For the second time in recent years, the city has reprimanded the longtime Castro bakery, Sweet Inspiration, for allegedly trying to skirt neighborhood regulations that require formula retailers - or chain stores - to obtain a conditional use permit from the planning commission.
The city violation notice, mailed January 22, notified the property owner of 2239 Market Street that the tenant, Sweet Inspiration, was illegally operating a formula retail business by doing business as Ike's Place, in connection with the bakery.
Formula retail is defined as "a type of retail sales ... establishment that has 11 or more" outlets and some sort of standardized menu or merchandise. Ike's Place, a sandwich chain that was founded on 16th Street in the Castro by Ike Shehadeh in 2007, has opened more than 30 locations.
The city told the property owners that Sweet Inspiration, a business entity known as Eighth Rays Inc., must discontinue operating a formula retail business within 15 days or face penalties, including a fine of up to $250 a day.
Shehadeh and Ryan Scott are listed as the primary owners and stakeholders of Eighth Rays and have also filed an application for a license to sell beer and wine, which is pending. Scott was previously executive chef at Finn Town Tavern, located two doors away at 2251 Market.
Repeated calls to Sweet Inspiration to obtain a comment about the notice had not been returned at press time.
In its letter to the property owners, Ralston Capital in Belmont, CA, the city outlined the history of its investigation.
In June 2016, according to the letter, the city's planning department staff conducted a site visit to 2239 Market Street and "confirmed the violation." Inspectors observed, "that a separate menu existed to advertise Ike's Place products, as well as product bags that used the registered trademark for the business."
In mid-July 2016, the planning department issued a notice of enforcement, advising the business to take corrective actions.
Two months later, Shehadeh told the planning department he had removed references to Ike's and that there would be no affiliation between Ike's and Sweet Inspiration. The following month, the city determined that there was no longer a formula retail business operating at 2239 Market Street.
But the dispute resurfaced again last December, when the planning department received information that Mike's Place was operating from Sweet Inspiration and was selling menu items from Ike's Place.
On January 12, according to the city, Sweet Inspiration was offering a $2 hamburger special in connection with Scott and Ike's Place. To obtain the special, a customer was required to "follow" Ike's Place on Instagram or Facebook, both known as SweetsSF.
City planning staff again made a site visit and verified that standard menu items from Ike's Place were on the menu, including the "Matt Cain" or "Cain Sandwich." On the day of the site visit, a staff member was wearing a T-shirt displaying the Ike's Place logo.
Commenting on the dispute, Castro Merchants President Daniel Bergerac said in an email to the Bay Area Reporter, "All businesses have to play by the rules. The rules have to be administered equally so that there is a level play field for all businesses.
"I sincerely hope Sweet Inspiration will get their permits in order to operate legally," he added.