The Applebee’s Neighborhood Grill & Bar in Times Square plans to appeal a $7 million judgement over unpaid rent to its current landlord — and is meanwhile in talks to move to a another space nearby, The Post has learned.
The family friendly eatery at 234 W. 42nd St. hasn’t paid rent since April 2020, but that’s only after its owner Zane Tankel tried to negotiate a settlement with his landlord worth “millions of dollars,” Tankel claimed in an exclusive interview with The Post.
“I wouldn’t pay rent because he wouldn’t discuss a settlement,” Tankel said of the rep at his landlord, Madison International Realty. Tankel griped that he paid $600,000 in property taxes and utilities in 2020 “and I never even got a ‘thank you.’”
Tankel said he is in talks with two other landlords on West 42nd Street, although he declined to give specifics. Tankel says his 98 employees at the Times Square restaurant, some of whom started working there when it opened 25 years ago, are assured jobs at his other restaurants in the city.
“We have been talking to other landlords on the same street who want us,” Tankel said.
State Supreme Court Judge Lucy Billings sided with Madison International last month, ordering Tankel’s company Apple-Metro on Sept. 30 to cough up its back rent for the past two years plus — including 9% interest and attorneys’ fees – and to move out of the space.
“The COVID-19 pandemic did not relieve or suspend defendants’ obligation to pay rent,” Billings wrote in her decision, adding that “financial hardship” isn’t an excuse, either.
Tankel said he is appealing the decision after reaching compromises with nearly all of Apple-Metro’s landlords for its 28 locations in the New York metro area with the exception of Times Square, whose annual rent he said is $2.5 million.
Nevertheless, courts have largely rejected COVID-19 as an excuse for not paying rent, arguing that the pandemic did not cause physical damage to stores — like a natural disaster that might flood a basement or knock out electricity.
“They are essentially saying why should the landlord suffer,” real estate attorney Jeffrey Margolis said, adding that “the city also didn’t give landlords relief on their taxes.”
A couple of big rent disputes last year, including the Times Square Gap store which was ordered to pay $24 million in back rent, established a precedent for these pandemic related cases, real estate litigation attorney Adam Levy told The Post.
“I haven’t seen a case where a tenant won in New York since those decisions came down in the summer 2021,” Levy added.
Some landlords negotiated lease adjustments with their tenants, using security deposits for rent or switching a fixed payment to a percentage of sales in order to keep a good tenant, experts said.
Madison International’s attorney Deborah Riegel said in a statement, “The landlord attempted to negotiate and was willing to accept a settlement on the amount of rent owed. Applebee’s still declined to pay, even after the location reopened and profitability was restored to nearly pre-pandemic levels.”
The Times Square Applebee’s will likely close within the next 30 to 60 days. The landlord is not seeking to collect on the remainder of his lease which runs through 2025, according to court documents.
“I’m operating as if I have to close that restaurant,” he added. “But everyone working there will get a job at another Applebee’s, including one eight blocks away on 50th Street.”
Like many Big Apple restaurants and retailers, Applebee’s stopped paying rent shortly after the pandemic began. While some restaurants reopened in 2020 to handle take-out and delivery orders, Tankel decided that Times Square had too few tourists and office workers to reopen before June 2021.
The two-story, 15,000 square foot eatery is nestled between the shuttered entrance to the Hilton Times Square hotel and the former Ripley’s Believe it or Not museum, which closed a year ago. A pop-up, Halloween haunted house temporarily moved into the Ripley’s space, which is also owned by Madison International.
Tankel says West 42nd Street has been hit hard by the pandemic and even before with a number of big attractions shuttering in recent years, including a massive McDonald’s. The B.B. King Blues Club & Grill across the street from his restaurant closed in 2018 and has stood empty ever since.
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