Harry G. Ochs Faces Eviction

[Holly Moore]

Harry G. Ochs and Sosn Butchers are facing eviction from Reading Terminal Market - reportedly for being in arrears on their rent. According to Mike Klein's article Ochs & Sons recently signed a new lease which substantially increased the rent and has fallen a number of months behind in their rent.

More facts need to come out, but I would think that part of the Market's mission would be to do what it takes, up to and including subsidizing the rent, to keep a long term merchant (over 100 years) the caliber of Ochs # Sons part of the market.

[Holly Moore]

Just did a quick calculation. Based on the monthly rent and stand square footage - the annual rent is something in the area of $76 per square foot. That is a lot for a butcher shop. Would be interesting to learn how much the rent has risen since the convention center took over the market.

[lancastermike]

I got Klein's tweet regarding this. They should work with the guy to make sure he can stay in business. However, he has an obligation to pay his rent as well.

Wonder if Bob Libkind has any information on this?

[Tim Dolan]

Yikes! I better use my gift certificate to there that I received as a Christmas present pretty quick...

[angevin]

This is a damn shame. My fear is that this is the beginning of the end of the Market as we know it. For how long will the little guys be able to afford the space? If Ochs is having trouble, who's next? Will it eventually be taken over by frou frou chain merchandizers?

[gfweb]

Agreed. There should be some attempt at preservation rather than just maximizing rent. If the place gets filled with foolishness it will lose its reason for existing.

[janeer]

It would be terrible if RTM went the way of Quincy Market in Boston (which I knew in the days when the old purveyors were still there). I can't imagine RTM with Harry Ochs. Get him on a payment plan, but find a way to keep him there. Maybe he needs some business advice.

[rlibkind]

Nick Ochs told me this morning that the dispute, in his view, is over when he should have started to pay higher rents under the lease he signed in August. Nick is optimistic that the matter will be resolved and he will remain in the market. RTM General Manager Paul Steinke has told one and all that if Nick makes a dent in the back rent, the suit will be withdrawn.

I think the concerns that the RTM would become just a tourist mall, a la Quincy market, are overdone. Just look at the market's mission statement and operating policy guidelines, as well as its actions in finding new vendors and helping existing ones for the proof. Rick's Steaks (clearly a tourist-oriented business if there ever was one) has ceded to an expanded Fair Foods offering an incredible variety of local produce, meats and cheeses. (And four stalls are now selling cheese steaks, where there used to be just one.) The market found a way to retain a specialty pork butcher to replace one who folded, and brought in a new local farmer when Earl Livengood decided to concenterate elsewhere. The RTM's proposed acquisition of Farm to City likewise demonstrates its commitment to local food.

Indeed, the lunch counters and and non-food vendors actually subsidize purveyors like Ochs, the other butchers, fish mongers and produce stalls. Under the market's policy, they pay less rent than the others.

As for an additional subsidy for Ochs based on longevity, that would raise the hackles of the other fish, meat and produce vendors. Why should he get a better deal than them, especially his competitors? Do you think Charles Giunta (Giunta's Prime Shop), Martin Giunta (Martin's Quality Meats), Moses Smucker (Smucker's Quality Meats) or Amos Riehl (L. Halteman) would stand for that?

The market's "Purveyors" -- the term the market uses for the market's butchers, greengrocers and fishmongers -- all pay the same basic rent. The "Food Basket" (dairy, coffee, bakery, etc.), "Mercantile" (non-food) and "Food Court" (lunch stands, etc.) vendors pay higher rents.

For a more detailed discussion of how the market structures its leases, and some of the history behind it, I've prepared a "white paper" on my blog: RTM Lease Structure.

[gfweb]

Thanks, Bob. You give me hope.

[Holly Moore]

Bob,

Thanks for the excellent summary of RTM's lease structure. I hope that, indeed, Harry G. Ochs and Sons comes through this unscathed.

Yes, the expanded Fair Foods stand is a great use of Rick's Steak space. But, as I recall, when Rick's Steak eviction was initiated, the board's intent was to replace Rick's Steaks with a Tony Luke's franchise. One could conclude that Fair Foods getting the space was a PR move undertaken because the Rick's Steaks unjust eviction had become such an inflammatory and divisive issue.

I take exception whenever RTM management compares itself to the Gallery and other malls to justify or minimize its actions. That the board and management see Reading Terminal Market as any way similar to a shopping mall is a big part of the problem.

It is not just Harry G. Ochs and Sons that I believe has earned special consideration. Any long term merchant has. The hundred year merchants, especially, are the soul of the market; its historic foundation. The lead commitment in the Market's Mission statement is "To preserve the architectural and historical character, and function, of the Reading Terminal Market as an urban farmers’ market." I'm not sure how a lawyer letter threatening the eviction of one of the market's oldest merchants helps to preserve the market's historical character and function.

[rlibkind]

It ain't PR when you follow your talk with action (Fair Food).

Yes, the RTM is not a mall. But it is a conglomeration of retail businesses in the same way. Some management tools and approaches that a mall uses are not necessarily counter-productive when applied to a public market like the RTM. The main difference is that the RTM is not there to maximize profit for a private-sector landlord; rather, it's to support its mission. And part of that mission is to assure the financial viability of all its merchants as well as the entity (the RTM) that makes their businesses possible.

I can't think of another "hundred year" merchant other than Ochs. And I still say it would be grossly unfair to subsidize one butcher at the expense of the others. If they can make a profit paying their fair share, so can Ochs; if Ochs can't, then they need to rethink their business. The other butchers shouldn't be forced to create profits for Ochs by giving up some of theirs to subsidize Ochs' rent.

The late Harry (and his son Nick) are indeed, sweethearts, nice guys, and purveyors of excellent meat. But they don't need the sweetheart deal Holly proposes to survive and prosper.

[Holly Moore]

Sure, it's still PR if the action was taken to mollify an ugly situation.

Didn't realize Ochs is the only hundred year merchant. That kinda makes it worse that the market is even considering eviction rather than working with him.

[zeffer81]

Farewell to Harry Ochs:

http://www.philly.com/philly/blogs/the-insider/Harry-Ochs-bolts-Reading-Terminal-Market-for-Manayunk.html

[Holly Moore]

From Mike Klein's article on Philly.com

Paul Steinke, general manager of the market, said: "We're sorry to see them go. We'll long remember the Harry Ochs name. Despite many attempts to reach an agreement to satisfy Nick's financial obligation to the market, we were unable to resolve those issues. But we wish him and his family well."

The Reading Terminal Mall Market board and management should be ashamed of themselves for letting things get to this point. But I understand - it's just business.

[rlibkind]

Losing the Ochs name at the market is regrettable, just as it was when Noelle Margerum pulled up stakes. Tradition is to be valued. But who among us can afford to value tradition at $21,000?

That said, clearly it wasn't the $21,000 in back rent that was causing Nick's biggest problems. Based on Michael Klein's report today, Nick was facing more than $200,000 in judgments on loans issued by two banks.

To suggest that an evil RTM management bears responsibility for putting Nick out of business replaces fact with fantasy. Bad luck and/or bad management, or some combination thereof, is the culprit.

[Holly Moore]

It was the management that filed the eviction notice.

If I don't pay rent for my ten year old business, I expect to be evicted. When the oldest and only hundred year merchant in a historic market, a public trust, has problems, I expect the management's reaction to be supportive - focused marketing and merchandising assistance, management consulting, a break on the rent for a few years with the opportunity to catch up down the road.

This time, unlike the expulsion of Rick's Steaks, the management was not "evil" or vindictive. This time they have been disloyal to market tradition and less than competent in supporting a valued merchant.

[rlibkind]

Go back to the numbers, Holly. Nick's real troubles aren't because of market management, nor does the market have an obligation, legal or spiritual, to bail out that business. I don't think the other butchers would be pleased to pay higher rent to pay off Nick's $221,000 in loan and rent arrears debt.

[Holly Moore]

The eviction action was initiated by market management for back rent - it had nothing to do with bank issues. So I'd suggest a recheck of the numbers too. Why would the market or the merchants have any responsibility for bank debt?

If RTM was indeed the same as the Gallery or a regional shopping mall, as the former board chairman asserted, then it would be simple. Pay the rent or get evicted. But RTM is not just another mall. It is an historic market with tradition and continuity.

Quite simply - last week the market had a merchant who had been there for over a hundred years. Now it doesn't. But as long as management is "sorry to see them go," and will "long remember the Harry Ochs name" I guess they have done all they could.

[Capaneus]

I think management's obligation is to maintain, if possible improve, the identity of the market, as a market. It's not a museum, and individual merchants are not objets d'art, prized in themselves. Last time around, we ended up with a better market, as Fair Food Farmstand greatly expanded its offerings, replacing a very average cheesesteak vendor - and as it turned out, others filled in that loss more than competently.

And to me, that means management did their job (albeit largely accidentally).

This time, we lost one of several butchers, and one who obviously was failing to reach market-goers. It isn't fair to the merchants who are succeeding to have Ochs be subsidized - because all you suggest would have been a subsidy, in one form or another. And I find it hard to see what we lost - longevity in and of itself isn't terribly valuable to me.

[Holly Moore]

In the past I've worked corporately for three of the top fast food franchisors. When a franchisee had problems, a franchisor's first inclination was not to send a lawyer letter threatening eviction. Rather, it was to focus training, operational, and marketing support on that franchisee and help them turn around their operation. Other franchisees understood that this was smart business for all and, down the road, could help them if they encountered similar difficulties.

Yes, franchisor and landlord are different business models. Landlord of a historical market and landlord of a mall are also different business models. Mall landlords want suitable tenants that can generate the most rent per square foot. A mall landlord's mission statement does not lead with "To preserve the architectural and historical character, and function, of the Reading Terminal Market as an urban farmers’ market." The management of a historical market the caliber of Reading Terminal Market is more franchisor than mall landlord and does indeed have an obligation to do whatever it can to nurture all merchants, especially the long term merchants, and most especially their oldest merchant.

David O'Neil was the Reading Terminal Market manager who, pre-convention center, brought about the Market's renaissance. He recognized and treasured the Market's heritage. I wish he was here today.

[Holly Moore]

An interesting article in the Philadelplhia Business Journal

Harry Ochs was a well-known merchant and led efforts to save the market in the early 1990s, when officials considered shutting it down to make way for the Pennsylvania Convention Center. Ochs and others convinced officials to make the market an integral part of the overall Convention Center footprint.

Once again, no good deed goes unpunished.

[wkl]

i think it's sad to lose a long term merchant at rtm. but where do you draw the line? at what point do you begin eviction proceedings against a merchant behind on rent. 3 months, 6 months, one year, never??

the article you link to does quote the rtm rep saying they made every attempt to work with ochs. do we know what rtm did to try and work with ochs?

[Holly Moore]

As I read it the management said they did everything they could to work out the back rent issue. ie insure payment.

[wkl]

put you rtm manager hat on. how long would you let a tenant be in arrears before proceeding with eviction?

[Holly Moore]

Depends on the tenant. If it was the market's oldest tenant and a tenant who had played a major role in the market's survival during various crises, I'd cut them a good deal of slack - at the same time trying to figure out what was going wrong and what can be done to get them back on course.