The Applebee’s in Times Square has been ordered to vacate the premises and pay nearly $7 million in overdue rent.
The decision was handed down Monday by a New York Supreme Court judge.
The restaurant at 234 W. 42nd St. is operated by franchisee Apple Metro and has been there for more than 20 years. It began missing rent payments in June 2019, according to court documents, but the bulk of the overdue balance began to accumulate in March 2020, when New York shut down indoor dining amid the pandemic. The Applebee’s reopened in June 2021 and continued to miss payments.
Last November, landlord Madison International Realty served Apple Metro with a lease termination, but the restaurant stayed put, prompting the company to take legal action.
Lawyers for Apple Metro argued that New York’s pandemic restrictions made it impossible for the restaurant to meet its commitments and entitled the company to rent abatement that effectively nullified the lease termination.
Since March 2020, the restaurant’s sales are down 75% compared to the two years prior, according to an affidavit filed in April by Apple Metro co-founder Roy Raeburn. During the 10 months after the restaurant reopened in June 2021, sales were down 23% compared to the same period before the pandemic.
Adding to its troubles was the closure in September 2020 of the neighboring Hilton Times Square hotel, which provided a steady source of customers.
The restaurant employs 80 people and has been leasing the prominent Manhattan location since 1999. Its current lease extended through March 2025.
Apple Metro’s attorney Peter Sartorius said the company wanted to remain in the space but that it wouldn’t be able to immediately meet the landlord’s demands that it repay the overdue rent in full.
“I don't know if my client has the ability to write a check tomorrow, quite frankly,” Sartorius said, according to a court transcript.
Madison International attorney Deborah Riegel responded that the restaurant has been making more than $700,000 a month “and still not paying us a penny,” according to the transcript.
Times Square is prime real estate for restaurants, which must shell out steep rents in exchange for massive exposure. Though largely dormant during the pandemic, the tourist hub has rebounded, and brands including Krispy Kreme, Popeyes and Raising Cane’s have raced to open flagships there.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.