Sbraga & Co Closes Abruptly

[Adam White]

Not to much new info, but they may update the article as calls are returned.

http://www.bizjournals.com/jacksonville/blog/morning-edition/2016/07/sbraga-company-says-closing-wasnt-its-decision.html?ana=e_jac_rdup

It may not have been his decision, but if it was closed due to him being behind on the rent, then it may as well have been. I'm not saying it was closed for that reason - but I find it odd that he is making such a point about it not being his decision, yet not providing any more details.

Well, I don't know.  People truly act like monthly payments on leases are quasi religious.

The guy spent a million and a half on the buildout, and lent his name and celebrity to the project.

A lease is really an agreement to trade money for time. So if you have a year long lease for a space at 1000 dollars per month, its actually a 12,000 dollar lease to use the property as though you owned it for a year.  Thats why prices are quoted square foot per year. ($25 per sq ft. is not a monthly price in commercial renting)

The payments can be made regularly, or they can be made at one time. Or monthly or quarterly, or semi annually.

Once you've made the good faith of spending that kind of money on building out a space, its not like the landlord doesn't have equity as collateral. It would be a dickish move not to provide some communication or leeway or some alternate negotiation in a situation like this if it was just a matter of rent.

I would assume it would be down to the terms of the lease. For example, I have a 92 year lease on my flat. I am contractually required (by the bank) to make monthly mortgage payments. Of course, that's down to the bank in my case.

I've never rented anywhere and been allowed to pay my rent in a lump sum at any time other than up front. The situation is likely different for commercial spaces, but I would be pretty confident that a schedule of payments would have to be arranged in advance, not after the fact (by the lessee).

As far as this place is concerned, beyond not know the cause of this, we certainly don't know what leeway afforded by the lessor (nor do we know what was communicated).

He could owe a lot of money. Or it could be something else entirely.

[MusicMan]

Pretty sure John Valentino paid $900,000 just for the old gas station site where MM sits now, plus all the other square footage. That had to be at least an additional $1,000,000?  Then he had new construction costs plus interior build outs, etc...................

$1.5 million seems pretty reasonable compared to that.

[Captain Zissou]

I'm not sure this restaurant had the traditional ownership structure that you guys are all assuming.  Do you have evidence of Sbraga himself leasing the space and fronting the buildout costs?  The information I have gathered points in a different direction.  The abrupt closure and short timeline would indicate that Sbraga wasn't just behind on payments, but was ousted from the partnership.

[Adam White]

Not to much new info, but they may update the article as calls are returned.

http://www.bizjournals.com/jacksonville/blog/morning-edition/2016/07/sbraga-company-says-closing-wasnt-its-decision.html?ana=e_jac_rdup

It may not have been his decision, but if it was closed due to him being behind on the rent, then it may as well have been. I'm not saying it was closed for that reason - but I find it odd that he is making such a point about it not being his decision, yet not providing any more details.

Well, I don't know.  People truly act like monthly payments on leases are quasi religious.

The guy spent a million and a half on the buildout, and lent his name and celebrity to the project.

A lease is really an agreement to trade money for time. So if you have a year long lease for a space at 1000 dollars per month, its actually a 12,000 dollar lease to use the property as though you owned it for a year.  Thats why prices are quoted square foot per year. ($25 per sq ft. is not a monthly price in commercial renting)

The payments can be made regularly, or they can be made at one time. Or monthly or quarterly, or semi annually.

Once you've made the good faith of spending that kind of money on building out a space, its not like the landlord doesn't have equity as collateral. It would be a dickish move not to provide some communication or leeway or some alternate negotiation in a situation like this if it was just a matter of rent.

I would assume it would be down to the terms of the lease. For example, I have a 92 year lease on my flat. I am contractually required (by the bank) to make monthly mortgage payments. Of course, that's down to the bank in my case.

I've never rented anywhere and been allowed to pay my rent in a lump sum at any time other than up front. The situation is likely different for commercial spaces, but I would be pretty confident that a schedule of payments would have to be arranged in advance, not after the fact (by the lessee).

As far as this place is concerned, beyond not know the cause of this, we certainly don't know what leeway afforded by the lessor (nor do we know what was communicated).

He could owe a lot of money. Or it could be something else entirely.

Sure, the terms are important, but you do know that you can pay an entire year of rent ahead, any time that you like.

I made the post to point out that there is always room for negotiation, if both parties are willing.

And there are sound reasons for this.

For example, it was very hard for Toney Sleiman to convince established chains to sign leases with him because of the reputation he had with mom and pop start ups. Once you get a reputation as a risky place to conduct business, doors close for you.  Look no further than the commercial district of Springfield for an example. It remained dead for ten years, whilst districts less renovated surged ahead in commercial activity.  Its only now beginning to pick back up, with the pro business leadership of Christina Parrish and the other newcomers at SPAR.

Can you imagine that the next place in that space will be willing to spend more than a million, and a lot of national mentions of the restaurant to help market it?

I acknowledged in my post that you could do it up front. But anyway, I am not fussed. I don't know why the place was locked up and I'm as curious as anyone else to find out why. It's a real shame, regardless.

[Captain Zissou]

It's my understanding that it was Hallmark's money and Sbraga licensed his brand to the restaurant and served as a consultant.  Hallmark has moved on from this concept and is working with a new tenant for the space.

[kaitlynrosesullivan]

It not being his first project to close like this, I have a very hard time believing that any part of his released statement is true. #sbrexit

[icarus]

Ive dealt a lot with these types of buildouts in several capacities.  What I've seen more of lately is the landlord providing all of the buildout costs including kitchen equipment in return for an operating lease from a well known/brand chef or chain.  the chef often times is part of an operating group/partnership.  If expectations of the landlord are not met and/or there is a shakeup in the operating group, typically, the landlord will bring in another operator.  A lot of times the closure is brief but in this instance since the branding is Sbraga, it will probably take longer to rebrand.

The restaurant has not been open long enough for it to be a strictly rent issue.  I'm not sure we will ever know the entire back story.  I for one am just hopeful the landlord brings in a new operator that will attract even more traffic with their cuisine. 

[mbwright]

How long should it take to break even on a $1.5 mill purchase/build out?  How do investors make money at this?  Just curious from a business perspective.  You would have to sell a lot of burgers and such.

[PeeJayEss]

It not being his first project to close like this, I have a very hard time believing that any part of his released statement is true. #sbrexit

Pretty solid first post, assuming you came up with that hashtag.

[mtraininjax]

Every time I go for a run or bike ride on Riverside Ave I am totally flabbergasted that there's this ridiculously absurd six lane road ripping through Brooklyn. Terrible. Hopefully whatever is built back up on those empty lots is urban and not like the Fresh Market or Gate Station, i.e. suburban style developments.

Well, it used to be 4 lanes, then FDOT decided it needed to be 6 lanes. If you don't like Brooklyn now, you would have hated the moon-like look before anything was built on it once all the buildings and structures were leveled to make way for the 6 lane strip.

We call that "Progress" here in Jax!

[Sentient]

It's my understanding that it was Hallmark's money and Sbraga licensed his brand to the restaurant and served as a consultant.  Hallmark has moved on from this concept and is working with a new tenant for the space.

https://youtu.be/9aKj777atio?list=PLUY2k-bGR9Hx24nYtxtDeEF7mcUPmwOVD