New York City's Metropolitan Transportation Authority (MTA)'s sweetheart deal for Apple's just-opened Grand Central Terminal retail store seems to be paying dividends for the MTA and neighboring stores. One restaurant is reporting a 7 percent increase in sales since the store opened in December.
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Michael Jordan's The Steak House is located across the terminal from the new Apple Store, Grand Central and co-owner Peter Glazier says the restaurant has seen a 7 percent jump in sales in the seven weeks that the Apple Store has been open, reports Crains New York. Glazier also says the rise isn't because Apple replaced another restaurant, Metrazur, in the terminal. "The jump only happened after Apple opened," said Glazier, not in the several months that the space was being renovated as the store was built.
There was some criticism of the deal that Apple and the MTA worked out, most notably around the lack of a revenue sharing agreement which is standard for most tenants of Grand Central. Apple's $60-per-square-foot lease agreement is also significantly lower than what most other tenants are paying. The MTA argued that a flagship Apple Store would bring in significant foot traffic to the terminal, benefiting both other GCT tenants and the terminal as a whole.
The MTA has previously noted that for every 1% increase in sales across the terminal's retailers, the MTA will gain $500,000 in rent due to the percentage rent provisions in place on the leases of nearly every other tenant with the exception of Apple.
MTA's gamble appears to be paying off, for at least one establishment.
(Photo via Yelp/Chris F.)
Top Rated Comments
They aren't losing a boatload. The previous tenant had a lower rent than Apple is paying and their contract had another 7 years or so (can't remember). So, by Apple getting in this space, MTA is making more than they would have.
Further, the $60 per square foot Apple is paying to MTA isn't the total cost. Apple bought out the previous tenant with Millions of dollars up front, and Apple contributed even more to necessary renovations to the building (new elevator is what I heard.)
So, if you're the MTA, and you have someone willing to come in and bring more foot traffic, and that person agrees to improve your building, and that person agrees to pay more than a low rent tenant with a long contract, and they agree to pay-off that tenant.... what is there to say no to?
Correct me if I'm wrong, but I thought the MTA was actually getting more per square foot than they did from the previous restaurant that occupied the premises.
10 extra tables a night, and let's say $50 a table (which is probably on the low side) X 7 days a week X 7 weeks so far = almost $25000 in extra sales without doing a single thing.
Ah that would be the rational response that one would have to the entire situation. However some in these forums think that Apple can do no right, so your logic won't have any effect on them.
The entire deal works in the MTA's favour.
The whole rent thing has been debunked long ago and it works in MTA's and other retailers favor, consistently, and that's from independent accounting reports. Some people just won't let go or have to find fault somewhere, and here they land.
"...10 extra tables a night, and let's say $50 a table (which is probably on the low side) X 7 days a week X 7 weeks so far = almost $25000 in extra sales without doing a single thing..."
It's actually more than that. The place is very spendy, food is great, often hard to make a reservation, and serves 200 to 360 depending on configuration. Figure all that in and it's like a grand a night. And both MTA and Apple got so much criticism (mainly from people who didn't know the facts), why not show a first look response....or is it only good to show the negatives?