The Times Square Applebee’s Neighborhood Bar + Grill is being evicted after its owners were forced to pay $7 million in back rent following three years of nonpayment.
The State Supreme Court judge also decided last week that the location’s franchisee, Apple-Metro, must reimburse its landlord for overdue rent and expenditures dating back to June 2019.
However, the restaurant’s attorneys claim that the COVID outbreak aggravated its cash flow problems.
In court documents obtained by Crain’s New York, attorney Peter Sartorius argued that this made it practically impossible for the restaurant, which reopened in June 2021 as part of New York’s phased reopening, to conduct business and recover lost revenue.
Still, in October 2021, just five months after the restaurant reopened, the Glendale, California-based franchise was presented with a notice of default by the landlord Madison International Realty.
And one month later, the landlord cancelled Apple-leasing Metro’s deal, which was slated to end in 2025.
A New York Supreme Court judge issued an eviction notice to the Applebee’s restaurant in Times Square after the franchisee failed to pay rent during the COVID outbreak.
The store was franchised by Apple-Metro Inc. under the direction of former president Roy Raeburn. In December 2021, he is photographed here with Dr. Mehmet Oz, former New York Police Commissioner Ray Kelly, and Apple-Metro Inc. CEO Zane Tankel.
Madison International Realty served the Glendale, California-based chain with a notice of default in October 2021, and terminated its lease with Apple-Metro the following month.
In court hearings, the landlord’s attorneys stated that the parties attempted to negotiate a resolution that would have allowed Applebee’s to remain in the 11,000-square-foot space, but no agreement was reached.
Deborah Riegel of Rosenberg and Estis stated that the landlord would not accept anything less than the full sum, which the franchisee refused to comply with.
Raeburn stated in an April affidavit that the casual dining restaurant’s revenues have decreased since the onset of the pandemic.
She stated in court records that the corporation was raking in $700,000 per month and that if Applebee’s were evicted, the landlord could find another tenant willing to pay the rent.
However, attorneys for Applebee’s in Times Square have contended that the restaurant franchise experienced financial difficulties during the outbreak.
It had made a hardship statement at the time, alleging it was experiencing financial difficulties owing to government-mandated restaurant closures and capacity constraints.
It then obtained $3 million in forgiven Paycheck Protection Program loans, but only to assist the 80 employees during the restaurant’s shutdown.
Roy Raeburn, the co-founder of Apple-Metro, stated in an April affidavit that sales have decreased by 75 percent since the onset of the pandemic compared to the same two-year period before to the pandemic.
And since the restaurant reopened in June 2021, sales have decreased by 23% compared to the same 10-month period preceding the epidemic.
Adding insult to injury, he noted that the restaurant’s primary source of clients, the Hilton Times Square, will permanently close in September of 2020.
The Times Square building has struggled to retain tenants during the pandemic, with three spaces formerly occupied by major retailers such as Modell’s, Ripley’s Believe It or Not!, and the Liberty Theater being marketed for lease less than a year after COVID was first identified in the United States.
In July, it was announced that a popular candy store chain, IT’SUGAR, had signed a contract to occupy the 20,450-square-foot space left vacant by Modell’s departure.