Fros I am so sad to hear about the issues this new property management company has placed on this small business. Fro is an example of the American Dream and now it may be taken away from him. I hope that the community can come together and support Jeff in his fight to save his dream.
Let's rally together to support Jeff and small businesses!
This is absolutely devastating not only for Jeff "Fro" Davis but also for small businesses in the Sacramento area. As a former employee I am appalled at the way this new property management company is treating this small business owner. Jeff Davis is an example of the American Dream and now that dream may come to an end. I hope that we as a community can rally together to help keep Jeff's dream alive.
Something has to be done about this! Don't want to lose the besst sushi restaurant in the area! Just WRONG.......
This is not acceptable. Somebody do something about this situation as Tokyo Fros is the best sushi restaurant in the area! It's so hard to park there now but still worth the effort as its one of my favorite restaurants.
Right the parking situation sucks. We Ubered last time we wanted a Fro fix
Very terrible what they are doing to the businesses, especially Tokyo Fros. Jeff Davis and his staff always make to feel w÷lcome. Best sushi and establishment around.
Terrible what that are doing to the businesses. Jeff Davis and his staff always make you feel welcome. Tokyo Fros is the best sushi and establishment around.
Good luck with your landlord. Being a sushi lover, I better try you out soon!
I was at the opening of Tokyo Fro's many years ago. Jeff "Fro" Davis has always been passionate about this resteraunt and the experience people have with the food and the dinning experience. It's obvious he takes great pride in his resteraunt. A very rare quality to find these days. Tokyo Fro's has the best sushi from Sacramento to Florida, I have not found better sushi! This is a example of letting Corporate giants push out the local businesses. I truly hope something can be done to stop this. We need to protect the local business owners.
I work down the street, we used to go to Capitol Tap prior to the construction. Its litterally impossible to park there now, looks like a war zone, really, and no where to park on the street. Hello Twin peaks with huge parking lot!
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