CRAINSNEW YORK BUSINESS
Where the homeless are headed P. 9 | The list: Top women-owned businesses P. 14 | Restaurants’ no-tipping alternative P. 20
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STILL LIFE Ten years after a little law took the shackles off the booze business, companies such as Brooklyn’s Van Brunt Stillhouse are booming PAGE 16
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P001_CN_20170306.indd 1 3/3/2017 5:47:40 PM 20 YEARS ISN’T A TREND. IT’S A TRADITION.
CBRE’s 20-year, unbroken legacy of leadership in Manhattan deal-making continues. With 28 of the top 50 lease transactions in 2016, including eight of the top 10, our performance underscores a commitment to doing what we do best: consistently delivering powerful results for every client we serve.
CN018183.indd 1 3/1/17 5:05 PM MARCH 6 - 12, 2017 CRAINSNEW YORK BUSINESS
FROM THE NEWSROOM | JEREMY SMERD | EDITOR IN THIS ISSUE
The psychology of poverty 4 AGENDA 5 IN CASE YOU MISSED IT ONE OF THE BEST-KEPT SECRETS in my Bed-Stuy neigh- 6 WHO OWNS THE BLOCK borhood is a Super Foodtown that is the size of a suburban Depressed 8 ASKED & ANSWERED Democrats supermarket and features free underground parking that could be bad 9 POLITICS for the city’s makes schlepping groceries a cinch. But the market never economy sees the cheek-to-jowl crowds that beset Brooklyn’s Fairway, 10 VIEWPOINTS Trader Joe’s and Whole Foods locations. 14 THE LIST Colvin Grannum, CEO of the Bedford Stuyvesant Res- FEATURES toration Corp., shuddered as I shared that observation with him at our office last week. Grannum has spent decades -de 16 BOTTOMS UP veloping the 300,000-square-foot plaza along Fulton Street, 20 THE NO-TIPPING POINT with the goal of making it a neighborhood destination clamoring with customers. Today it is the home of many People don’t see key businesses that otherwise would not be in the neigh- themselves making P. 24 Lior Lev Sercarz borhood. Along with Foodtown, the plaza features several “ more money and major banks (which are indeed often crowded), a post office, an Applebee’s and other enterprises. moving up the My comment reminded him that his effort to bring in economic ladder services that residents in wealthier neighborhoods take for granted has not always been met with open arms by Bed- Stuy’s longtime locals. “This is too nice for the community,” 24 GOTHAM GIGS Grannum recalled as being people’s reaction when the supermarket first opened. “That is painful to hear.” 25 SNAPS Grannum got similar feedback more recently, when he pushed to bring Citi Bike 26 FOR THE RECORD to the neighborhood. “We thought this was great,” he said. After all, bike-sharing 27 PHOTO FINISH can be cheaper than the subway, would help locals get around and could address the CORRECTION high rates of hypertension and diabetes in the neighborhood. But locals generally Rockefeller Group is both a landlord and a landlord saw it as a service for the gentrifiers—like me—who are rapidly moving in. representative for 1221 Sixth Ave. “The list,” pub- That same distrust colors residents’ views of the mayor’s affordable-housing lished Feb. 27, omitted these facts for two leases. plan. Supporters such as Grannum know that poor people in neighborhoods with mixed incomes fare better because schools and services tend to be superior. That’s why he agrees that affordable housing should be available to a range of incomes and that the mayor’s plan strikes the right balance. But that’s not how critics of the plan, including many in my community, see it. They want more focus on the poorest New Yorkers and view housing for folks making $60,000 per year as unattainable for them, a perception that suggests many low-income New Yorkers see themselves entrenched in poverty. In their eyes, af- ON THE COVER fordable housing is not a way to move up but a wedge to force them out. PHOTO: BUCK ENNIS “People don’t see themselves making more money,” Grannum said. “They don’t see it as housing for them as they move up the economic ladder.” DIGITAL DISPATCHES
Go to CrainsNewYork.com CONFERENCE CALLOUT MARCH 21 READ The de Blasio administration JIMMY VAN ARTS & CULTURE > BRAMER backed a pair of City BREAKFAST Council bills that JOIN CRAIN’S and Jimmy Van would impose new Bramer, city councilman and requirements on the Cultural Affairs committee fast-food industry. But chairman, as well as others were said to need further refinement. others for a discussion of One bill that was supported would require funding strategies for arts and eateries to give workers advance notice of culture organizations. their schedule. CON EDISON ■ NBCUniversal invested $500 million in 4 IRVING PLACE Snap Inc. as part of the social media compa- 8 to 10:30 a.m. ny’s IPO March 2. The media giant has been [email protected] pouring money into digital companies over the past two years. It invested $400 million in BuzzFeed and $200 million in Vox. Vol. XXXIII, No. 10, March 6, 2017—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for double issues the weeks of June 26, July 10, July 24, Aug. 7, Aug. 21 and Dec. 18, by Crain Communications Inc., 685 Third ■ New York will launch a rebate of up to Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send $2,000 for zero-emission and plug-in electric address changes to: Crain’s New York Business, Circulation Department, 1155 Gratiot Ave., Detroit, MI 48207-2912. For subscriber service: Call (877) 824-9379. Fax (313) 446-6777. $3.00 a copy, $99.95 one year, $179.95 two years. hybrid cars on April 1. The incentive, which (GST No. 13676-0444-RT) ©Entire contents copyright 2017 by Crain Communications Inc. All rights reserved. will make electric vehicles more price- competitive with regular cars, is part of the state’s effort to reduce carbon emissions. AP IMAGES, BUCK ENNIS
March 6, 2017 | CRAIN’S NEW YORK BUSINESS | 3
P003_CN_20170306.indd 3 3/3/17 6:08 PM WHAT’S NEW March 6, 2017
AGENDAHere’s a tip for the city: Let Uber decide how to run its business
ity regulators have had their hands full with the for-hire- vehicle industry for several years. The advent of Uber and its rivals has upended taxis’ finances, lured tens of thousands of New Yorkers to try driving for a living, curbed subway and Cbus ridership, and added traffic to the most congested parts of the city. We don’t envy the Taxi & Limousine Commission’s impossible job of trying to keep all the riders, drivers, fleet owners, startup companies and tech entrepreneurs happy. But at least one of the agency’s decisions is easy: It should refrain from forcing Uber to add a tipping option to its app. TIPPED OFF: Uber doesn’t offer a Some Uber drivers have formed a unionlike group and petitioned the tipping option, and riders are commission to tinker with the company’s software. They want passengers fine with that. to be presented with a choice to add a gratuity at the end of each ride (via their smartphone), as taxi customers are when they pay by credit card. Such a mandate would be an unjustified government intrusion into a busi- It is acceptable for the TLC to include a tipping option for yellow cabs ness’s operations. because the agency also sets fares and limits medallion lease rates. A restau- We understand the argument for a level playing field. But the field can- rant that bans tips can raise its prices to compensate, but a taxi cannot. not be perfectly flat. If there were one set of rules for every segment of the If Uber drivers want what taxi drivers have, they should vote with their industry—including taxis, black cars and feet and drive taxis instead. Indeed, the taxi livery cars—there really would be only one If Uber drivers don’t like the industry would welcome them. Drivers also segment, and it would be a quasi-govern- could migrate to an Uber competitor that mental operation. company’s no-tipping policy, they are has tipping in its app. Of course, Uber com- By demanding a tipping option, Uber free to work for a competitor mands 73% of the on-demand ride market, drivers are attempting to cherry-pick one so there could be a trade-off of having fewer perceived benefit of taxi drivers without customers. Decisions, decisions. having to meet any of their other obligations, such as granting every ride App developers also have choices. They compete for drivers and riders, request encountered within the five boroughs, working eight-hour shifts, and if they fail on either count, they quickly lose market share. Uber has installing a partition, using a fare box and displaying a medallion on their said its customers prefer that tipping is not expected. Such calls should be vehicle that costs about $600,000. made by drivers and companies, not regulators. — THE EDITORS
FINE PRINT Mayor Bill de Blasio is proposing a 2.5% surcharge on residential sales exceeding $2 million—which he says would raise more than $330 million and be used to fund rent subsidies for about 25,000 low- income senior citizens. From 2014 through 2016, only 8% of city residential sales were above $2 million, and 47% were of homes costing $500,000 or less.
BY GERALD SCHIFMAN STATS
25 WORDS OR LESS A NEW STUDY shows how popular app-based ride companies have become in New York SHIFTING GEARS City—and how much traffic they add.
AND T I would never accept RIDERSHIP GAINS AND LOSSES, 2015–2016 “ Increase in annual miles driven a job that requires attributable to Gett, Lyft, Juno,
+72M H Uber and Via since 2013 Senate confirmation 600M E CITY or [otherwise] Daily passengers of those requires that I be civil five companies, a threefold 500,000 increase since June 2015 to Chuck Schumer. Car —Miguel Estrada, a former George Yellow taxis services Subways/buses W. Bush nominee to the U.S. Court of Vehicles operating in New York -25M -24M -19M Appeals, who is rumored also to have City for the five companies been a candidate for President Donald 50,381 App-basedcars Trump’s solicitor general
BLOOMBERG NEWS ADDICTED TO NUMBERS? GET A DAILY DOSE AT @STATSANDTHECITY. SOURCE: Schaller Consulting
4 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P004_CN_20170306.indd 4 3/3/2017 5:48:10 PM AGENDA ICYMI CRAINSNEW YORK BUSINESS EDITOR IN CHIEF Rance Crain publisher, vp Jill R. Kaplan executive assistant Devin Arroyo, 212.210.0701 EDITORIAL editor Jeremy Smerd Drug spending is not rising managing editor Brendan O’Connor assistant managing editors Erik Engquist, as fast as people think Jeanhee Kim, Robin D. Schatz web editor Amanda Fung copy desk chief Telisha Bryan RESIDENT DONALD TRUMP said last week that he art director Carolyn McClain photographer Buck Ennis wants to “bring down the artificially high price of senior reporters Joe Anuta, Aaron Elstein, drugs and bring them down immediately.” Rail- Matthew Flamm, Daniel Geiger P reporters Rosa Goldensohn, ing against drug prices draws bipartisan support, and the Jonathan LaMantia, Caroline Lewis comment, made during Trump’s address to a joint session data reporter Gerald Schifman web producer Peter D’Amato of Congress, was one of the few that prompted applause columnist Greg David from both sides of the aisle. Though the president has flip- DRUG GRUDGE: contributing editors Tom Acitelli, Trump inveighed Theresa Agovino, Erik Ipsen, Cara S. Trager flopped on the issue, his latest stance aligns him with Sen. against Big Phar- ADVERTISING Bernie Sanders and Gov. Andrew Cuomo, both Democrats. ma, but insurers www.crainsnewyork.com/advertise have managed to advertising director Irene Bar-Am, But a Crain’s analysis of the most recent financial state- keep costs low. [email protected], 212.210.0133 ments from several health insurers in the state found some- senior account managers thing peculiar: Drug spending by several health plans went down last year, and in cases when it rose, the respective Zita Doktor, Rob Pierce, Stuart Smilowitz, Debora Stein member base increased more than spending did. Drug costs at EmblemHealth’s GHI plan, for example, fell 21%, sales coordinator Devin Arroyo, 212.210.0701, [email protected] while Empire BlueCross BlueShield’s spending fell faster than its overall membership. Northwell Health’s Care- ONLINE Connect and Humana’s New York plan saw similar trends. general manager Rosemary Maggiore, 212.210.0237, Insurers say they are still experiencing an increase in drug prices. But they are better managing their own [email protected] spending by moving toward generic medications, using pharmacy benefit managers to save on high-cost specialty CUSTOM CONTENT director of custom content drugs and shifting more costs to consumers through high-deductible health plans. Patty Oppenheimer, 212.210.0711, The Crain’s analysis surprised Barry Schilmeister, a principal at Mercer, a Manhattan-based benefits consultant. [email protected] multicultural sales manager Giovanni Perla, “I would not expect total spend on pharmacy to be going down,” he said. That’s because his clients, who are large [email protected] senior custom marketing manager employers, said they expected to pay 7.9% more this year on drug coverage for their employees, up slightly from Sonia David, [email protected] the year before. EVENTS www.crainsnewyork.com/events How is it that insurers are spending less but employers are paying more? Part of the answer may be that the sav- director of conferences & events ings have yet to be passed on. Or it could be that a handful of specialty drugs used by some employees is driving the Courtney Williams, 212.210.0257, [email protected] increase. So insurers, despite savings, want politicians to keep the pressure on Big Pharma. – JONATHAN LAMANTIA manager of conferences & events Adrienne Yee, [email protected] events coordinator Ashlee Schuppius, [email protected] Entertaining suitors AUDIENCE DEVELOPMENT DATA POINT an appointee of former Mayor Michael Time Inc. hopes to receive offers from Bloomberg. director of audience & content UNDOCUMENTED IMMIGRANTS PAY partnership development Michael O’Connor, Meredith Corp. and four other po- 212.210.0738, $1.1 BILLION IN TAXES TO NEW YORK BYO H O [email protected] tential suitors to buy all or some of its 2 titles. Last year Time rejected an $18 per The Famous Famiglia pizza chain is REPRINTS AND ARE RESPONSIBLE FOR $40 reprint account executive Krista Bora, share offer from investors led by Edgar opening a location in Accra, Ghana, in 212.210.0750 Bronfman Jr., who will likely bid again. BILLION OF ECONOMIC OUTPUT, May. To ensure the pies taste like they PRODUCTION Observers expect a deal will be reached 3% OF THE STATE’S GDP, A FISCAL do here, the owners are planning to production and pre-press director only after Time lowers its price. ship 100 gallons of city tap water over- Simone Pryce POLICY INSTITUTE REPORT FOUND. media services manager Nicole Spell seas each week to make the dough, plus SUBSCRIPTION CUSTOMER SERVICE Preparing to pay the sauce, cheese, flour and oil. www.crainsnewyork.com/subscribe The Archdiocese of New York is seeking [email protected] a $100 million mortgage on land across shift investments from active strategies America’s worst 877.824.9379 (in the U.S. and Canada). $3.00 a copy for the print edition. from St. Patrick’s Cathedral to fund a into cheaper passive offerings. For the second year in a row LaGuardia $99.95 one year, $179.95 two years, for compensation program for victims of ranked last out of 29 major U.S. airports print subscriptions with digital access. clergy sexual abuse. The church has Waldorf Astoria makeover for its percentage of on-time arrivals. to contact the newsroom: www.crainsnewyork.com/staff owned the ground beneath the luxury The final guests—for now—at the Wal- 685 Third Ave., New York, NY 10017-4024 Lotte New York Palace Hotel and land- dorf Astoria checked out March 1. The phone: 212.210.0100; fax: 212.210.0799 marked 19th century mansions known hotel is shutting down for two to three Entire contents ©copyright 2017 as the Villard Houses on Madison Av- years so its owner, Anbang Insurance Crain Communications Inc. All rights enue between East 50th and East 51st Group, can convert the space into a mix reserved. ©CityBusiness is a registered trademark of MCP Inc., used under license streets since the end of World War II. of luxury condos and guest rooms. agreement. CRAIN COMMUNICATIONS INC. No longer Mr. Met Obama book deal BOARD OF DIRECTORS Thomas Campbell, chief executive of Penguin Random House won a bid chairman Keith E. Crain president Rance Crain the Metropolitan Museum of Art, will to publish books by former President treasurer Mary Kay Crain, Cindi Crain step down in June after eight years at Barack Obama and former first lady senior executive vp, William Morrow the helm. Museum trustees and staff Michelle Obama. The publisher report- executive vp, director of strategic Tribeca’s Exclusive Lineup operations Chris Crain members have criticized Campbell’s edly paid more than $60 million, a re- executive vp, director of corporate financial management. Despite record cord for presidential memoirs. Tribeca Film Festival organizers operations K.C. Crain attendance last year, the Met suffered a announced the lineup for the 16th senior vp, group publisher David Klein New campaign finance board chair annual event, which will include 98 vp/production, manufacturing David Kamis $10 million deficit. chief financial officer Bob Recchia Frederick Schaffer, CUNY’s former feature films chosen from a pool of chief information officer Anthony DiPonio Bonus cuts top lawyer, was tapped as chairman 8,700, making this April’s slate the founder G.D. Crain Jr. [1885-1973] For the first time since 2011, BlackRock of the city’s Campaign Finance Board, most exclusive one yet. Aardvark, chairman Mrs. G.D. Crain Jr. [1911-1996] starring Zachary Quinto and Jon secretary Merrilee Crain [1942-2012] slashed employee bonuses by an aver- an unpaid position. Schaffer, who had age of 2% to 4% in 2016. The world’s been criticized for his oversight of Hamm (above), will be among the largest money manager, like its peers, alleged financial mismanagement at premieres.
has been under pressure as people CUNY, succeeds Rose Marie Hearn, THOMSON BLOOMBERG, WALTER
March 6, 2017 | CRAIN’S NEW YORK BUSINESS | 5
P005_CN_20170306.indd 5 3/3/2017 5:48:51 PM AGENDA WHO OWNS THE BLOCK REAL ESTATE
The South Bronx beckons Residential developers are scooping up inexpensive land, but will they get the zoning changes they need to build? RENDERING OF 1125 WHITLOCK AVE. BY TOM ACITELLI
s commercial development continues to expand in the South Bronx, a grow- 1462 SOUTHERN BLVD. ing number of investors are pushing Queens-based Southern Plaza Corp. purchased for zoning changes to allow more res- this 2,075-square-foot vacant lot in February 2016 for $249,000 and is seeking a zoning 1081 TIFFANY ST. Aidential development in the Longwood neighbor- change to build a 4-story apartment building with hood there. Propco LLC acquired this eight market-rate units. “The values of development sites in the Long- vacant 4,581-square-foot lot for $420,000 in wood area are still reasonable,” said Albert 2015. The firm filed plans Gjonbalaj, chief executive of UA Builders, a con- in December to build a struction firm in Manhattan acting as general 7-story apartment build- contractor on three Longwood proj- ing with 26 market-rate 1030–1032 REV. JAMES A. POLITE AVE. units. A 307-square-foot ects. Gjonbalaj was also an investor medical office is planned in Propco LLC, affiliates of which A limited liability company from north Brook- for the ground floor. lyn bought this 3,602-square-foot, two-family acquired the parcels during the house—built in 1901—for $650,000 in June. first half of 2016. Propco paid less The corporation filed plans two months later to than $2 million for the three par- construct a 4-story, 10-unit apartment build- cels, which ultimately could yield as ing here. The city has not approved that plan, but it did sign a demolition permit in August. many as 79 market-rate apartments. It’s not clear if the new apartments would be The firm does not need zoning market-rate. A representative for the owner changes for the developments, given listed on the building plans did not respond to requests for comment. their small nature, but other proj- ects in Longwood do. The mixed-use district includes multifamily buildings as well as light industrial warehouses and garages that developers are hoping to turn residential. In late January the Rockland County– 915 DAWSON ST. based Ader Group asked the city Propco bought this vacant 5,031-square- for a zoning change that would foot lot for $775,000 in August. In 1125 WHITLOCK AVE. let it convert a low-slung garage November the company filed plans for an 8-story building with 29 market-rate near the Sheridan Expressway The Ader Group is looking apartments and 1,000 square feet of to convert this single-story, and the elevated 6 train into a recreation space on the ground floor. 22,490-square-foot parking 14-story, two-building complex. garage into a 14-story, two- All of the 1125 Whitlock building affordable housing complex with 474 residen- Ave. development’s nearly 500 units would be tial units, 14,937 square earmarked for below-market rents, according feet of retail space and to plans filed with the city. Some of the planned 9,520 square feet of com- munity space. Ader does 93 studio apartments would rent for less than not own the garage—two $400 per month, and 48 units would be set aside 764 E. 152ND ST. limited liability companies for formerly homeless families. The proposal Propco acquired this vacant have controlled it since at least 2007—but it is in talks also includes plans for rooftop solar panels and 4,200-square-foot lot in July to acquire the property this green spaces. for $735,000. In December it filed plans for a 7-story, spring. Ader said that if the Ader Group plans to commence construction City Council approves the 24-unit apartment building. 909 BECK ST. by the end of the year, but the project still has to go variance, construction could be completed by 2020. through a land-use review, a process that takes at The Catholic Archdiocese of New York has controlled this site, which least seven months and can lead to a project being serves as a parking lot for an adjoin- quashed by a single City Council member. ■ ing 6-story nursing home, since the early 1990s. Nursing home opera- tor ArchCare filed plans in January to build an 8-story, 89-unit complex here aimed at older residents. GOOGLE MAPS; COURTESY OF THE DEPARTMENT OF CITY PLANNING
6 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P006_CN_20170306.indd 6 3/3/2017 10:31:44 AM Ambition: it s what drivс’ us
Connecting real estate opportunities Robert Agelo Keith Kurland and decisions to your broader ambitions Aaron Appel Lisa Kiell is the foundation of our business. It’s Matthew Astrachan Mitchell Konsker what drives us—every day. Davie Berke Robert Martin Paul Berkman Peter Miscovich Recognizing top performers across the Don Bucci Peter S. Nicoletti country that embrace that commitment William Cavagnaro Scott M. Panzer Michael Chionchio Gilda Perez-Alvarado and help you achieve your ambitions Alexander M. Chudno James Quinn is at the core of our culture. It’s what Je rey Davis Peter Riguardi we do—every year. Kevin Davis Steven Rotter
Frank Doyle Shannon Rzeznikiewicz For 2016, we celebrate 42 colleagues in Paul Formichelli Drew Saunders New York for their drive to deliver beyond Kellogg Gaines Jonathan Schwartz what’s expected. We honor them for their Robert Gibson Ken Siegel achievements, and we thank our clients Paul N. Glickman Dustin D. Stolly for placing their trust in JLL. Howard S. Hersch Derek W. Trulson Max Herzog Scott Vinett Michael Hirschfeld Cynthia Wasserberger Martin Horner Jim Wenk Paul H. Kau man Amy Zhen us.jll.com/TopPerformers
CN018178.indd 1 2/27/17 12:04 PM AGENDA ASKED & ANSWERED TECHNOLOGY INTERVIEW BY MATTHEW FLAMM
MIKE GREGOIRE CA TECHNOLOGIES
ounded in Manhattan in 1976, CA Technologies is one of the world’s biggest software rms, with a $13 billion market cap and 2,000 employees in the metro Big is the new area alone. In 2013 the company hired software “ nimble. When we Findustry veteran Mike Gregoire to oversee a turnaround. His man- change, it is going date: lead CA into the future of cloud-based software services. to be meaningful, and it is going CA seems to be a major workhorse of the software industry. And yet it’s to be real. not well-known to the average New Yorker. We’re an engineers’ company. If you’re in the business of computer science and understanding high-pro le, mission-critical, very technical business applications, you would absolutely know who CA is. And if you’re in science, technology and math and looking for a job, the kind of work we offer is very attractive.
How would ordinary people run across your services? Every time you use your banking card and “authenticate” using DOSSIER your password, you’re probably using our software. If you’ve been asked the name of your rst dog or what street you grew up on, WHO HE IS Chief executive of cer, CA Technologies you’re probably bumping into our patents and our algorithms for fraud detection. And if you’re building software at any company, REVENUE $4 billion you’re probably using our software every day, either for testing or EMPLOYEES 11,000 to take what’s being written in code and get that into production. TOTAL COMPENSATION CA brought you in as a change maker. What needed transforming? $10 million For a long time in this industry, the model was to install software AGE 51 at the customer site, with very expensive implementation and a BORN St. Catherines, Ontario high degree of customization. Today customers want the burden of maintaining software to be on the vendor. We upgrade the soft- RESIDES Greenwich, Conn. ware, and it’s running in our data centers. We’ve been morphing EDUCATION B.S., physics, our company to look more like that than the traditional model. Wilfrid Laurier University; M.B.A., California Coast University But can a company as big and as old as CA grow in this new world? TRIAL BY FIRE In mid-2003 Big is the new nimble. With the scale we have, when we change, Oracle began a hostile takeover it is going to be meaningful, and it is going to be real. of software giant PeopleSoft, where Gregoire was executive You’re saying the company’s size and age are advantages? vice president of global services. “That was 18 months of being un- It takes years to build a very large global distribution and support der the gun. You see the behavior network—and we already have it. Now the questions are: How fast of different people when there’s can we move? How attentive can we be with customers? And how an awful lot of pressure.” willing are we to change our business model and our attitudes? BUT ORACLE IS OK After Oracle acquired PeopleSoft, Your previous jobs were in California. How are the two coasts different? Gregoire left to lead Taleo, another The West Coast is more creative, and the East Coast is more human resources software rm. operationally sound. On the West Coast there are a lot of smaller He took it through an IPO in 2005 startups where you have more opportunity to pivot. In New York and eventually oversaw its sale—to you work with regulated industries that can’t afford mistakes. Oracle—for $1.9 billion in 2012. Now if I could get those two to work together, it would give us NO RACE FOR OLD MEN a great competitive advantage. When Gregoire turned 50, he entered the 50- to 54-year-old bike-racing compe- Why is it better for CA to be based here? tition bracket and started winning races again. Now he’s looking forward to his We have 11 of the 12 biggest banks as customers and 47 of the next best chance to stand on the podium. Fortune 50, which are all here. The way you build software today, “You want to be the 55-year-old guy you bring your customer into your development cycle. When you’re racing the 60-year-old.” trying to get your customer to travel 3,500 miles and work with BUCK ENNIS you for a couple of weeks, that becomes more dif cult.
You’re a mountain- and road-bike racer. Does that help you in business? When you’re on the bike, nobody knows you’re a CEO. You’ll have plumbers and hedge fund guys who are out there trying to kill you. And you’re not thinking about balance sheets; you’re thinking about surviving. It’s a great distraction, and it lets creativity percolate in the back of your mind. ■
8 | CRAIN’S NEW YORK BUSINESS | MARCH 6, 2017
P008_CN_20170306.indd 8 3/3/2017 9:49:53 AM AGENDA POLITICS
SHARE OF SHELTER POPULATION Mayor, council may clash BY FORMER NEIGHBORHOOD over homeless shelters Central Brooklyn 10.1% De Blasio’s plan to concentrate facilities conflicts with ‘fair share’ legislation BY ROSA GOLDENSOHN AND ERIK ENGQUIST Central Bronx 9.3% ayor Bill de Blasio’s plan to pushing for the council’s changes, said other buildings or be built from scratch. house the homeless is on keeping people in their own neigh- Data from 2015 and 2016 for the High Bridge/Morrisania a collision course with a borhood should not be the only fac- city’s 42 neighborhoods (as defined by 8.2% City Council proposal to tor in deciding where to site shelters. state health officials) show that large Bronx Park/Fordham Mspread shelters more evenly through- He noted that a women’s facility in the numbers of homeless people come 6.6% out the area. Park Slope section of his Brooklyn dis- from central Brooklyn and the central The mayor announced last week that trict was good for people not from the Bronx, so those areas would get the East New York/New Lots the guiding principle of his homeless- neighborhood for other reasons. most shelter beds in the mayor’s new 6.5% ness plan will be to shelter people “as “There are things that make a lo- system. More than 2,000 individuals in Hunts Point/Mott Haven close to the neighborhood they come cation better or worse,” Lander said. families from central Brooklyn entered 6.4% from as possible.” “Close to transit is better than not close the shelter system over 20 months in But nearly half the city’s homeless to transit. Close to jobs is better than not fiscal years 2015 and 2016. Southeast Bronx shelter entrants come from only six close to jobs. Close to other services is During that period, 47% of the city’s 4.9% neighborhoods in Brooklyn and the better than not close to other services.” shelter entrants came from two Brook- Bushwick and Williamsburg Bronx, according to Department of So- But de Blasio and his social services lyn areas (central Brooklyn and East 4.4% cial Services data from fiscal years 2015 commissioner, Steven Banks, said at a New York/New Lots) and four Bronx and 2016, obtained by Crain’s through press conference last week that home- areas (the central Bronx, Bronx Park/ Jamaica a Freedom of Information Act request. less people’s jobs, schools, doctors and Fordham, High Bridge/Morrisania and 4.3% Meanwhile, the City Council plans support networks tend to be in their Hunts Point/Mott Haven). The ZIP code Central Harlem to overhaul the city’s “fair share” own neighborhood. Housing them in sending the most people to shelters was 4.1% standards to ensure that shelters, local shelters helps them regain stabil- 10456 in the Bronx, with 4.4% of all en- Top 10 of 42 city neighborhoods defined by the waste-transfer stations and jails are ity during a tumultuous period in their trants coming from that poverty-strick- state Department of Health distributed across neighborhoods life, they said. en, heavily African-American neigh- rather than concentrated in pockets of borhood. East New York in Brooklyn, a the city, as they currently are in low- Location matters demographically similar neighborhood, “where they set roots” against the De- income communities of color. But these The administration plans to close was second, with 3.9% of entrants com- partment of Homeless Services’ dispro- are precisely the areas feeding the city’s 360 shelters as it creates 90 in the next ing from the 11207 ZIP code. portionate use of certain communities. shelters. The homeless population sur- five years. Some of the new shelters will Councilman Jumaane Williams, a He emphasized that shelters are a tem- passed 60,000 for the first time last year. be in the same buildings as ones that Brooklyn Democrat, said the plan must porary solution to the displacement Councilman Brad Lander, who is have been closed. The rest will go into weigh the good of sheltering people of low-income people who will still be priced out of permanent housing in their community. WHERE THE HOMELESS HAIL FROM “But we should be using every op- portunity we can to deal with the Families entering shelters, July 2014 to February 2016 chronic problem, which is the lack of <17 <881 affordable housing,” Williams said. Lander rallied support for a shelter that opened recently in the Kensing- ton portion of his district. But council members responding to pressure from constituents more often fight efforts to locate shelters in the communities they represent. Maspeth residents, for example, fiercely resisted a proposal to convert an area hotel into a shelter, leading the hotel’s owner to back out. The Queens community district that includes Maspeth does not have a single shelter, although half of hotels housing shelter residents are in Queens. About 70% of regular shelters are in the Bronx. “We’re going to ask each communi- ty board to do its fair share,” de Blasio said. “That does not mean if there are protests, we will change our minds.” The city does not need community support to open a shelter, but having it helps—especially if the site owner fears protests. The administration believes lo- cals will be more welcoming of shelters if their own neighbors would be housed in them and that they will be appeased by the planned reduction in the total number of shelters, even though the quantity of shelter beds will rise. “If everyone felt they could be homeless,” the mayor said, “we’d be having a different conversation.” ■
GERALD SCHIFMAN Data analysis by Gerald Schifman
March 6, 2017 | CRAIN’S NEW YORK BUSINESS | 9
P009_CN_20170306.indd 9 3/2/17 8:36 PM AGENDA VIEWPOINTS
Democrats’ depression is downer for NY economy, too DIFFERENCE OF OPINION Partisan divide creates vast consumer-confidence gap VIEW OF PRESIDENT TRUMP Party Favorable Unfavorable DK/NA Democratic 15% 79% 6% NEW YORK CITY’S tour- country is on the wrong track and pro- Democrats clearly fear Republican 71% 26% 3% ism agency says visits nounce its prospects are bleak. the future, that could Independent 45% 53% 2% from foreigners will The reliable University of Michigan spell bad news for fall this year for the monthly consumer survey shows the the economy. (It also U.S. ON RIGHT TRACK first time since 2008 same trend nationally. The survey cre- might be true nation- Party Right track Wrong track DK/NA because of President ates an index for consumers to assess ally; one study showed Democratic 20% 72% 8% Donald Trump’s rhet- the overall health of the economy and that counties carried Republican 63% 27% 10% oric and executive the likelihood of a recession. Repub- by Clinton accounted Independent 36% 52% 12% GREG DAVID order about immi- licans are over the top, with an index for 64% of the coun- grants. But a bigger reading of 120.1. Democrats are mired try’s GDP. But I’m OUTLOOK UNDER TRUMP problem for the city economy is the in disaster at 55.5. It is the biggest par- focusing here on the dire outlook of the Democrats, who tisan gap in the history of the survey, local story.) Party Optimistic Pessimistic DK/NA are a majority in the city and are so which dates back to the early 1950s. Of course, there Democratic 27% 71% 2% depressed by Trump that they might It is not unusual for consumers’ are other consider- Republican 75% 24% 1% just curtail their spending. attitudes to be colored by ations—notably the Independent 49% 50% 2%
It has become a cliché to their political affiliation. soaring stock mar- SOURCE: Siena Research Institute poll of New Yorkers in January say that the country is com- % Democrats were more pos- ket. Wall Street ral- pletely divided, but a Siena itive about the economy lies are good for the poll last month showed that during the Obama years wealthy, who get most of their income All this comes among increasing 64SHARE of U.S. GDP this cliché is especially true from counties that than Republicans were. The from capital gains and dividends, and signs that the city economy is slowing. in New York. Republicans Donald Trump lost reverse was true during most that would boost both spending and It is still growing, but at a much slower support Trump enthusias- in November of the second Bush admin- income-tax collections. Wall Street pace than in recent years. Reactions to tically, say the country is istration. But the extreme benefits from a bull market when it Trump may well determine its future. ■ on the right track and view nature of consumers’ reac- triggers initial public offerings, merg- the nation’s outlook as bright. Demo- tions to Trump suggests something ers and acquisitions, something that GREG DAVID blogs regularly crats can’t abide the president, say the could be different this time. If New York hasn’t happened yet. at CrainsNewYork.com.
Make the city’s museums free—but not to tourists Cost should not be a barrier between New Yorkers and their cultural institutions BY LUIS R. CANCEL
ayor Bill de Blasio and his they all mention. But the city does allowing museums to charge full price example of how hotel taxes can support Department of Cultural not possess a standardized measure of of the latter. The discount for local the arts. San Francisco allocates 17.3% Affairs are developing the museum attendance by residents, and residents could be reimbursed to the of its hotel tax to arts and cultural ini- first-ever plan to guide a close examination of patronage will museum via a fund administered by the tiatives—roughly $40 million per year. Mfuture funding for—and development attest to low participation by minori- Department of Cultural Affairs. Includ- New York City’s policymakers, how- of—culture in the city. Given the plan’s ties. This should be a wake-up call for a ing flagship museums such as the Gug- ever, have resisted calls to apply a per- stated mission to promote equity and “majority minority” city like ours. genheim, MoMA and the Whitney in centage of hotel taxes to support the diversity and expand access to the city’s A “pay what you wish” admission the program would be vital. cultural sector, even though it is the cultural life, it should include an initia- initiative for New York City residents The city could finance the initiative primary driver of that hotel traffic. tive that gives New Yorkers free entry could have a lasting impact. It would by allocating a small percentage of the In fiscal 2015 the hotel room occu- to museums citywide. need to efficiently distinguish between room tax imposed on hotel visitors. pancy tax raised $560 million in city For many middle- and working-class resident and nonresident attendees, San Francisco provides a real-world revenue. If we applied the San Fran- families, museum admission prices are cisco percentage (17.3%), New York a barrier to entry. It’s a tremendous OPEN THE GATES: Letting would have earmarked $96.9 million missed opportunity when residents residents pay what they for cultural initiatives. can’t afford to visit local cultural trea- wish to enter would diversify Museums are a principal reason why sures that tourists flock from around museum audiences. New York is an international cultural the world to see. capital. Its citizens should enjoy and be We cannot blame the museums— enriched by these institutions. Access many strive to minimize the effects of to them should not be limited to resi- their prices with periodic free or “pay dents who can afford the admission fee. what you wish” days. But those are sim- A “pay what you wish” program ply Band-Aids. Only bold public policy would increase museums’ admission can provide a structural solution. revenue and diversify their audiences. The mayor and his predecessor, It is a win-win model that could lead to Michael Bloomberg, deserve credit for a future of broad citizen participation promoting the city as a tourist desti- in the city’s cultural life. ■ nation. Record numbers of visitors— more than 60 million a year now—have Luis R. Cancel was New York City’s been a real boon to our city. When you cultural affairs commissioner from 1991 ask tourists why they’re here, visiting to 1994 and San Francisco’s director of
GETTY IMAGES a cultural institution is the one thing cultural affairs from 2008 to 2011.
10 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P010_CN_20170306.indd 10 3/2/17 6:27 PM A ROUNDTABLE DISCUSSION ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS
What’s Ahead for Small Businesses in 2017
Mark Gusinov Sophie Wade SVP / Group Manager President, NAWBO NYC New York Market, City National Bank Founder, Workforce Innovation Specialist Flexel Network, LLC
ith a new president in office, Crain’s Custom: Which factors in a continuing uncertain economic climate, New York City’s small-business today’s economy are having the the ability to be more flexible when Wowners could potentially see biggest effect on small business’s managing the workforce and fixed costs tremendous changes that will affect potential for growth — both positively means that small businesses are able their businesses in the coming year. and negatively? to respond faster and take advantage Many entrepreneurs and self-employed of business opportunities. professionals are trying to prepare for Sophie Wade: Technology the economic repercussions of new advancements are having an Meantime, other “Future of Work” proposals for health care, tax reform and enormous impact on the ability of small developments also find established regulatory changes expected to come businesses to grow and scale affordably. small businesses adjusting to new from the Republican-controlled Congress In addition to being able to sell nationally nontraditional work-related demands, in the near future. and internationally with ease, small needs — such as calls for a well- businesses can use new platforms and articulated corporate culture, flexible To get a look at what is ahead for applications to collaborate and partner hours, technically supporting remote businesses operating in New York City, with each other in different capacities employees and additional devices. There Crain’s Custom recently spoke with independent of location. is also competition from disruptive two experts with unique perspectives: newcomers, often technology-enabled. workforce innovation specialist Sophie Furthermore, there is increased access to Wade, president of the National talent — whether remote employees or Mark Gusinov: The American Association of Women Business Owners freelancers — allowing small businesses consumer — the most important (NAWBO) NYC and author of the to source the expertise or support they linchpin of the U.S. economy — is upcoming book Embracing Progress: need and to also keep real estate costs strong. Consumer confidence hit more Next Steps for the Future of Work; and down. At the same time, the increasing than a decade high at the beginning of Mark Gusinov, senior vice president numbers of [voluntary] independent the year and is still gaining compared to and group manager, personal and contractors allows small businesses last year. That means more spending. business banking at City National Bank the flexibility to explore new markets or Consumer spending grew nearly four in New York. Here are the insights and expand seasonally without taking on the percent last year and is on track to keep observations they offered. risk of permanent staff or overhead. With gaining this year.
S1
Small Business Roundtable What's Ahead MECH.indd 1 3/2/17 5:37 PM A ROUNDTABLE DISCUSSION
One recent index from January found that small- My hope is that the new administration and believe that the small to mid-sized market presents business optimism rose to its highest level since Congress will take advantage of today’s a unique opportunity for us to not only help clients December 2004, and that this optimism has economic strength to invest for the long term with their current needs and be involved at an led to more jobs. Companies surveyed added with initiatives such as: (1) increased federal early stage in their growth but also help prepare the most new employees per fi rm since 2015, funding for America’s infrastructure and (2) them properly for future growth. Our approach is reflecting greater confi dence in the economy. a reduced regulatory burden on American to look at these companies holistically, so we are Businesses anticipate a decreased regulatory businesses, including the responsible reform — addressing their fi nancial needs as well as helping burden as a major positive in 2017. but not the repeal — of Dodd-Frank — and the the business owners protect their assets and do implementation of reinvented worker-training important succession planning. Still, challenges remain. Interest rates rose again programs to enable under-employed Americans last year and are expected to increase even more to get trained for good jobs in a 21st-century Approaching relationships with an enhanced this year — which will make borrowing more economy. Almost 20% of fi rms surveyed in the focus on understanding their full picture costly for small-business owners. However, rising small-business optimism index cited regulation rather than a transactional view is critical. The interest rates may improve access to capital. and red tape as their top business concerns. majority of business owners do their business and personal banking at separate institutions, Crain’s Custom: With a new president in Finally, I’d like to see the new administration which can be a mistake. When a client has a office, there are many changes ahead. enacting reasonable tax reforms that reduce full relationship with an institution it allows What proposals and initiatives from the Trump loopholes, inequities and tax expenditures the institution to leverage their total fi nancial administration do you anticipate will have the without limiting deductions that would unfairly strength and attributes as a business owner biggest effect on small businesses in 2017? penalize taxpayers in high-cost, high-tax states as well as from a good understanding of their like New York and California. personal balance sheet. This in turns allows the Sophie Wade: When the Dow Industrial institution to be a stronger resource for clients Average recently broke through 20,000 Crain’s Custom: Access to financing has from a proactive planning perspective. points, it reflected an optimism that does not always been important to the growth of appear to be well-supported by economic small businesses. How would you assess the Crain’s Custom: Small businesses often fundamentals. Any correction would impact current financing climate? need to spend money to make money. What both consumer confi dence and general are the key areas in which they should be business sentiment. This is compounded by Sophie Wade: There are many more investing to stay competitive, generally continuing uncertainty regarding prospective types of fi nancing options now, which give speaking? Trump administration policies and how they will small businesses more alternatives to consider be executed. based on their business model, market, specifi c Sophie Wade: Technology and talent are objectives and more. With the new administration’s the areas I recommend small businesses For small businesses, I anticipate one critical expressed intention to reduce regulation, a positive invest in to stay competitive. Owners will best element to be what replaces the Aff ordable reaction by lending entities is anticipated regarding be served by being thoughtful and strategic Care Act (ACA) or what aspects are amended. fi nancing options and availability. about funds spent on technology and talent to create sustainable advantage. Nonetheless, a combination “ Technology advancements are of factors contributes to Changes related to both of these will be having an enormous impact on lending institutions’ comfort important to transition to the new ways of in extending credit and loans working — such as being able to connect, the ability of small businesses to more widely again that are communicate and collaborate with employees grow and scale aff ordably.” critical to the small-business and freelancers remotely. Aff ordable and market. Deregulation, such as eff ective cloud-based technology applications — Sophie Wade the Trump administration’s and tools can facilitate this. intended dismantling of the This act allowed for the decoupling of full- Dodd-Frank Law, is one such factor. At the same Workplace flexibility and other individualized time employment and health insurance, which time, the strength or even stability of future and customizable work-related elements are supported the growing independent contractor economic growth is a very influential factor. increasingly important to address in order market that is providing more flexible resources Therefore, the current uncertainty associated to be able to attract, engage, and retain the for small businesses. In addition, for some small with the unknown impact of other policies of the desired workers — whether full-time, part-time business owners, new ACA-health-care-related new administration is also important. or independent contractors, and whatever costs impacted their budgets and profi tability. generation they may be part of. So, the parameters of whatever replaces the Parts of the entrepreneurial market appear to ACA will change the available resources and be hesitant with the stalling of the IPO market. In addition, in an increasingly fragmented costs of small businesses and the support they A continuing tight IPO market is likely to marketplace, small businesses are becoming provide for their workforce. increase the concern of investors about more and more networked and interconnected. getting a return on their investments. This is New types of collaboration are evolving, such Technology is a critical component of the future combined with the challenges that a potential as small companies working together on of large and small companies alike. The current protectionist environment could have on the projects to combine resources. The investment stiff competition for technology resources is marketplace and small businesses’ hiring needs. of time and energy, and some expense, to build increasing and will only worsen if the access individual and corporate relationship networks to developers internationally is restricted. This Mark Gusinov: Financing is vital to the is also worthwhile to develop powerful new could greatly reduce the competitiveness of success of small businesses. But according “intangible assets”— valuable interwoven, small businesses if they are unable to aff ord the to the optimism index I mentioned, more collaborative relationships which can be utilized limited supply of programmers in the U.S. than 65% of small-business owners remain to extend resources, enhance creativity and on the sidelines, seeing no reason to pursue pitch larger companies. Mark Gusinov: In talking with our bankers fi nancing despite their recent surge of optimism. and clients, most of our clients say they Mark Gusinov: Technology continues are guardedly optimistic based on the We fi nd especially that small to midsize companies to drive productivity and effi ciency for belief that the new administration, supported in the $20-25 million range are underserved in the small businesses. Providing them with by a Republican Congress, will be more pro- New York market. Larger institutions have tended adequate resources to help support this critical business and able to get tax reform and to pull back from this niche over the years and component is important in both the short term regulatory reductions accomplished. focus on upper middle-market companies. We and long term. This can help them stay ahead
Small Business Roundtable What's Ahead MECH.indd 2 3/2/17 5:37 PM ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS
of the curve and properly prepare for the future. In our NYC chapter, we We work with clients to create a strategy so they had a full-day Small “We find especially that small to can finance the latest equipment or technology. Business Bootcamp on February 24. The midsize companies in the $20-25 We’re also seeing here in New York that many of our event was geared to million range are underserved in clients in the outer boroughs are investing in real inform those in the small the New York market.” estate. With borrowing costs so low, it makes sense business community — Mark Gusinov to many business owners to buy their facilities with the knowledge, instead of leasing that space. We work with our intelligence, tools and clients ahead of time so they’re prepared for a big insights they need to sell, market, collaborate, are less likely to win U.S. government contracts purchase like this when a great opportunity arises. network, manage, engage, lead and develop than male-owned businesses, according to the their customers, clients, employees, contractors, U.S. Department of Commerce. Crain’s Custom: Women-owned businesses partners and themselves. have been growing at a clip in recent years. At City National, we know the hurdles women- What is propelling their growth — and what Mark Gusinov: There are a number of owned businesses confront, and we strive to obstacles remain? reasons we see the growth of women-owned provide the financial services and guidance that businesses. Women-owned business for- best fit their needs. Being able to support a diverse Sophie Wade: The percentages look good mation has accelerated coming out of the Great group of business owners is, and continues to but the growth is still relative to a small Recession — outpacing the lethargic business be, at the center of our approach. We see that base. NAWBO was instrumental in changing the creation the rest of the country has experienced. minority- and women-owned businesses are dynamic for women business owners. Back in More women are pursuing careers independent of taking advantage of local and state tax credits, set- 1975, a woman still needed a male signatory to get large companies to better fit their personal lives. asides and other incentives to grow and thrive in a business loan, even if it was her 18-year old son More than half of women surveyed by PayPal listed multiple verticals and industries. Being a resource (as actually happened). This catalyzed the birth of work-life balance as a leading motivator for starting for them is imperative to ensure that this growth NAWBO, and many basic regulations changed for their own business–and even more said they start- continues and accelerates. women entrepreneurs that allowed them access to ed their own business to achieve independence. many more opportunities. Working with business owners in the early stages Despite this progress, women face many creates a relationship that will thrive over time. However, there are still many obstacles remaining challenges. According to Gallup, women-owned Our goal is to be a trusted advisor and resource for for women as they build their businesses. businesses are less likely to be profitable and less our clients — and that doesn’t happen overnight. It NAWBO’s mission is to support and propel women likely to gain access to credit than those owned is an investment by our clients and by our bankers entrepreneurs in their endeavors. by men. Additionally, women-owned businesses to ensure that our relationship evolves.
City National is the bank built on client referrals. Top Ranked in Client Referrals.*
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Small Business Roundtable What's Ahead MECH.indd 3 3/2/17 5:37 PM AGENDA THE LIST NY AREA’S LARGEST WOMEN-OWNED COMPANIES Ranked by 2016 revenue
14 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P014_P015_CN_20170306.indd 14 3/2/17 6:26 PM
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March 6, 2017 | CRAIN’S NEW YORK BUSINESS | 15
P014_P015_CN_20170306.indd 15 3/2/17 6:26 PM BOOZE IN THE CITY | STILL LIFE
POTTER AND KATZ OF New York Distilling Co. at their Williamsburg plant BOTTOMS The city’s booze business is booming, and the whole state is catching the UP buzz BY CARA EISENPRESS
bsinthe, beer, bourbon, gin, grappa, moonshine, rum, vodka and wine: That’s just a sampling of the boozy bev- erages currently brewing, fermenting, distilling and aging in New York City. Thanks to a loosening of state restric- tions, local liquor production is thriving, and city pur- Aveyors are finding an enthusiastic audience ready to drink it all up. A series of regulatory changes starting in 2007 reduced the costs and requirements for licenses, eased marketing restrictions and increased the limits on production. Those initiatives were aimed primarily atfueling economic engines upstate, as alcohol makers can attract visitors to oth-
BUCK ENNIS erwise overlooked towns and support farms with their barley and ap-
16 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P016_CN_20170306.indd 16 3/2/17 9:10 PM ple purchases. (Those farmers were also free to craft booze of their own.) But the easing of those regulations also unleashed city booze makers. There are now 60 companies dis- tilling and fermenting in the five boroughs; in 2010 there were fewer than 10. “I think we’re just entering the beginning stages of well-made New York alco- hol,” said Steven Baird, whose Clinton Hill, Brook- lyn, bar, Cardiff Giant, exclusively serves state- sourced beers, ciders, spirits and wines, including offerings from more than 10 city-based companies. “There is a lot of demand for New York products just because they’re local. But customers don’t return to those products unless they are well made.” Across the country, craft brewing is a $22 billion business, accounting for roughly 20% of the beer market. But small-scale distilling still represents just 3% of spirits sales nationally, a market share many say is poised to expand. “It seemed to me that the market for spirits was going to track what had happened in craft beer 20 years before,” said Tom Potter, co-founder of Brook- lyn Brewery, which opened in 1987, one of several businesses to enter the market back when licenses were expensive and regulations stiff. He has since moved on to spirits, co-founding the New York Dis- tilling Co. in 2011. Colin Spoelman, then an amateur distiller with an interest in whiskey, got the license for Kings County Distillery in 2010. Today his company pro- duces about 20,000 gallons of whiskey a year. “People are turning away from vodka—a market- er’s booze—and turning to whiskey, which is a mak- er’s spirit,” Spoelman said. His distillery now has one Bushwick facility and three buildings in the Brook- lyn Navy Yard, including a tasting room. He credits the city’s mandate to maintain manufacturing there with helping the company land an affordable rent. Kings County now employs 25 people, including four distillers. “I think it takes as many employees to run Kings County as it does to run a larger Kentucky distiller,” LIQUID GOLD: Schlesselman Spoelman said. “Theirs [are] so automated, they can of Van Brunt Stillhouse, a produce 10 or 100 times more.” whiskey distillery in Brooklyn As local imbibers continue to revel in the sheer variety of craft brews and spirits, New York’s booze purveyors say there’s little need to fear an increase in competition. “A city can support several breweries,” said Eric Feldman, co-founder and CEO of Bushwick’s Braven POTTER AND KATZ OF New York Distilling Co. Brewing Co. “They’re like coffee shops.” At Kings County, visitors can tour the grounds, im- Much of that growth has come through a distribu- at their Williamsburg plant Daric Schlesselman of Van Brunt Stillhouse, a bibe and buy, and direct-to-customer transactions tion deal with Whole Foods, but while 90% of their whiskey distillery in Red Hook, agrees, saying that now account for roughly a third of all sales, Spoel- revenue is from wholesaling, the ability to draw lo- customers who appreciate variety actually help the man said. “They’re excited to drink and learn.” cals and tourists to their Port Morris hub is a plus. industry grow. “Consumers who are aware that there All that education is also increasing off-site sales. “Ten percent doesn’t sound like a lot,” Gallant are more options and colors in the rainbow are drawn “We don’t have ad campaigns or billboards or throw said, “but it’s a good chunk.” toward being open-minded,” he said. big parties,” Schlesselman said of the marketing ef- forts that his wife, Sarah Ludington, oversees at Van Local legends Lowering the bars Brunt Stillhouse, where the tasting room accounts The original business plan for Braven Brewing One major perk of the regulatory Co. called for creating its Bush- changes is that companies such as wick-style pilsners in the histor- Kings County are now able to han- “BEING ABLE TO DRAW PEOPLE ic beer-making neighborhood. In dle their own distribution. With 2013 co-founders Eric Feldman and 93% of sales taking place in the five TO THE DISTILLERY IS A KEY PART Marshall Thompson tried to raise boroughs, logistics are simple. “New OF GETTING THEM TO REACH about $200,000 with an eye toward York City is an advantage because it’s opening a nano-brewery. But when packed,” Spoelman said. “In a day we FOR OUR PRODUCTS AT BARS they couldn’t scrape together enough can do a week’s worth of deliveries. cash, they contracted with Olde Sara- And it’s better than being a bakery, AND LIQUOR STORES” toga Brewing Co. of Saratoga Springs where if you don’t sell your loaves to brew their offerings as they con- they get unsellable quickly.” tinued to raise money. Another recent legislative tweak is also boosting for 15% of the company’s sales. “Being able to draw Braven sold about 2,000 barrels of beer in 2015 business. Until 2014 booze and beer makers were people here to the distillery is a key part of getting and 3,000 in 2016 and nearly doubled the company’s not allowed to sell bottles or charge for drinks served them to reach for our products at the bar and the revenue to $700,000. Now the partners have a new on-site without obtaining a separate license. Since liquor store.” plan: Raise $500,000 to open a 2,000-square-foot beer then many manufacturers have opened bars, beer Damian Brown and Chris Gallant of Bronx Brew- parlor and small production space sufficient to brew parlors and tasting rooms at their production facil- ery ferment enough beer to fill 12,000 barrels, up three and a half barrels at a time—enough to fulfill ities, drawing more customers and increasing sales. 40% from 2015, and plan to brew 16,000 next year. custom orders, fill mugs at the CONTINUEDparlor and ON accountPAGE 16
March 6, 2017 | CRAIN’S NEW YORK BUSINESS | 17
P016_CN_20170306.indd 17 3/2/17 9:11 PM BOOZE IN THE CITY| STILL LIFE
for 30% of sales. They FACTS have so far raised about $50,000 from individual investors and small pri- vate-equity groups, and hope to start building a location in Bushwick 60NUMBER OF licensed this spring. beer, wine and liquor Because Braven will companies operating in be brewing beer on-site, the five boroughs the co-founders need to find a space in a manu- facturing zone, ideally one that also sees foot % traffic and is near sub- way stops. 20SHARE OF national Brooklyn neighbor- beer sales by hoods such as Bush- craft brewers wick, Gowanus, Red Hook and Sunset Park fit that description, % making them prime tar- gets for many producers 3 aiming to tap the local PERCENTAGE OF market. national spirit sales by But for brewers look- craft distillers ing to expand produc- tion, another borough BRONX CHEERS: Gallant and Brown say 10% of beckons. Bronx Brewery’s sales “Brooklyn has small- happen in the tasting scale artisanal produc- room. 950 tion,” said Gallant of NUMBER OF city Bronx Brewery. “But the Thanks to that bottling lag, the company has so between its orchards in New Paltz and its soon-to- workers employed Bronx is where the bulk far sold mostly gin. But beginning this summer, it open Bushwick drinking spot. And even after secur- making booze of manufacturing takes expects rye sales to surge, as thousands more barrels ing a Brooklyn production space, Braven’s pilsners place in New York City.” mature. Within the next few years, Katz expects to will still mainly come from Saratoga. That explains why bring 30,000 bottles to market annually. But at Red Hook’s Van Brunt Stillhouse, Schlessel- KelSo Beer, which has been brewed at Greenpoint man said a shortage of space is hampering production Beer & Ale Co. in Clinton Hill for more than a de- Full circle and will soon force him to move—possibly outside cade, is headed north. Owner Kelly Taylor lost his The success of the city’s booze business is prov- the city. “Every bottle of whiskey would cost $12 in lease when the landlord planned to market the ing to be a boon for the entire state. Bronx Brew- rent,” he said of the prices he’d have to pay for a suit- building’s air rights. He is close to closing on a space ery started out making its beer at Shmaltz Brewing able city location, double the $12 per square foot he at a Mott Haven development, where a pays now. “Forget grain, wood and labor.” new 7,000-square-foot facility would pro- Without robust production, alcohol vide room to distill spirits as well as ex- “EVERY BOTTLE OF WHISKEY makers simply can’t create a vibrant man- pand beer production from 5,000 barrels ufacturing sector, said Jonathan Bowles, to 10,000. WOULD COST $12 IN RENT. executive director of the Center for an Taylor plans to open a taproom in the FORGET GRAIN, WOOD Urban Future, despite the local demand. late summer—he’s borrowing production And with an already robust hospitality in- space at other breweries in the interim. It AND LABOR” dustry, the addition of more beer parlors will be fully running in the fall, he said, and tasting rooms is unlikely to move the with six brewery staff members and four economic needle. to six employees in the taproom, which eventually Co., of Clifton Park in Saratoga County, and still “When you look at towns upstate, those craft will account for 10% to 15% of overall sales. contracts out excess production to the upstate brew- brewers are catalysts for bringing tourism,” Bowles “In the near future [the area] will be more robust, ery. Brooklyn Cider House plans to split operations said. “In New York City, do we need that?” ■ with apartments and hotels,” he said. “Until then it’ll be a construction zone.” The flow of alcohol makers “is helping to rebrand CONQUERING TIME AND SPACE the Bronx,” said Marlene Citron, president of the Bronx Overall Economic Development Corp., who cited the burgeoning businesses as a big draw to DAVE KYREJKO, owner of Arcane Distilling, a startup the Port Morris neighborhood. Last year, through a in Sunset Park that makes whiskey out of beer, said state grant, the Bronx Tourism Office ran a trolley the local booze industry needs to embrace modern tour to entice visitors. technology. And he wants to lead the way. But because the regulatory incentives apply to He has abandoned the centuries-old, space- the whole state, city alcohol makers may soon have consuming copper stills and wooden barrels of little reason to maintain operations within the five the traditional spirit-making trade in favor of boroughs. And as growing demand spurs increased vacuum distillers that use pressure in place of time production, proximity to ingredients, like apples to create flavor. or barley, may eventually entice local producers to Using a $7,000 machine Kyrejko built himself, move more of their facilities farther north. Arcane’s 230-square-foot facility can churn out 10 New York Distilling Co., for example, operates bottles in eight hours. Upgrading to a 1,000-square- a small distillery and bar in Williamsburg, but 95% foot plant—a move that is in the works—would of its wares are made in Orange County. “If you are increase that output eightfold, he said. “If you are going to make whiskey the best you can, it requires using copper-pot technology, you’re turning your back aging,” said Allen Katz, the company’s distiller. “Not on 200 years of science,” he added. “I respect the idea six or 12 months, but a minimum of three years. of distillation as an art. But not in 2017.” — C.E.
BUCK ENNIS, REDUX And for that you need space.”
18 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P016_CN_20170306.indd 18 3/2/17 8:59 PM ADVERTISING SUPPLEMENT TO CRAIN’S NEW YORK BUSINESS Dr. Richard Merkin and
PRESENT THE THE 2ND ANNUAL Heritage Healthcare Innovation Awards 2017 NOMINATIONS NOW OPEN AT CRAINSNEWYORK.COM/HERITAGE Heritage Provider Network honors innovative New York metropolitan area healthcare leaders with the second annual Heritage Healthcare Innovation Awards. JUDGING PANEL
Dr. Richard Merkin Maria Gotsch President and CEO, Heritage Provider Network President and CEO, Partnership Fund for New York City
Rainu Kaushal, MD, MPH Mitra Behroozi Professor and Chair, Healthcare Policy Executive Director, 1199SEIU & Research Weill Cornell Medicine Benefi t and Pension Funds
Edgar Mandeville, MD, FACOG Stephen Berger Director, Department of OB/GYN, Chairman, Odyssey Partners Harlem Hospital
Mary O’Neil Mundinger, DrPH Jo Ivey Boufford, MD Edward M. Kennedy Professor of President, The New York Academy of Medicine Health Policy, Dean Emeritus, Columbia University School of Nursing
Louise Cohen Laurel Pickering, MPH CEO, Primary Care Development Corporation President and CEO, Northeast Business Group on Health
Michael Stocker, MD Dr. Rosa M. Gil, DSW Retired CEO, Empire BlueCross BlueShield, President and CEO, Comunilife, Inc. Former Board Chairman, New York City Health and Hospitals Corporation
AWARD CATEGORIES Heritage Innovation in Healthcare Delivery Award Heritage Research Investigators in Translational Medicine Award Heritage Healthcare Leadership Award Heritage Healthcare Organizational Leadership Award Heritage Innovators in Healthcare Award
Winners will be profi led in a Crain’s New York Business custom section
For more information, visit crainsnewyork.com/heritage NYC Awards Luncheon: May 22, 2017 Luncheon hosted by Dr. Richard Merkin, President and CEO, Heritage Provider Network and Mark Wagar, President, Heritage Medical Systems, former CEO, Empire BlueCross BlueShield
2017CN018184.indd HERITAGE JUDGES1 FULL PAGE Ad MECH REV.indd 1 3/2/173/2/17 11:2311:45 AMAM
P020_P021_CN_20170306.indd 20 menu prices. but switchedtosimplyraising added anadministrativefee ON THEVANGUARD:
BUCK ENNIS NO-TIPPING 20 RESTAURANTS |
CRAIN’S NEWYORKBUSINESS Cohen Cohen
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PAY SCALES
Restaurateur Danny Meyer but few followed. Now the
industry hangsindustry its hopes BY MATTHEW FLAMM POINT bolstered amovement, on another solution solution another on
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M arc THE THE h 6,2017
T afford payto their cooks more, and state and federal gins, owners feelcannot said hemmed they in.They industry. by rising Squeezed costs and narrow mar jump at first the chance payof a raise—or leavethe face asevere labor shortage kitchen inthe as cooks regulatory-reform priority,” said. Rigie Restaurateurs an official response,” he said. concerns, is holding out hope: “We are awaiting still beverage council that mayoradvises the on industry City Hospitality Alliance, sits who on and afood workingees back of inthe house.” the fee on consumers would find its way the employto - woman told Crain’s wages New for York every City worker,” aspokes- a championhas been of businesses small and living go to workers the for whom it is intended. city “The City Hall has said it not money does the believe will of Consumer Affairs guidelines, is not yet board.on istration, which prohibits feethe under Department sharedcould be with back-of-the-house the staff. 20% administrative fee to adiner’s check. That money more restaurants how distribute they modify pay. kindofmodel—a “no-tipping light”—that could let hope open citydoorthe they to will another began to it outnumber out. trying those it Restaurants looks. giving up on experiment the including Tom Colicchio, found it’s a lot harder than stalled. has momentum however, then, Since ranks. its were joining rants The rule rule changeThe the is restaurant industry’s “top Andrew executive Rigie, director of New the York The problem, however,that is the de Blasio admin- The change wouldallow restaurants tackto on a Now, owners and advocates industry are saying High-profilethe model, tried ownerswho a year and a half ago that his restau his that ago ahalf and a year nearly Meyer announced Danny when got workers, amajor boost restaurant of livelihoods and lives to improve the movement, aims he no-tipping which . “We have yet to hear how this - - with the staff. raises subject the of goingperiodically gratuity-free Mediterranean on Street 60th eatery East where he restaurant,” said James Mallios, owner of Amali, a deterred from be point, will coming they into the I share, is that price ahigher people when see menuhigher prices overall evenifthe tab is same. the that sayfree worry restaurantgoers they at balk will form of menu higher prices. restaurant patrons to simply pay 20%tip their inthe saywho tipping dates back to slavery. And it asks problem.the It owners aligns with labor advocates ger tips. to disparitythe workers, between get big as - servers the-house workers. Raising prices, meanwhile, adds laws prohibit from them sharing tips with back-of- see adrop.”see said. “A four-dollar-sign restaurant on Yelp didnot universally, ratings the went down afterthe switch. that have gone gratuity-free. He found that, almost onlinethe ratings of 42restaurants across country the price-sensitive. Lynn recently looked at effect the on clientele,a high-end tends which least the to be and that Danny Meyer has an advantage in serving are abouthis right servers to worry raising prices— on psychology of the expert tipping, said Mallios and same the as atbe athree-dollar-sign restaurant. nextthe option without realizing that cost the might rant online four might see dollar signs and skip to priced into People meal. the shopping for arestau- and Yelp for customers alerting that tip the has been uniform mechanism on websites suchTable as Open Ingrained problem “The general concern “The whichamong servers, the But owners have who considered going gratuity- The no-tip movementsolution like a seemed to “The only exception“The is restaurants,”upscale he UniversityCornell professor Michael Lynn, an One problem, Mallios explained, is that there is no 3/2/17 8:36 PM UBER’S NO-TIP POLICY COMES AT A COST
The issue, Lynn said, is how consumers respond FOR THE VANGUARD of the restaurant fair-wage movement, tipping is a thing of the past. And not to pricing information. “People look at menu prices,” the glorious past. “It goes back to slavery days,” said Saru Jayaraman, a restaurant workers’ advocate he said. “If you boost prices 20% and your competi- (and a Crain’s 40 under 40 honoree). Jayaraman has been a leader of the no-tipping movement. She tors don’t, you’re going to be seen as more expensive, cites Pullman train porters and restaurant workers who were former slaves required to live on tips, even if they’re not including tipping.” not wages. Mallios said he would like Consumer Affairs to But for many Americans, tipping is almost like breathing, only with a little more anxiety. People permit the administrative fee, and he’d like to know standing in line at a coffee shop feel compelled to tip even before they’ve gotten their hands on their for sure that he can distribute that money to the triple-shot half-skim latte. “Tipping in the U.S. has so many dimensions,” said Priya Raghubir, chair of front and the back of the house. the marketing department at the NYU Stern School of Business, who added that the practice often “People tip on the totality of the experience,” isn’t rational. “People will routinely tip a cabdriver but won’t tip the person who makes up their room Mallios said. Current laws “prevent a meaningful tip in the hotel, because they never see that person.” pool among all the employees.” The one exception to the tipping phenomenon appears to be Uber—which also considers tips But even those who have tried the fee—not aware outdated, like the paper money its users never have to touch. The company has built its business on it was illegal—say it can be confusing to workers and the ease and seamlessness of its experience, and that’s one reason it’s resisting the demands of the guests. In February 2015 Amanda Cohen, owner of Independent Drivers Guild, which represents more than 40,000 Uber drivers, to put a tipping function Dirt Candy, a three-dollar-sign Yelp-rated vegetar- on the company’s app. ian restaurant on the Lower East Side, started apply- The guild’s leadership says its campaign is about fair wages, and that if wages—meaning fares— ing a 20% administrative fee to checks, instead of went up, tips wouldn’t be such an issue. But fares will not be going up, as Uber CEO Travis Kalanick a tip—which her attorney told her complied with explained to a driver in a recent videotaped encounter (that ended with him swearing at the driver for Department of Labor regulations and was a gray disagreeing with him). “We have competitors,” the billionaire executive said. If the company hadn’t cut area as far as enforcement by Consumer Affairs. She fares, it would be out of business, he added. soon found, however, that the fee required constant But unlike with Danny Meyer, who has employees, Uber is not paying its drivers—who are contrac- explanations and remained confusing to customers, tors—an hourly wage. who wondered why she didn’t just roll the money That’s why for some drivers, it’s not much fun helping Uber lead the country into a tipless future. into the price of the meals. “Uber just created this culture,” said Sohail Rana, an Uber driver in New York who has been in the driving business for 23 years. “People will give the hotel doorman 20 bucks just to put their luggage in A short-lived experiment the trunk but won’t tip the driver if he does the same thing.” — M.F. A few months later Cohen did just that, as Dirt Candy became the first restaurant in the city to go without tipping—not counting Sushi Yasuda, which Sabato Sagaria, Union Square Hospitality’s chief by 12% to 25%, depending on the item and venue, adopted the practice in 2013 in keeping with Japa- restaurant officer, said it was hard to say if servers North End Grill added a $35 bar steak to comple- nese tradition. were doing better, because their pay now depends on ment the rib eye, which had jumped to $69 from $59. She said going gratuity-free has caused a slight their job level. But their quality of life has improved, (The rib eye then was replaced with a $59 strip steak.) drop in revenue—about the equivalent of a small he said. The turnover rate for all hourly workers at “It is like running a brand-new restaurant,” dish per meal. But it let her address the city’s kitchen the restaurant is down 35% from a year ago. Sagaria said, referring to the extent of the changes. worker shortage: Her cooks earn $120 to $130 per The company doesn’t take its high-end clientele “But we’re doing this to take care of our entire team night, instead of the $100 they used to, and she for granted but assumes that they, too, want to think and help them grow and make careers out of this. reports near-zero turnover among her 18 back-of- they’re getting deals. So although prices have risen That’s very important for the industry.”■ the-house workers. Servers, whom she calculates would be earning around $250 with tipping, now get an hourly wage of $20 to $25 and average about $200 per night. Lynn and others who study restaurants said that is the weakness of the no-tipping model: The best servers take a hit in pay and eventually look else- where for work. But Cohen said the upside to hourly pay is their not having to schedule their lives around INDIVIDUAL GAME SUITES the busiest shifts—when they’d earn the most tips— and that she does not have a problem with retention. MAKE YOUR SPECIAL OCCASION LEGENDARY “They could make a ton of money, but it’s not a guarantee,” she said, adding that her 14 servers have been with her for six months to a year and a half. “I really believe if people come into work, they should get paid for their job.” The key to making the policy work, she said, is taking the time and energy needed to educate din- ers and staff. And that’s important for restaurants in any price range. “My customers are very price- sensitive—everyone is right now—but if they under- stand what you’re doing is in the interest of paying a fairer wage to your staff, they’ll be OK,” she said. Meyer’s Union Square Hospitality Group didn’t just introduce a no-tipping policy at seven of its 13 restaurants (so far), but it also combined the change with a thorough revamping of management practices. Now employees can advance their career through a ladder of job grades that helps determine their pay. IDEAL FOR ANY OUTING Servers at The Modern are paid $13 per hour plus a share of the restaurant’s revenue that week, BIRTHDAYS • ANNIVERSARIES • BAR/BAT MITZVAHS • LITTLE LEAGUE depending on their job level. (The current mini- FUNDRAISERS • CORPORATE EVENTS mum wage for tipped workers in the city is $7.50 per hour.) The floor for line cooks across the company is now $14 per hour, and at two restaurants, Maialino and Gramercy Tavern, they’re also entitled to a share of the revenue. In general, hourly culinary wages are FOR MORE INFORMATION up 10% to 15%. The Modern—the only venue that 718.508.3955 • [email protected] • yankees.com/suites offers a year-over-year comparison—reported doing about as well as it had been before the switch.
NYY_Crains_6x6.indd 1 2/13/17 3:42 PM
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Notice of Formation of Warren Street Notice of Formation of Company name Notice of Formation of CGRAMSEY Notice of Formation of Mad Happy LLC. Advisors, LLC. Arts. of Org. filed with of 1199 ROGERS LLC. Arts. Of Org. HOLDINGS LLC Arts. of Org. filed with Arts. of Org. filed with Secy. of State of Secy. of State of NY (SSNY) on filed with NY Dept. of State on Secy. of State of NY (SSNY) on NY (SSNY) on 1/24/17. Office loca- 1/23/17. Office location: NY County. 4/19/2016. Office location: Kings 01/24/17. Office location: NY County. tion: NY County. SSNY designated as SSNY designated as agent of LLC upon County. Sec. of State designated agent Princ. office of LLC: 53 N. Moore St., agent of LLC upon whom process whom process against it may be of LLC upon whom process against it Apt. 2F, NY, NY 10013. SSNY designat- against it may be served. SSNY shall served. SSNY shall mail process to: 38 may be served and shall mail process ed as agent of LLC upon whom process mail process to: The LLC, 8360 Warren St., Apt. 8B, NY, NY 10007. to: 1199 ROGERS LLC, 135 Eastern against it may be served. SSNY shall Melrose Ave., Ste. 105, Los Angeles, Purpose: any lawful activity. Pkwy, Apt. 1D, Brooklyn, NY 11238, mail process to Patrick Ramsey at the CA 90069. Purpose: any lawful activity. principal business address. Purpose: princ. office of the LLC. Purpose: Any all lawful purposes. lawful activity. Notice of Formation of DDCM 104-106 DELANCEY LLC Arts. of Org. filed with Notice of Formation of ISABEL Secy. of State of NY (SSNY) on J-KAY ASSOCIATES LLC. Art. of Org. BEDOYA LLC. Arts. of Org. filed with 01/26/17. Office location: NY County. Lemayny LLC Arts. of Org. filed w/ Secy. of State of NY (SSNY) on filed with the SSNY on 12/14/16. SSNY on 2/6/17 Off. in New York Co. SSNY designated as agent of LLC upon Office:New York County. SSNY designat- 1/24/17. Office location: NY County. whom process against it may be SSNY desig. as agt. of LLC whom proc- SSNY designated as agent of LLC ed as agent of the LLC upon whom ess may be served. SSNY shall mail served. SSNY shall mail process to process against it may be served. upon whom process against it may be Maurice Kassimir & Associates, P.C., process to Incorp Services, Inc., One served. SSNY shall mail process to: SSNY shall mail copy of process to the Commerce Plaza, 99 Washington Ave, 1375 Broadway - Fl. 23, NY, NY LLC, c/o Morici & Morici, LLP, 600 2159 First Avenue, #2E, NY, NY 10018. Purpose: Any lawful activity. Ste. 805-A, Albany, NY 12210. The reg. 10029. Purpose: any lawful activity. Third Avenue, 15th Floor, New York, NY agt. is Incorp Services, Inc. at same ad- 10016. Purpose: Any lawful purpose. dress. Purpose: any lawful activity. OLDETOWNEHOUSE LLC. App. for Auth. filed with the SSNY on 12/14/16. NOTICE OF FORMATION of Salon 85 Originally filed with Secretary of State Notice of formation of US MARSHALL Notice of Formation of Bridgeview 126 West LLC.Arts of Org filed with Secy. of of Delaware on 12/09/2016. Office: LLC. Art. Of Org. filed w. Secy of State LLC. Arts of Org Filed with Secy. of State of NY (SSNY) on 01/11/2017. New York County. SSNY designated as of NY (SSNY) on 12/30/2016. Office State of NY(SSNY) on 1/3/2017. Of- Office location: NY County. SSNY desig- agent of the LLC upon whom process Loc: New York County. SSNY designat- fice Location: NY County. SSNY desig- nated agent upon whom process may against it may be served. SSNY shall ed as agent of LLC upon whom process nated agent upon whom process may be served against LLC to: c/o mail copy of process to the LLC, c/o Jill against it may be served. SSNY shall be served and shall mail copy of proc- M.D.Seidenberg, CPA, 627 RT. 304, Allegretti, Morici & Morici LLP, 600 mail copy of process to: US MARSHALL ess against LLC to principal business New City, NY 10956. Principal busi- Third Avenue, 15th Floor, New York, NY LLC, 17 Stuyvesant Oval, New York, NY address: 41 Elizabeth St., Ste. 505, ness address: 520 West End Ave, #9, 10016. Purpose: Any lawful purpose. 10009. Purpose: Any lawful activity. NY, NY 10013 Purpose: any lawful act. NY, NY 10024 Purpose: any lawful act.
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P022-23_CN_20170306.indd 19 3/3/2017 2:21:21 PM GOTHAM GIGS
COLOR PALATE: Sercarz combines BY LANCE PIERCE unlikely spices in his signature blends.
Mix master A former sous chef at restaurant Daniel creates a line of spices with international influences
ior Lev Sercarz spent most of his childhood in school. (With one grandfather from Tunisia and another a house without a full kitchen, so his parents from Belgium, Sercarz spoke French from a young age.) LIOR LEV SERCARZ were taken aback when he announced at age 23 He moved to New York City in 2002 for a job at Dan- that he wanted to become a chef. “They were iel, chef Daniel Boulud’s two-Michelin-star restaurant. AGE 45 Lresigned to the fact that their son was going to be a failure, Sercarz spent six years there in various chef’s roles, “but I BORN A kibbutz in Upper Galilee, that I wasn’t going to be a lawyer or a doctor,” he joked. was constantly bugging him about spices,” he said, adding northern Israel Sercarz was born and raised on a kibbutz, that Boulud “finally built a beautiful spice RESIDES Upper West Side a collective farm in northern Israel. Meals “I’m importing shelf and let me take over.” Eventually, he EDUCATION Institut Paul Bocuse were served in a communal dining hall. mint from asked Sercarz to develop a line of spices School of Cuisine, Lyon, France It wasn’t until he was 10, when the family for the restaurant. PRICE OF SPICE La Boîte blends moved to a suburb of Tel Aviv, that he had Israel for a Soon Sercarz was blending spices in his range from $15 to $27 per 2-ounce his first experience with hands-on cooking. gin distilled 350-square-foot apartment. He picked up jar. A gift box of spiced biscuits sells He remembers helping his mother prepare in Indiana. customers including chefs, bakeries and for $65. meals—nothing fancy, he says—and the ” hotels. By 2006 he had two dozen clients PEPPER POWER Sercarz’s bottles of store-bought seasonings she used: meat rub, fish and was ready to launch his spice business, La Boîte. peppercorn blend contains eight varieties from various countries, seasoning and soup blends. His hope, he said, is to have someone open a jar from ground to different textures. “If the jar label said soup, it’s for soup and that’s that,” the collection and “cook fish with it tonight, vegetables “It turns everyday pepper into he said, recalling how rigidly they followed directions. with it tomorrow and, over the weekend, bake some cook- something much more complex,” he “The way most people cook at home is still the same: They ies with it.” said, “with some acidity, sweetness and floral notes to it.” use the spice only for what the jar says it’s for. I wanted to La Boîte now produces about 80 spice blends—not change those perceptions.” confined to food. Sercarz recently used zuta levana, a wild ON THE SHELF Sercarz has written The Art of Blending, which After military service in Israel, Sercarz worked for a mint, for a customer in the liquor business. explains the origins of each of his catering company, setting up outdoor feasts for tourists, “That’s the beauty of what we do,” he said. “I’m in New blends, and The Spice Companion, complete with Bedouin tents and platters of Middle East- York, importing mint from Israel to be used in a gin dis- a guide to 102 spices.
BUCK ENNIS ern food. Then he moved to France and went to culinary tilled in Bloomington, Indiana.” — HILARY POTKEWITZ
24 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P024_CN_20170306.indd 24 3/3/2017 9:52:57 AM SNAPS
Bear necessities A campaign to relocate a pair of giant pandas from China to New York City received a major boost Feb. 9, when it threw a Black and White Panda Ball at the Waldorf Astoria that raised nearly $500,000 for the effort. Nonprofit group The Pandas Are Coming to NYC, which is hoping to bring the animals to the Central Park Zoo by 2020, plans to make the ball an annual event.
Rep. Carolyn Maloney, Consul General Zhang Qiyue of the People’s Republic of China and Maurice “Hank” Greenberg, chief executive officer of C.V. Starr and Co. and chairman of The Starr Foundation, at the gala. Maloney and Greenberg are among those leading the drive to procure the pandas. Among the 450 guests were model Carmen Dell’Orefice; John Catsimatidis, chief executive of Gristedes and Red Apple Group; Edward Cox, chairman of the Republican State Committee; and John Catsimatidis Jr., senior executive at the Red Apple Group.
The coast is clear Feeding Environmental hunger organization the for cancer Waterkeeper Alliance held an art auction Feb. 6 research at Sotheby’s. Robert F. Celebrity chefs Kennedy Jr., the group’s prepared meals for president, attended the individual tables at event along with model the Chefs for Kids’ Alexandra Richards Cancer gala Feb. 16. and artist Jeff Koons. Alex Guarnaschelli, Richards served as DJ, and executive chef of Butter, Koons contributed a piece and Mario Batali, to the auction. chef and TV producer, took part in the event, which raised more than $1.2 million.
Lotay Rinchen, co-founder of Bridge to Bhutan, a sustainable travel venture; Marc Yaggi, the Waterkeeper Alliance’s executive director; and TV producer Ilene Landress attended Gretchen Witt, co-founder of Cookies for Kids’ Cancer; Adam Rapoport, editor the auction, which in chief of Bon Appetit; Dan Kluger, chef and owner of Loring Place; and Pamela raised nearly Drucker Mann, publisher of Bon Appetit and Epicurious. Cookies for Kids’ Cancer, $700,000. which raises funds and awards annual grants for pediatric cancer research, held the benefit at Metropolitan West.
SYLVAIN GABOURY/PATRICK MCMULLAN; KEELYN OXLEY; DANIEL KRIEGER; JAY MCCLINTON/DOSOJOSMEDIA.COM OXLEY; DANIEL KRIEGER; JAY MCMULLAN; KEELYN GABOURY/PATRICK SYLVAIN SEE MORE OF THIS WEEK’S SNAPS AT CRAINSNEWYORK.COM/SNAPS. GET YOUR GALA IN SNAPS. EMAIL THERESA AGOVINO: [email protected].
March 6, 2017 | CRAIN’S NEW YORK BUSINESS | 25
P025_CN_20170306.indd 25 3/3/2017 9:53:34 AM FOR THE RECORD*
NEW IN TOWN The Korean ramen shop and chief executive officer, square feet at 90 Fifth pany plans to open its first Properties Group repre- in Chelsea Market opened sold 18,708 shares of com- Ave. With the latest lease, city location, occupying sented the tenant and the ■ Atlantic Social its second restaurant, near mon stock at prices ranging the company will occupy the entire 4-story building landlord, AMA Realty. 673 Atlantic Ave., Brooklyn the Barclays Center. The from $83.08 to $85.55 115,000 square feet of the between West 21st and The asking rent was Top Chef alum Dale Talde 60-seat location features a per share Feb. 16 and 17 11-story building. The West 22nd streets. The $60 per square foot. and his partners at Three broader menu that includes in transactions worth asking rent of a vacant asking rent for the ground Kings Restaurant Group non-noodle options such as $1,574,842. He now directly floor was $86 per square floor was $400 per square ■ Fabric company James opened a 250-seat sports braised short ribs. holds 73,174 shares. foot. JLL represented the foot. The McDevitt Co. Thompson & Co. signed a bar and restaurant in Fort landlord, RFR Realty. represented the tenant. The six-year, nine-month lease Greene that serves General ■ Philip Morris Internation- Cushman & Wakefield landlord, Thor Equities, was for 2,750 square feet at Tso’s chicken wings and BANKRUPTCIES al Inc. (PM-N) represented the tenant. represented in-house. 463 Seventh Ave. EVO similar fare and has 16 TV André Calantzopoulos, Real Estate Group repre- screens and a game room. ■ Ocelotl Diner Corp. chief executive officer, RETAIL ■ Logan’s Run, a farm-to- sented the tenant. Adams 2247 First Ave. sold 35,000 shares of ■ Alo Yoga inked a 15-year table restaurant, signed & Co. represented the ■ Dumpling Spot The Mexican restaurant common stock for lease for 17,600 square a 10-year lease for 3,370 landlord, The Arsenal Co. 67 Bayard St. filed for Chapter 11 bank- $102.65 per share Feb. feet at 164 Fifth Ave. The square feet at 375 Fifth The asking rent was $60 per The owners behind Xi’an ruptcy Feb. 19. The filing 15 in a transaction worth women’s yoga apparel com- Ave., Brooklyn. Ideal square foot. ■ Famous Foods opened a cites estimated assets of $3,592,750. He now directly restaurant that specializes $100,001 to $500,000 and holds 752,671 shares. in fried and boiled northern liabilities of $50,001 to Chinese–style dumplings. $100,000. The creditors with the largest unsecured claims REAL ESTATE DEALS DEALS ROUNDUP ■ Ikinari Steak are LG Realty Associates, TRANSACTION SIZE BUYERS/ TARGET/SELLERS [IN MILLIONS] INVESTORS TRANSACTION TYPE 90 E. 10th St. owed $50,029; Utica First COMMERCIAL The Japanese fast-service Insurance Co., owed $2,767; Law firm Kramer Levin Popeyes Louisiana Kitchen Inc./ $1,827.1 Restaurant Brands SB M&A chain that strives to serve and Empire Merchants, Naftalis & Frankel signed a Bandera Partners LLC International Inc. steak in the shortest time owed $2,393. 15-year lease that decreased (Manhattan); BlackRock Fund Advisors; Renaissance possible opened its first U.S. its space at 1177 Sixth Ave. Technologies Corp. location. It has 40 standing ■ The Fresh Ice Cream Co. The company renewed its 278 Sixth St., Apt 3B, Sustainable Power Group LLC $1,577 Alberta Investment SB M&A dining spots and 10 seats. lease for 265,000 square (unknown majority stake)/Fir Tree Management Corp.; Diners can order steak by Brooklyn feet, which is 50,000 square Partners (Manhattan) The AES Corp. the ounce and the cut. The company filed for feet less than what the firm Lumos Networks Corp./Archer Capital $941.5 EQT Partners AB FB M&A Chapter 11 bankruptcy Feb. currently occupies in the Management LP (Manhattan); ■ May Kaidee 17. The filing cites estimat- building between West 45th BlackRock Fund Advisors; 126 E. 28th St. ed assets and liabilities of and West 46th streets. The BlackRock Inc. (Manhattan); Pamplona Capital Management LLP The Bangkok-based cooking $1,000,001 to $10 million. asking rent for the deal Private Equity; Pamplona school and restaurant with The creditors with the was in the mid-$80s per Capital Management LLC (Manhattan) five locations in Thailand largest unsecured claims square foot. The landlord, Telxius Telecom SA/ $839.6 KKR & Co. LP FB M&A opened its first city location. are Schoep’s Ice Cream Inc., Silverstein Properties, was Telefónica SA (Manhattan) (24.8%) The vegetarian Thai chain owed $645,435; Hudson- represented in-house. New- Greenway Plaza and Phoenix $512.1 Canada Pension Plan SB M&A offers courses on topics in- ville Ice Cream, owed mark Grubb Knight Frank Tower (49%)/Parkway Inc. Investment Board; Silverpeak cluding fruit sculpting and $476,785; and Dan Ozizmir, represented the tenant. Real Estate Partners chili paste making. owed $300,000. (Manhattan); TH Real Estate ■ WeWork signed a lease Dynegy Inc.; Armstrong and $480 LS Power Development SB M&A ■ Simone Rocha ■ William’s Worldwide for 64,390 square feet at Troy Facilities/Dynegy Inc. LLC (Manhattan) 71 Wooster St. Shipping & Trading Inc. 130 W. 42nd St. The Solar Life Science Program $350 Deerfield Management GCI Simone Rocha, the Irish 1177 Utica Ave., Brooklyn co-working-space company LLC (Manhattan) Co. LP (Manhattan); designer known for The company filed for will occupy four floors at Pacific Investment Management dressing celebrities such Chapter 11 bankruptcy the 220,000-square-foot Co. LLC; Solar Capital Partners LLC (Manhattan) as Diane Kruger and Kate Feb. 21. The filing cites esti- office building. The asking Bosworth, opened her first mated assets of $500,001 to rent was in the mid-$70s Turn Inc./BlackRock Inc. $310 Amobee Inc. SB M&A (Manhattan); Fidelity Investments; U.S. store, in SoHo. $1 million and liabilities of per square foot. Newmark Firsthand Capital Management Inc.; $1,000,001 to $10 million. Grubb Knight Frank Focus Ventures; Greenspring Associates ■ Three Seat The creditors with the represented the tenant. Inc.; Northport Investments; Norwest Venture Partners; SP Investments Management LLC Espresso & Barber largest unsecured claims JLL represented the land- 137 Avenue A are JPMorgan Chase, owed lords, China Vanke and Crossroads Courtyard Center/ $290.7 Tristar Capital LLC SB M&A This new three-chair $113,394; Popular Commu- Tribeca Associates. Rockwood Capital LLC (Manhattan) barbershop that doubles as nity Bank, owed $52,000; Delta Natural Gas Co. Inc. $269.1 PNG Cos. LLC (N.Y.) SB M&A a café serving snacks and and Swift Financial Corp., ■ Mount Sinai Health Natural Resource Partners LP $250 GoldenTree Asset Management GCI alcoholic beverages opened owed $50,000. System signed an 11-year LP (Manhattan); The Blackstone in the East Village. lease for 26,100 square feet Group, private equity group at 250 W. 57th St. The (Manhattan) ■ Trapizzino STOCK TRANSACTIONS health care network will Selected deals announced for the week ending Feb. 24 involving companies in metro 144 Orchard St. occupy the entire 15th floor New York. SB M&A: Strategic buyer M&A represents a minority or majority acquisition of existing This new Lower East Side ■ Bank of New York Mellon of the 26-story building shares of a company without the participation of a financial buyer. FB M&A: Financial buyer M&A eatery serves trapizzini, Corp. (BK-N) between Broadway and represents a minority or majority acquisition of existing shares of a company with the participation of a financial buyer. GCI: Growth capital investment represents new money invested in a company for a popular Roman street foods Brian T. Shea, vice chair- Eighth Avenue. The asking minority stake. SOURCE: CAPITALIQ that look like pizza pockets. man and chief executive rent was $67 per square Diners can choose from officer of investment foot. Newmark Grubb 14 fillings, such as braised services, sold 199,676 shares Knight Frank represented oxtail and chickpeas and of common stock for $45.07 the tenant. The landlord, GET* YOUR NEWS ON THE RECORD rosemary. per share Feb. 8 in a trans- Empire State Realty Trust, To submit company openings, moves or real estate deals, or to receive further information, action worth $8,998,746. was represented in-house ABOUTemail [email protected] SECTION . He now directly holds and by Cushman & For the Record is a listing to help businesspeople in New York find opportunities, potential MOVES AND EXPANSIONS 267,992 shares. Wakefield. new clients and updates on customers. Bankruptcy filings from the eastern and southern districts of New York are listed alphabetically. Stock transactions are insider transactions ■ Mokbar ■ The Estée Lauder Cos. ■ Residential brokerage at New York companies obtained from Thomson Reuters and listed by size. Real estate 212 Flatbush Ave., Inc. (EL-N) firm Compass inked an listings are in order of square footage. Brooklyn Fabrizio Freda, president expansion lease for 25,000
26 | CRAIN’S NEW YORK BUSINESS | March 6, 2017
P026_CN_20170306.indd 26 3/3/2017 10:44:55 AM PHOTO FINISH One-horse town f you’re looking to hitch your wagon to the city’s horse-riding industry, a stable investment just hit the market. Kensington Stables in Brooklyn, the last place to paddock horses near Prospect Park, is up for sale a er the owner entered bankruptcy this year. IIn the city’s early days, horses were an integral part of daily life. Some 120,000 trod city streets in 1908, according to an essay at the time in Appleton’s Magazine. ey hauled people and goods and powered commerce. Horseback riding continued as a leisure activity, but over the decades most of Brooklyn’s stables closed to make room for residential development. Walker Blankinship (below, with Max), whose parents purchased Kensington Stables in 1993 and whose mother led for bankruptcy, said he is elding several o ers. Local Councilman Brad Lander has complicated matters, though, by vowing not to allow developers to rezone the commercial site unless they pledge to maintain space for horses. at means the buyer either will have to keep the stables intact or include new stalls in whatever is built. e asking price for Kensington is $2 million—$354 per square foot—according to an online listing. But with the public’s interest in equestrian activities declining, Lander’s position could depress the property’s value. “It’s a tall order to ask someone to buy it as a stable,” Blankinship said. — PETER D’AMATO PETER D’AMATO
MARCH 6, 2017 | CRAIN’S NEW YORK BUSINESS | 27
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