Charlotte just cut Showmars a big break on its rent at the government center

Showmars has been the Charlotte-Mecklenburg Government Center’s exclusive lessee for restaurant space for nearly 20 years.
Showmars has been the Charlotte-Mecklenburg Government Center’s exclusive lessee for restaurant space for nearly 20 years. adouglas@charlotteobserver.com

Showmars’ “World Famous Fish Sandwich” and gyro pitas will still be served, for now at least, inside the uptown Charlotte government building — a majority of city council members approved a deep break in rent for the restaurant this week.

The Charlotte-based chain says its location inside the Charlotte-Mecklenburg Government Center is losing money each month. On Monday night, the council voted to approve a rent reduction — from $3,000 a month to $500 — for the remaining two years of Showmars’ lease at 600 E. 4th St.

With the change, the city council also voted to remove an existing renewal option in Showmars’ lease, which means the restaurant and the city will need to renegotiate terms if the location is to remain beyond 2021.

But several council members said Monday they are interested in either opening up the ground floor retail/restaurant space to multiple vendors or rethinking the restaurant-style model.

Tony Korolos, director of real estate for the city, said a past attempt to have multiple food vendors for city hall employees and visitors resulted in complaints about food quality and long lines. Showmars’ lease stipulates food trucks and other competitors may only operate at the government center for breakfast or lunch for a maximum of five days each year.

The Showmars location in the government center primarily serves city and county employees and visitors, such as jurors and others going to city offices and the nearby courthouse. But the restaurant, which has been the exclusive lessee inside the government center since 1999, says it makes little to no profit from the location.

Due to limited operating hours of the government building, the restaurant is open only for breakfast and lunch Monday to Friday. Other Showmars locations in Charlotte open on weekends and serve dinner, too.

In asking for a rent reduction, the restaurant cited the city’s 2012 move to install security checkpoints for the government center, coinciding with the Democratic National Convention held in Charlotte. The restaurant lost nearly 30 percent of its sales after the security stops were put in place, city officials said Monday.

Before the meeting, council member Ed Driggs told the Observer he supports reducing Showmars’ rent because having an on-site restaurant is an amenity for city workers and likely more cost-efficient than turning the nearly 4,700-square-foot space over to a cafeteria vendor. Showmars offers government center employees a 10% discount and recently scored high on a survey of city employee satisfaction with the restaurant.

Driggs said that Showmars founder George Couchell is an “old friend” but that the relationship did not affect his judgment on the lease vote.

Council member Braxton Winston said he isn’t sure the city should subsidize restaurant operations through rent breaks. Winston equated the move to the city picking winners and losers.

“If that business model doesn’t work, maybe we should go another route,” Winston said, adding the government center’s first floor has more potential than its current use. Winston said he’d like to see the building’s entrance be more useful for residents and visitors, and could perhaps house a rotation of pop-up eateries or food trucks.

Winston, along with council member LaWana Mayfield, voted against reducing Showmars’ rent.

Mayfield said it would set a precedent for other vendors to ask city leaders for the same deal and she said a break in reduction is an accommodation other businesses don’t get as rent costs rise across Charlotte.

‘A rounding error’

Showmars has been the government center’s exclusive lessee for restaurant space for nearly 20 years. During a lease renewal in 2016, the city lowered Showmars’ rent from $4,856 to $3,000 monthly and extended a $95,000 loan to the restaurant to help cover shared costs of renovating the dining room for customers.

Couchell told the Observer the restaurant inside the government building has had little to no profits over the past seven years after the security check stations were installed. To enter the restaurant, visitors must pass through a security screening which includes bag checks and a metal detector.

Couchell said the restaurant’s limited operating hours also hurts revenue.

“It’s not financially tenable,” he said. “The main reason that we, and especially me, want to be in the government center is because we love the city of Charlotte. I don’t want the people of Charlotte to think that Showmars is taking advantage of the city.”

Other major employers in uptown Charlotte, Couchell said, routinely offer discounted rents to tenants serving food.

Couchell founded Showmars in 1982 and the restaurant now has more than 30 locations around Charlotte. Couchell says he’s proud of the company’s location inside city hall, and that Showmars prioritizes charitable donations and community service in Charlotte, such as through Panthers player Greg Olsen’s foundation for pediatric medical research and the Levines Children’s Hospital.

A recent survey of more than 500 employees inside the government center showed 90% liked Showmars’ service inside the building and 75% were satisfied with the restaurant’s food quality.

Showmars serves both Greek and Southern American food, along with soups, salads and the popular fish sandwich. Couchell said the government center location also regularly deviates from the restaurant’s standard menu to provide variety for customers who eat there multiple times a week and to ensure city and county workers have healthy food options.

Several council members on Monday said they worried Showmars would feel unwelcome or unassisted if the city didn’t grant a reduction in rent for the remaining two years of the lease.

“Let’s make sure our partners at Showmars know how much they’re appreciated ... I really appreciate the folks who work there,” said council member Tariq Bokhari. He said the area where the government center, police department and county court facilities are located is a “food desert” in uptown Charlotte.

Mayor Pro-Tem Julie Eiselt said the $2,500 per month reduction in rent wasn’t a big-ticket item for the city’s nearly $600 million general fund.

“The rent itself is a rounding error in the grand scheme of things,” Eiselt said, adding that keeping Showmars in place until at least 2021 is important because city and county workers in the government building have little to no nearby restaurant options.

Anna Douglas is an investigative reporter for the Charlotte Observer. Previously, she worked as a local news reporter for The (Rock Hill) Herald and as a congressional correspondent in Washington, D.C., for McClatchy. Anna is a past recipient of the South Carolina Press Association’s Journalist of the Year award and the Charlotte Society of Professional Journalists’ Outstanding Journalism Award. She’s a South Carolina native, a graduate of Winthrop University, and a past fellow of the Dori Maynard Diversity Leadership Program, sponsored by the Society of Professional Journalists. Anna has lived in Charlotte since May 2017.