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<\/p>\nOperators of some of Houston\u2019s most successful longstanding restaurants are becoming jaded and unnerved by rent increases and landlords\u2019 lack of transparency.<\/p>\n
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\n Courtesy of Zach Horst\n <\/p>\n
\n Goodnight Hospitality’s Rosie Cannonball in Houston\n <\/p>\n
A successful neighborhood restaurant offers something to a retail<\/a>\u00a0or mixed-use property that a monthly rent payment can\u2019t, and it would behoove both parties to work together and find mutually beneficial solutions, panelists said at Bisnow\u2019s Houston Retail and Mixed-Use Event on Tuesday.<\/p>\n \u201cRunning restaurants is hard right now,\u201d said Chris Shepherd, a Houston-based chef and founding director of the Southern Smoke Foundation. \u201cDoing real estate is hard too. So if we can both come to the common ground that both of these industries kind of suck right now, maybe we can actually make them better.\u201d\u00a0<\/p>\n As restaurant operators deal with rising food and labor costs, they also feel encumbered by increasing maintenance fees, surging rents and predatory or misleading lease clauses, panelists said at the event at GreenStreet<\/a>.\u00a0<\/p>\n But restaurants can\u2019t exist without a space to operate from. Considering the time they spend finding that perfect place, owners want to make it work.\u00a0<\/p>\n \n Bisnow\/Maddy McCarty\n <\/p>\n \n Rebees\u2019 Matt Ragan, Southern Smoke Foundation\u2019s Chris Shepherd, Goodnight Hospitality\u2019s June Rodil, Johnny\u2019s Gold Brick\u2019s Benjy Mason and Bludorn Restaurant\u2019s Aaron Bludorn.\n <\/p>\n A lease agreement is akin to a marriage for June Rodil, the CEO of Goodnight Hospitality, which has four restaurant concepts, including Rosie Cannonball and Montrose Cheese & Wine. A lease should be longer than five years, because it takes that long for a restaurant to sink its teeth into a neighborhood, she said.<\/p>\n But if a landlord demands double the rent to match the increase in market value at the end of a decade, that can break the relationship with the restaurant, said Benjy Mason, owner of Johnny\u2019s Gold Brick, Winnie\u2019s and Starduster Lounge.<\/p>\n \u201cThe whole thing starts to fall apart, and you see empty spaces all up and down what used to be a busy commercial thoroughfare,\u201d Mason said.<\/p>\n It\u2019s often catastrophic to lose a location that operators spent so long picking out, examining every detail. Mason once passed on an otherwise-ideal lease because it wasn\u2019t possible to turn left into the parking lot.\u00a0<\/p>\n Only about 51% of restaurants make it past their fifth year of operation<\/a>. Opening a restaurant anywhere is risky, Shepherd said. But he\u2019s willing to tell a leasing broker to \u201csuck it up, buttercup\u201d and be patient until an acceptable deal comes together.<\/p>\n \u201cI used to always tell this one person who always wanted a lease to be placed, \u2018Put your eraser back to that piece of paper, and let’s talk about this again, because there’s no way in hell I\u2019m doing that,\u2019\u201d he said.\u00a0<\/p>\n \n Bisnow\/Maddy McCarty\n <\/p>\n \n Method Architecture\u2019s Katherine Rorie, Midway\u2019s Don Quigley, Downtown Houston+\u2019s Cassie Hoeprich, Market Square Cos.\u2019 Matthew Kelley, the city of Sugar Land\u2019s Devon Rodriguez and Rebees\u2019 Matt Ragan.\n <\/p>\n Relationships between landlords and tenants are built on trust, so Mason wants clarity about the property owner\u2019s financial structure. Openness and honesty go a long way, he said.\u00a0<\/p>\n Landlords have charged Mason increased common area maintenance fees annually, and each time he pushes back to ask exactly what the fee pays for. He questions whether it is fair for him to pay promotion fees to a landlord when media often promote his restaurants and, therefore, the landlord\u2019s property.<\/p>\n \u201cWhere\u2019s that money being spent?\u201d Mason said. \u201cI know costs are going up, but my costs are going up 5% and yours are going up 15%? Almost every time, I find things and I\u2019m like, \u2018This is not appropriate.\u2019\u201d\u00a0<\/p>\n But expenses are rising\u00a0on the real estate side of things, too, said panel moderator Matt Ragan<\/a>, director of retail programming and operations for Rebees<\/a>. Borrowing and construction costs<\/a> are up. Land values haven\u2019t dropped because of lenders extending and pretending, keeping values artificially inflated.<\/p>\n \u201cWe\u2019re trying to figure out how to make our deals pencil on our side, at the same time that they\u2019re trying to figure it out,\u201d Ragan said.\u00a0<\/p>\n \n Bisnow\/Maddy McCarty\n <\/p>\n \n Waller Economic Development Corp.\u2019s Lynn Spencer, Gin Design Group\u2019s Gin Braverman, Transwestern\u2019s Paula Musa, Concept Neighborhood\u2019s Jeffrey Kaplan, Weitzman\u2019s Sarah Thobae and TAG Restaurant Group\u2019s Troy Guard.\n <\/p>\n<\/p>\n<\/p>\n<\/p>\n