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Posts Tagged ‘Sodexo’

Sodexo Kiosk at Luna Park Coney Island. May 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

Sodexo Kiosk at Luna Park Coney Island. May 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

While Coney Island’s veteran Mom & Pops hammer out a deal for one last summer on the Boardwalk, French food and facilities giant Sodexo has a sweet 10-year sublease with Luna Park operator Central Amusement International. A copy of the confidential sublease agreement between Sodexo and CAI was obtained through a Freedom of Information Act request to the NYCEDC.

Sodexo’s contract with CAI is dated April 26, 2010 and says it had to be approved by the NYCEDC since the sublease is subordinate to the underlying lease between the City and the amusement operator. Here are some of the terms of Sodexo’s sublease:

–Last season, Sodexo paid Luna Park operator CAI a “flat rental fee” of $75,000 to operate food kiosks in the park. Sodexo keeps all cash receipts and pays all operating expenses. What was the City’s cut? According to the Economic Development Corporation’s (NYCEDC) lease with CAI, the City receives 15% of the fixed rent paid by any subtenant. If you do the math, 15% of $75,000 is a paltry $11,250. By comparison, last year the City received 100 per cent of the rent paid by the Boardwalk businesses, which was $100,000 each for Paul’s Daughter, Ruby’s and the other food concessions.

–Sodexo’s initial investment of $1.432 million is considered a “Reimbursable Initial Capital Investment” for the purchase of four kiosks, a concession trailer, beer and liquor license, and equipment necessary for remodeling and operating the restaurant under construction at Surf Avenue and 10th St. The Reimbursable Capital Investment will be owned and depreciated by the amusement operator.

-In 2011, Sodexo will pay CAI a flat rental fee of $225,000, which means the City’s 15% cut will be $33,750. Pocket change! Beginning in 2012, Sodexo will pay a fee based on the prior year’s net sales. For example, if the prior year net sales are $2.7 million, then Sodexo would pay a flat rental fee of $432,000, or 16% of the net sales.

–CAI gets to decide whether Sodexo will have the option of operating “Branded Concepts” in the park. According to the contract, the term refers to “food and beverage systems operated by Sodexo through national and regional third party license agreements or franchise agreements or through Sodexo’s own in-house trademarked brands.” As ATZ reported in January, Sodexo is known for its cafeterias and individually branded restaurants, but nationally branded subtenants are also brought in under franchising or licensing agreements for the appearance of variety. Branded Concepts frequently mentioned in Sodexo’s ads are Starbucks, Pizza Hut, Sub Connections and Panera Bread.

—Luna Park cannot require Sodexo to use products from “non-Sodexo approved vendors” and suppliers. As we reported previously, Sodexo has a completely centralized purchasing system, which requires clients to choose from a list of “Right Products.” Another term used internally by Sodexo is “Compliant.” Vendors who offer rebates are “compliant” while those that do not are “locked out,” according to investigative reporter Lucy Komisar in “Cafeteria Kickbacks: How food-service providers like Sodexo bilk millions from taxpayers and customers.” Last July, then-Attorney General Cuomo issued a press release announcing “a $20 million settlement with food services provider Sodexo for overcharging 21 New York school districts as well as the SUNY system.”

–Sodexo is an independent contractor and has its own employees. The lease contains more than a dozen clauses to insure compliance with non discrimination and affirmative action policies as well as City programs such as Minority and Women Business Owned Enterprises. According to NPR, Sodexo executives say they are trying to create a more diverse workplace after settling an $80 million class action discrimination lawsuit brought by African-American employees in 2006.

–After 3 years, either party is free to terminate the lease. If the agreement is terminated by Sodexo for convenience or by CAI for cause, at the end of the third year CAI would have to reimburse the remaining unamortized value of the Reimbursable Initial Capital Investment ($1.432 million) over a three year period, payable on a monthly basis, with interest accruing at the prime rate in the Wall Street Journal plus 2%.

CAI’s Luna Park and soon-to-open Scream Zone are on City-owned land in Coney Island purchased from Thor Equities for $95 million and leased to the amusement operator for ten years. As the Sodexo sublease makes clear, CAI has a pretty sweet deal too. Their base rent is $100,000 annually plus a small percentage of the gross receipts. For example, ten percent of gross receipts over $7 million.

However, Central Amusements is also investing nearly $30 million in building and operating the park. 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.”

Sodexo, which is the 21st largest corporation in the world, has a market value of 7.7 billion euros ($10.59 billion). The French food and facilities management giant has been CAI’s partner for “On Site Service Solutions” since Luna Park opened last May, though the partnership was not announced by the City or CAI. Sodexo’s presence was known only within Coney Island until ATZ first reported the news in November after the Boardwalk businesses received eviction notices on November 1st, the day after the 2010 season ended.

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Related posts on ATZ…

March 31, 2013: Surf’s Up for CAI Foods in Coney Island, Sodexo Is Out

October 20, 2011: Reversal of Fortune on the Coney Island Boardwalk

January 20, 2011: Sodexo Investing $2.4M in Zamperla’s Coney Island

January 13, 2011: Paul’s Daughter Dishes on the Boardwalk Brawl

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Under construction

Under Construction: Sodexo Restaurant on Surf at 10th St, Coney Island. December 23, 2010. Photo © Bruce Handy/Coney Island Photo Diary via flickr

The French multinational Sodexo is investing $2.4 million in Zamperla’s Coney Island and has an exclusive contract to manage the food and facilities for the City’s amusement operator, sources told ATZ.

Sodexo has been Zamperla’s partner for “On Site Service Solutions” since Luna Park opened last May, though the partnership was not announced by the City and was known only within Coney Island until ATZ first reported it in November.

This season, Sodexo will operate food and beverage kiosks in the new Scream Zone in addition to Luna Park. The corporation, which is the 22nd largest in the world, also plans to open up their own restaurants at Paul’s Daughter’s Boardwalk location and the former Gregory & Paul’s on Surf Avenue across from the Cyclone. As previously reported last month, the Surf Ave restaurant is currently under construction.

Luna Park

Rendering of Luna Park's Main Gate Shows Luna Park Cafe on the Left Side

ATZ obtained a copy of Zamperla/CAI’s proposal to the City which describes the Surf Avenue restaurant. The decor sounds a bit like Ruby’s and the Coney Island History Project: “The Luna Park Café pays tribute to the long history of Coney Island with memorabilia and tributes from local residents and visitors from around the world. This unique environment provides the backdrop for quick service prepared-to-order meals. The menu will be designed to provide a more balanced meal option for visitors looking for a complete meal and will be a venue where ‘healthier’ alternatives can be found. Potentially a year round venue, the Luna Park Café will also serve as the primary point of food service for all team members where an employee discount will be available.”

Sodexo Kiosk at Luna Park Coney Island. May 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

Sodexo Kiosk at Luna Park Coney Island. May 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

The proposal goes on to say that more extreme foods will be featured inside Scream Zone. “With thrill rides comes thrilling food and beverages which will use elements of spice, exotic-flavors, irregular sizes, and ‘u-decide’ the ingredient items where guests can challenge their imaginations. A kiosk-type portable network, as previously described, will be looked upon to enter this phase of the operation. A heavy emphasis will be placed on the design of each location to assimilate into easy accessibility from each attraction. This service plan provides the flexibility needed to keep Scream Zone evolving. A final count of locations has not been determined at this time but a similar strategy as used for Luna Park Phase I will be applied.”

Scream Zone

Banner for future Scream Zone. May 28, 2010. Photo © Tricia Vita/me-myself-i via flickr

In regard to the Boardwalk concessions in 2011, Zamperla’s proposal says they “will be combined and integrated into the food and beverage operations of Luna Park and Scream Zone. This is an important step in the presentation of Luna Park and Scream Zone from their beach points of entry. Structures would be improved and remodeled to mesh with the aesthetics of the respective parks. To be successful within the food and beverage part of the operation, this plan will constantly be reviewed and modifications made annually. New product development will always be looked upon, as well as the demands of the guests as ways to improve.”

Sodexo is known for its cafeterias and individually branded restaurants, but nationally branded subtenants are also brought in under franchising or licensing agreements for the appearance of variety. Whether the Sodexo client is a college, school, hospital, government, corporation or leisure destination, one constant is Sodexo’s completely centralized purchasing system, which requires clients to choose from a list of “Right Products.” Another term used internally by Sodexo is “Compliant.” Vendors who offer rebates are “compliant” while those that do not are “locked out,” according to investigative reporter Lucy Komisar in “Cafeteria Kickbacks: How food-service providers like Sodexo bilk millions from taxpayers and customers.” Last July, Attorney General Cuomo announced “a $20 million settlement with food services provider Sodexo for overcharging 21 New York school districts as well as the SUNY system.”

Sodexo Kiosk at Luna Park Coney Island. May 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

Sodexo Kiosk at Luna Park Coney Island. May 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

With just 88 days till the opening of Coney Island for the season on Palm Sunday –April 17, 2011– Zamperla’s Central Amusement International is locked in an ugly eviction battle with the Coney Island 8. The veteran Mom & Pops, including Ruby’s Bar and Paul’s Daughter, which have been Boardwalk favorites for decades, hope to remain. The Coney Island 8’s website claims, “Inside information suggests that Sodexo did not want to deal with The Coney Island 8 and therefore would not accept the contract with Zamperla without full control over all the food establishments.”

Sources familiar with Zamperla’s situation don’t expect the amusement operator to agree to any settlement that would allow the Coney Island 8 to remain on the Boardwalk since plans to make over the Boardwalk are well underway. Zamperla and Sodexo are said to be bringing in new businesses which have submitted letters of intent and now have leases in hand. Some of the newcomers have already gone in and measured the spaces or received the architect’s plans. Insiders characterize the Boardwalk makeover as a done deal. The next court date is February 16, just 60 days before Coney Island’s opening day. But it’s possible a settlement will be reached before then. A settlement would at least compensate the Coney Island 8 for the costs of those very unnecessary “business plans” and help them relocate in Coney or elsewhere.

Ruby's Bar & Grill, Coney Island. May 28, 2010. Photo © Tricia Vita/me-myself-i via flickr

Ruby's Bar & Grill, Coney Island. May 28, 2010. Photo © Tricia Vita/me-myself-i via flickr

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Related posts on ATZ…

March 31, 2013: Surf’s Up for CAI Foods in Coney Island, Sodexo Is Out

October 20, 2011: Reversal of Fortune on the Coney Island Boardwalk

March 3, 2011: The Lowdown on Sodexo’s Sweet Deal in Coney Island

November 23, 2010: Meet Sodexo: Luna Park Coney Island’s Partner for “On-Site Service Solutions”

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1959

1959: Paul's wife and daughter visit him on the Bowery. Photo © Tina Georgoulakos via Paul's Daughter Facebook

Over the past two months, the owners of Ruby’s and Shoot the Freak have emerged as the spokesmen for the Coney Island 8, the eight Boardwalk businesses locked in a eviction battle with Zamperla’s Central Amusement International.  But we’ve heard very little from the others. ATZ got in touch with Tina Georgoulakos, owner of Paul’s Daughter, which was founded as Gregory & Paul’s in 1962, for her view on the Boardwalk Brawl.

“I wanted so much to be a part of the New Coney Island but they didn’t even offer me a tiny little spot on the Boardwalk,” says Tina. “They didn’t even respond to me about my proposal, they didn’t even write my name on the eviction notice. And then to find out I’m being replaced by Sodexo, a company who paid out $100 million to settle lawsuits because of racism against their employees and fraud against New York schools. I feel like I’m in a bad B movie.”

Tina and Paul Georgoulakos

Day after the eviction: Tina and Paul Georgoulakos. Photo © Tina Georgoulakos via Paul's Daughter Facebook

Zamperla’s plan for Paul’s Daughter’s Boardwalk location at the southeast corner of Luna Park is a restaurant run by food management giant Sodexo.  The French multinational is the world’s 22nd largest corporation. Since the park opened in May, the company has been Zamperla’s partner for “On Site Service Solutions,” setting up and managing food and beverage kiosks in the park.

In early December the Boardwalk businesses were asked to give access to architects from a firm that was hired by the EDC this summer to do existing condition reports on each of the Boardwalk properties.  They were requested to provide access for them since the city needed these reports for insurance purposes.

“The architects did complete floor plans and elevations, they then turned those drawings over to Sodexo,” says Tina. “One of the architects asked Sodexo rep Sandy Boyd if Sodexo was going to be  a year-round  restaurant and she replied ‘oh no, it will be seasonal, there aren’t enough people here off season.’ Of course being open all year is what CAI has been pitching to the public so it’s just another lie.”

Burger Girl

Burger Girl at Paul's Daughter. Photo © Tricia Vita/me-myself-i via flickr

After the shock of finding out that her location at the Boardwalk entrance to the park would become a Sodexo-run restaurant, Tina was disapppointed that the City and Zamperla didn’t at least offer her another space, even a smaller one, on the Boardwalk.  If another location had been offered she would have a smaller menu and take the Burger people from the roof and put them together, along with the iconic signage, she says.

The lack of support from City officials and some comments in the media have also been hurtful. In Monday’s NY Post, Councilman Domenic Recchia said, ‘I understand the sentiment that these businesses have been here a long time, but they also made a lot of money paying cheap rent all these years. If they really cared, I know firsthand that they had plenty of chances to buy these properties and fix them up, but they never did.”

Gregory & Paul

1962: Paul partners with Gregory Bitetzakis and takes over the old Howard Johnson’s on W. 8 St. and the Boardwalk. They call it Gregory & Paul’s Bar and Grill. 1968: Rockefeller buys the property their store is on and donates it to the Aquarium, putting them (and seven other stores) out of business. Photo © Tina Georgoulakos via Paul’s Daughter Facebook

“I wish Recchia had called me. I imagine he’s going to be very angry when he finds out he was misinformed,” says Tina. “It hurts me to hear such untruths about my store Paul’s Daughter. There aren’t any violations against it.  I’ve been handcuffed by one year leases for years and years. And I would have given anything to have been given the opportunity to purchase the property but it was never offered and by the way it sold for 32 30 million dollars to Sitt.  I pay $100,000 for seven months.  I guess some people don’t think that’s a lot. I proposed to spend hundreds of thousands of dollars to modernize my iconic store.”

Paul’s Daughter is located on the former Astroland property and was able to remain there after Sitt bought the land. In 2009, the city purchased the property along with two additional lots on Stillwell for $95 million and leased them to Zamperla, which pays $100,000 annual rent plus a small percentage of the gross receipts to the City. 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.”

Easter Brunch at Paul's Daughter on the Boardwalk. Photo © Tricia Vita/me-myself-i via flickr

Easter Brunch at Paul's Daughter on the Boardwalk. Photo © Tricia Vita/me-myself-i via flickr

“I would have been elated to share in Valerio’s vision for Coney Island only he kept it a secret,” said Tina. “If they were even entertaining the idea of me staying wouldn’t they have shared their vision with me?”  On the day of eviction, Valerio Ferrari, Zamperla USA CEO, told ATZ: “They didn’t have the vision that we have for the Boardwalk. It’s a business decision.” He said Zamperla/CAI’s vision is to revitalize the Boardwalk by making it a lively place open 365 days a year. But it’s also a matter of investment dollars.

Says Tina: “It breaks my heart  to know that not only is my city, my beloved New York, not helping me, they are trying to tell lies about my business to make me look bad.  I haven’t a clue as to why.  Ask anyone in Coney Island about my dad aka ‘The Chief.’ I don’t know a soul who doesn’t adore him. Forty-one crazy, wonderful years on the Boardwalk.  I love NY….. I love Brooklyn and I love the view from my store even more.  I wish someone could help me stay.”

paul's daughter

Last Day of Season at Paul's Daughter, Oct 31, 2010. Photo © Tricia Vita/me-myself-i via flickr

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Related posts on ATZ…

November 13, 2011: The End of Paul’s Daughter As We Know It–Will They Return?

October 8, 2011: Photo of the Day: “The Chief” of the Coney Island Boardwalk

November 21, 2010: Goodbye (Or Maybe Not?) to My Coney Island Equivalent of Proust’s Madeleine

November 10, 2010: This Week in Coney Island: Party at Paul’s Daughter, Hypocrisy at NYCEDC

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