Bringing in Miami Beach restaurateurs and French food services giant Sodexo to operate in Coney Island has turned out to be a fiasco for Luna Park developer Central Amusement International. We’re just glad some of the people in charge realized Coney Island is neither Miami Beach nor a corporate cafeteria before we lost all of our original, irreplaceable businesses and ended up with a shuttered Boardwalk.
After kicking out nine Coney Island Mom and Pops from City-owned property to make way for upscale eateries, the park division of Italian ride manufacturer Zamperla is now reported to be offering multi-year leases to at least two local favorites — Paul’s Daughter and Ruby’s Bar. The veteran businesses were supposed to pack up and get out by November 4th. Let’s hope they can negotiate a lease without too many onerous clauses and more of them get the invite. And if a spot becomes available, please, please bring in people who know and represent Coney Island and Brooklyn, New York.
One of the reasons for Zamperla’s about-face is that the Miami Beach restaurateurs who opened Coney Cones in July are pulling out of a $5 million deal that would have put new eateries on the Boardwalk from West 12th Street to Stillwell. According to yesterday’s New York Post story by Rich Calder, Coney Cones co-owner Michele Merlo said business at his new store had been “very disappointing” because of the bad weather and told other Boardwalk vendors “they can’t make money off Zamperla’s existing lease offer.”
Sources tell ATZ that Merlo and his partner Julio Gonzalez have offered to sell Coney Cones, which was a $200,000 investment for them and pays an annual rent of $75,000, to a veteran operator in Coney Island. The ice cream shop is located at the Boardwalk entrance to Luna Park and serves gelato, salads, panini, and Kobrick’s coffee. Currently open every day from 11am till around 7pm, it will close for the season at the end of the month.
Unmentioned in yesterday’s flurry of news reports was another newcomer to Coney Island also pulling back from the original plan. Sodexo, which has food and drink kiosks in Luna Park and operates the new Cyclone Cafe on Surf Avenue, was slated to take over Paul’s Daughter. Last December, Sodexo rep Sandy Boyd showed up at the 40-year-old Boardwalk establishment to pick up plans from the City’s architectural firm. As ATZ reported in “Paul’s Daughter Dishes on the Boardwalk Brawl” (ATZ, January 13, 2011), when one of the architects asked Boyd if Sodexo was going to be a year-round restaurant, she replied “oh no, it will be seasonal, there aren’t enough people here off season.” This was a remarkable admission since part of Zamperla’s rationale for bringing in new businesses to replace the veterans was that the Boardwalk eateries would be open year-round.
Sodexo, the world’s 21st largest corporation, has kept a low profile in Coney Island. The only sign we’ve seen with their name is the piece of paper at the top of this post. It was put up to direct trainees to their restaurant in the spring. ATZ broke the news last year that Sodexo has an exclusive contract with CAI to provide food within the parks and was investing $2.4M in Zamperla’s Coney Island. At the time Luna Park CEO Valerio Ferrari told ATZ that $1.4 million was being invested in the new sit-down restaurant. He said it would be open year-round and feature waiter service and a variety of food. As for the Boardwalk, Sodexo-run restaurants were set to take over “some but not all” of the Boardwalk locations, Ferrari said, including Paul’s Daughter and Pio Pio Riko, which flanked the Boardwalk entrance to Luna Park. Things changed.
Sodexo’s Cyclone Cafe opened this season on Surf Avenue at West 10th Street with a menu of burgers, salads, sushi and brick oven pizza, but it is neither a sit-down restaurant nor a year-round venue. It has been closed on sunny weekdays in recent weeks while the Boardwalk Mom and Pops were open. During Halloween Horror Nights at Luna Park, the cafe is open only to patrons of the ticketed event inside the park. While its Surf Avenue lights blaze, its shutters are closed to the public. When the spot was Gregory and Paul’s, the picnic tables on the sidewalk were one of our favorite spots to sit and have a bite to eat while friends rode the Cyclone.
We’re happy to have officially suspended the Photo of the Day in ATZ’s “Countdown to Corporatization.” The sad goodbye to our Boardwalk friends began with “The Chief of the Coney Island Boardwalk” on October 8th. Rumors of another reprieve had been flying for a few days, which is why we stopped the series on Saturday.
One note of caution: The owners of Ruby’s Bar and Paul’s Daughter have not yet negotiated lease deals with Luna Park operator Central Amusement International, which holds a 10-year lease on the City-owned property. The specter of a dark Boardwalk puts the pressure on everyone for the deal to get done. But the Coney Island Rumor Mill has been abuzz about onerous terms in the leases that CAI has offered to the handful of operators who were previously invited to stay as well as to the Miami restaurateurs. The businesses are also expected to foot the bill for the rehab of the buildings as well as pay a higher rent and stay open year round.
One of the problems with a mandated year-round Coney season and hours is that unlike Luna Park, the restaurants are not subsidized businesses. Each of the Boardwalk Mom and Pops has been paying $100,000 per year rent, plus a $10,000 surcharge initiated this year to help keep the Boardwalk restrooms open later and for sanitation and fireworks. Believe it or not, $100,000 is also the base rent that CAI/Zamperla USA pays annually to the City. In addition, they also pay a small percentage of the gross receipts. For example, ten percent of gross receipts over $7 million. According to the NYC Economic Development Corporation’s lease with CAI (which ATZ obtained last year through the Freedom of Information Act), the City will receive 15% of the fixed rent paid by any subtenant. Zamperla gets to keep the other 85%. We think they have a pretty sweet deal with the City and should pass the sugar.
However, CAI/Zamperla USA has also invested nearly $30 million in building and operating Luna Park and Scream Zone. According to CAI’s contract with the City, Luna Park also received a subsidy of $5.7 million from the City for “among other things, facilitating the purchase of certain equipment necessary for the Tenant to operate the Premises as a first class amusement park.” CAI’s Luna Park and Scream Zone as well as the property occupied by the Boardwalk businesses are on City-owned land in Coney Island purchased from Thor Equities for $95.7 million in 2009 and leased to the amusement operator for a ten-year period that began in 2010.
Related posts on ATZ…
December 9, 2011: Paul’s Daughter Signs 8-Year Lease for Coney Island Boardwalk
March 3, 2011: The Lowdown on Sodexo’s Sweet Deal in Coney Island
January 26, 2010: Scoop: Zamperla’s $24M Coney Island Park to be Named Luna Park!