http://www.crainsnewyork.com/article...RISM/120729989
Shake Shack gets sidetracked at Grand Central
The popular eatery's long-running plans to open an outpost on the lower-level dining concourse have hit an obstacle. The present occupant, Zócalo, refuses to give up the space.
By Adrianne Pasquarelli @SheLikesToShop
July 20, 2012 1:39 p.m.
Shake Shack's plans to set up another eatery on the downstairs dining concourse in Grand Central Terminal have hit a road block. The current occupier of the space, Mexican restaurant Zócalo, is refusing to leave.
Last month, Robert Shapiro, who owns Zócalo, filed a lawsuit in the Supreme Court of the State of New York against the Metropolitan Transportation Authority and Shake Shack. In the case, Zócalo alleges that the "bidding process [for retail space in Grand Central] is corrupted." The restaurant is also protesting the eviction notice it received in February, and hopes to stay in the space as long as possible.
Neither Mr. Shapiro nor his attorney, Richard Feldman of Rosenberg Feldman Smith, chose to comment.
In January 2011, when the MTA put out a request for proposals, Zócalo submitted a bid to stay where it has been since 1998, but failed to win it. Shortly after, it was announced that Shake Shack, the popular burger and ice cream eatery owned by restaurateur Danny Meyer, was planning to move into Zócalo's spot. Zócalo has been on a month-to-month lease since last fall.
"Zócalo is desperately pursuing any possible means to remain in possession of space it no longer has the legal right to occupy, contrary to the legal rights of the MTA and Shake Shack," said an MTA spokesman. He noted that a civil court in a landlord-tenant proceeding already ruled that the Mexican eatery is in unlawful possession of the space, since its lease has expired.
In the current lawsuit, Mr. Shapiro, who also owns two Flex Mussels restaurants in the city, alleges that because Shake Shack is a chain that operates 14 locations, including outposts in Dubai and Kuwait City, it is ineligible for the spot under the request for proposals restrictions. The request limited bidders to chains with fewer than 10 operating locations, according to the suit.
A spokesman for Shake Shack declined to comment on the pending litigation.
Meanwhile, the MTA is losing out. While Zócalo's annual minimum rent is $336,698, according to an MTA spokesman, Shake Shack's 10-year lease starts nearly $100,000 higher—at an annual minimum rent of $435,000. By the 10th year, the burger chain would be paying $567,000, and will also pay the agency 8% of gross sales over specific thresholds.
The MTA has seen controversy before along similar lines. Last year, the transit giant made headlines when it brought in Apple Inc. to a 23,000-square-foot upper-concourse space, replacing Métrazur, a restaurant. Apple reportedly paid the restaurant $5 million to vacate the property.
with the market these days, if you own anything but land, you own a popcorn farm!