I am currently documenting the opening of The Keys restaurant in NYC by Chef Bill Seleno. Please see Part 1, Part 2, and Part 3, and Part 4 to learn more about the concept and menu.
Part of my following the opening of The Keys is to learn more about the logistical side of things so I can share the “underbelly” of how it all works with all of you. I want to know what steps need to be taken, how much it costs, and what really goes into the opening of a restaurant from start to finish. When Chef Bill and I got together to talk about his trips to California and Maine, he also gave me an update about where things stand with the opening.
Turns out, the current owner of the restaurant is causing crazy delays by disappearing for weeks on end. Bill loves the space, but the owner was dragging his feet so long, he was considering that he may need to start looking for an alternative. Bill also found out that there is a lien on the property that the owner supposedly didn’t know about. So it has been a roller coaster and it is hard to keep investors “on the hook” when Bill can’t make an immediate start. As of right now, the May 1st opening is pushed back to July 1st because of the delays. Though it isn’t necessarily a bad thing entirely, since this delay nicely puts the “concession” time (see below for more info) during the summer, which is the slowest time of the year for restaurants.
I asked Bill to explain more about how concessions work, and he told me that the landlord of the building will be giving Bill the first 3 months rent free to give the restaurant time to get on its feet. It’s an investment, in a way, by the landlord to make sure that the restaurant has some time to get started successfully, hopefully ensuring a lasting and loyal tenant.
According to Bill, restaurant sales go down 20-30% in the summer as people flee the city or when it gets too damn hot to go more than a few blocks away from your apartment. So having the slowest 3 months of the year being in concession could really benefit the opening. This will put the first rent month around September, a busy month in the restaurant business and also the month of the San Gennero Festival. The Feast of San Gennero is a street fair in Little Italy that features local restaurants. According to the current owner of the space, he saw a $40K bump for the 10 days after the festival last year. This will be a very nicely timed boost during the first month of paying rent.
The restaurant is 2,200 square feet, split into 2 floors. The upstairs cafe can seat 70, another 70 downstairs, and 40 in the patio area. The rent is ~$15K per month, which includes property taxes (here’s an excerpt from an older version of the lease, that I find fascinating: “In addition to the Base Rent, the Tenant pays a real estate tax escalation of 40% of the tax increase over the Base Tax Year of 1998-99. In 1998-99, the total taxes were $16,343.64; for 2011-12, the total taxes are $98,805.00. The total increase over the Base Tax Year is $82,461.36, and the Tenant’s proportionate share of 40% equals 32,984.66. Therefore, in addition to the Base Rent, the Tenant pays $2,748.72 per month to the Landlord for the tax escalation, which brings the total amount due to the Landlord per month to $11,905.72.“)
He is offering his investors 18% equity in the restaurant with a plan to have a full return on their investment in 2 years. As we talked about this, I couldn’t help but think about the incredible investment (in both time and money) that must be made upfront for a restaurant. Few other ventures require so much of a single person. As Bill was saying, every square foot in that restaurant has a dollar value. Each seat is a square foot.
Bill left for a few weeks to do a gig in Miami (“to get some money in the door”) and then took a trip with his son up to Maine. Now that he’s back, he will be renting a commissary kitchen (test kitchen) for a month to start working on the recipes. His goal is to find a line cook who is interested in stepping up and learning about new processes in the test kitchen. He is hoping to find someone who is aspiring to learn some new things and hopefully will be able to come with him to the space once it opens up. He wants to explore the menu so that it is classic but with molecular gastronomy touches, where it makes sense. This will “accent” the menu rather than direct it. The opportunity for the aspiring line cook of working in the test kitchen is that since it’s a learning environment, there is time to get more creative and learn new concepts as a side project to their “day job” (I guess in the restaurant world, it’s really a “night job”). He also hopes to have his entire staff in that kitchen so they have a hand in development. A waiter who has helped work a recipe will be that much more attached to the concept and food. (It’s also a good testing ground to determine how dedicated his staff is… it’s better to find out who flakes and doesn’t show up, who has a bad attitude, and who isn’t cut out for the job in a test kitchen rather than when you’re up and running.) One other benefit of training staff in the test kitchen is that it will cut down on the time in the actual restaurant, so when construction is done, he can hopefully open up within a few days after testing all the systems. All of this is an added cost, but the size of the kitchen and intricacy of the dishes necessitates the commissary kitchen, so might as well make the most of it! And Bill views it as an investment to make sure the restaurant is successful.
As soon as the lease is signed, they will shut down the space and construction will begin. One investor is specifically for construction. The permits, designers, materials, etc. will be their actual investment. Bill is thinking of a very aggressive 1 month build out (usually I’d question this, but he flipped around Albert Hall Tavern from a night club to a tavern with his own hands and a few others in a short amount of time as well). Bill will provide the direction and concept, and then the investor will realize it.
California and Maine had an influence on Bill, and he has decided to change up the menu a bit to focus some more on fish and vegetarian dishes. And he has decided that he is definitely going to brew! I’m so excited for this, as I love a good micro microbrew and there are few places in NYC that do it. He plans to bring in Yiga from Port Brewing in San Diego to do a west coast brew, and talk to Bar Harbor Brewing in Maine (my own personal brewery) about doing an east coast beer. He hopes to have them collaborate to do an East meets West beer. He also wants to try to get Shmaltz in to do a Prohibition style, “Keys Brew.”
Can’t wait!
Bill is also planning to have live jazz every night and have a DJ mixing with Jazz music on Thursdays through Fridays.
So what’s next? All information was submitted to the investors and next week is the big week. Bill will be buying shares in the current LLC and keeping the owner on as an employee, to keep more of the operating capital in the restaurant itself. The owner’s partner is now working with Bill (to try to keep the owner out of it, since it all seems to be too much for him), and the lien and loans will be coming out of the purchase price. Bill and his lawyer put it all together and sent it to the decision makers. The thumbs up or thumbs down is 1 week away. Eek!
Stay tuned for more news as it develops.
