Padow’s at Willow Lawn will close Friday

After a lengthy disagreement with their landlord, the owners of Padow’s announce they’ll close their Willow Lawn location after 25 years.

March 28, 2013; 9:51 AM • by Nathan Cushing

Update #1 — March 28, 2013; 9:51 AM

Padow’s Hams & Deli at Willow Lawn will close tomorrow evening after a lengthy disagreement with their landlord (see below), according to a post from the delicatessen’s Facebook page.

Padow’s at Willow Lawn would like to thank the many friends we have made over the past 25 years. We stand behind our motto “Great Food, Fast & Friendly Service, Satisfaction Guaranteed.” Unfortunately, The Willow Lawn store Will CLOSE for business at 6 p.m. on Friday March 29, 2013.

The six remaining Padow’s in the area will remain open.

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Original — December 21, 2012

Padow’s Hams and Deli, one of Richmond’s oldest family-owned delicatessens, filed for Chapter 11 bankruptcy protection last month. According to Padow’s co-owner and president, Sidney Padow, filing for bankruptcy protects the deli at the Willow Lawn shopping center from an unlawful detainer filed by the shopping center’s owner, Federal Realty Investment Trust (FRIT).

Padow said that the decision to file for bankruptcy came “several months” ago after FRIT said it would file the unlawful detainer, a legal action typically leveled against tenants who don’t pay rent. Padow said the rent at the Willow Lawn location, which has housed the restaurant since 1988, is unaffordable.

Padow claims that rent for the Willow Lawn business costs roughly $11,000 each month, or about 25 percent of its sales (which appears to exceed that of other restaurant’s rent-to-sales ratios, which can typically range from 8-15 percent). Padow said that food prices account for up to 50 percent of sales, followed by labor at 30 percent. As a result, the atypically high rent has pushed the Willow Lawn restaurant into the red for the past several months. It’s not the first time Padow’s and FRIT have clashed over money.

In 2006, Padow’s and FRIT negotiated and signed a 10-year deal to decrease the deli’s rent after Padow’s moved to a new location within the Willow Lawn complex. That lease also stated that FRIT couldn’t allow “any business which primarily operates a national sub/sandwich restaurant such as Subway or Blimpies” to operate within a certain vicinity of Padow’s. Five Guys Burgers and Fries and Qdoba opened nearby in 2007 and 2008, respectively.

Padow’s owners repeatedly contacted FRIT at that time to complain about the presence of those businesses, which they believed violated the non-competition terms of the lease. Padow’s claimed FRIT never responded. A recent inquiry to FRIT about Padow’s was returned by Sarah North, a marketing manager, who said “Federal Realty does not comment on any financial or lease details” of its tenants.

In 2008, as a result of a fledgling economy, many businesses went south. “Our business went south too,” Padow said, claiming a two-thirds decrease in sales.

Years later, a Richmond BizSense article reported that, beginning in 2009, the Willow Lawn Padow’s did not pay rent as a protest against the inclusion of Five Guys and Qdoba. Padow recently refuted that claim.

However, he did say that Padow’s had trouble paying rent beginning in 2010. In that year, FRIT filed an unlawful detainer against the deli as a result. Padow’s later filed suit in response claiming that FRIT had violated the terms of their 2006 lease by allowing the Five Guys and Qdoba. The parties came to an agreement later in 2010.

Padow said that, as part of that agreement, the Willow Lawn location was charged an additional monthly sum on top of existing rent. That additional sum was to pay back deferred rent owed to FRIT. According to Padow, in 2011 that added monthly sum was roughly $1,500. In 2012, it was $3,500.

With the current rent price about $8,000, plus the $3,500 in back rent owed to FRIT per the 2010 agreement, Padow’s monthly payment is just over $11,000. “We got to a point where we couldn’t afford [the rent],” Padow said. According to the recent bankruptcy filing, Padow’s owes FRIT $154,543. “This is the right thing for us to do,” Padow said about filing for bankruptcy, adding the deli will “try to avoid what Bill’s BBQ had to do.”

Padow expressed displeasure with FRIT for not extending breaks in the rent amid the recent economic downturn. “Most landlords are helping people,” including other property owners from which other Padow’s lease, he said. According to the co-owner, the Willow Lawn location has not paid rent since June 2012. “We ran out of money, and that’s the reason we filed for bankruptcy.” He said that the parties have been negotiating since June on a more affordable rent agreement.

A subsidiary of Padow’s that oversees six Padow’s franchises, Padow’s Deli Inc., also filed for bankruptcy last month. Padow cautioned that these six locations, as well as an additionally owned Padow’s, are not endangered due to the legal matters of the Willow Lawn location. He said declaring bankruptcy was “to protect ourselves” against any additional litigation. The bankruptcy filing, and any potential removal from Willow Lawn, is “not going to have any effect on the other restaurants.”

Padow said that owners will go before a judge in late January 2013, at which time the judge will likely decide if Padow’s will remain at Willow Lawn. Padow said he would like to remain at the shopping center, but recognizes chances of that happening are slim. “I’m not optimistic, but I’m going to be hopeful,” he said.

When asked what loyal customers and fans of the business can do to help, Padow was blunt: “Pray.”

 

photo by GYLo

March 28, 2013 9:51 AM 3 1 update