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Naked Fish restaurant in downtown San Luis Obispo has closed, and the co-owner says the reason is high rents and stagnant business in a changing downtown atmosphere.
Daniel Cardinale said that he believes small businesses are being pushed out of the downtown area with high rents. The sushi restaurant closed at 857 Higuera St. on Saturday, he told The Tribune in a phone interview.
Cardinale said his company paid $12,000 per month in rent in downtown SLO, where the lease recently expired after five years.
Cardinale said Karen Staeheli, his business partner, and he will keep open the Naked Fish locations in Paso Robles (opened more than a year ago) and in South Lake Tahoe (opened 19 years ago), which helped stabilize the SLO location that saw business fluctuations during its run.
“We were in the red and then in the black (at the downtown SLO site),” Cardinale said. “We had our ups and downs. It was never a lot and never too little.”
Cardinale said he felt it was important to honor the lease, but he opted not to renew because it “wasn’t really worth it.”
“It’s almost like they’re encouraging corporate businesses to come in,” Cardinale said. “I grew up in Paso Robles, and downtown SLO used to be a place that championed small business. I don’t know if it’s gentrification or just capitalizing on opportunity. But I think some of the larger property owners are continuing to raise (lease) prices to see how far prices will go.”
“(The location) wasn’t a failure, but it wasn’t a success,” Cardinale said. “But I felt like I wouldn’t have been able to keep it open.”
A listing for 857 Higuera, managed by Peak Property Management, offers the 2,640-square-foot space for $140,976 per year, or $53.40 per square foot. The building is owned by Ali Vahdani of Wineman Building LLC.
“We already have prospects, and we’re closing in on a new tenant,” said Gary Stevenson, the property manager for Peak.
Stevenson said that while some people say rent downtown is too high, “other restaurants are making it great.”
Those succeeding are finding a way to differentiate their business with the right model to serve downtown customers, thus offering a “unique experience,” Stevenson said.
Naked Fish has been a successful model, Cardinale said, with fresh fish rotations to mix up the menu and a “fun atmosphere.” The business generates more than $1 million per year in sales, he said.
Cardinale said he’s seeking to open in a new location, potentially outside of the downtown area in SLO or other parts of the county, such as Arroyo Grande.
Cardinale said that he believes rent prices in the downtown area are being driven by corporate real estate owners who are allowing SLO to “slip away from its charm and what its supposed to be.”
“I don’t think sole proprietors can compete anymore,” Cardinale said. “If you want Buffalo Wild Wings and California Pizza Kitchen — and there’s nothing wrong with those places, I eat there, too — but that’s what downtown SLO is likely to get because those are multi-milllion-(dollar) corporations that can pay the prices and not the sole proprietors.”