SHOULD YOUR BUILDING RUN A RESTAURANT? P.2

The board sought a bank loan, while at the same time asking homeowners to approve a resolution for a $4,000 payment per unit, which would cover the arbitrated fee plus costs for new tables, chairs, dishes, silverware and a computer system, all of which the court allowed the ousted Dinner Club to remove. The vote squeaked by, and so the bank loan wasn't needed.
Residents formed a committee to go about the process of retrofitting the restaurant, which had closed. But when the board looked for guidance from other condo associations, they couldn't find any that had a restaurant that didn't rely on golf course memberships to bring in a guaranteed stream of customers, Kroll says. It took two tries to find success.

The homeowners interviewed a dozen potential operators, with the contract going to a local, family-run company that had experience in commercial and institutional kitchens but none in restaurants. "In retrospect, it was a poor decision," Kroll says. Indeed, notes Mayer, the contract didn't include a budget guideline for the new operator to follow, and, within three months, the restaurant had racked up a $250,000 deficit, despite (or perhaps in part because of) a menu created by The Hamlet's restaurant committee. Some of the deficit was recouped in negotiations to end the contract; the rest was covered by a homeowners' assessment.

The Hamlet board finally got a fortuitous break: The father of one of a homeowners was selling his restaurant in nearby Great Neck, and so was quickly hired to run The Hamlet's restaurant under a contract requiring him to cover all costs using the monthly owner minimums. Any profit is shared with the homeowners association. Today the restaurant, Kroll reports, is open six days a week for dinner, is usually three-quarters full and "has been such a success with the residents that they are spending well over their minimums, which may even produce enough revenue to make additional repairs."

The restaurant "is operating very profitably" and is still overseen by the restaurant committee, which meets with the operator once a week. Although there has been some grumbling about whether snowbirds who decamp to Florida for the winter can roll over their minimums to be used when they are back in town, the majority of owners, Mayer concludes, "are very happy."

Adapted from Habitat September 2007. For the complete article and more, join our Archive >>