Two longtime Castro Street businesses on the 400 block of the iconic thoroughfare told the Bay Area Reporter they don’t have much time if they want to stay in their storefronts. They’re asking the community for help even as the end of their leases loom and their commercial spaces are set to be taken over by Another Planet Entertainment.
Brothers Ken Khoury, of the Castro Coffee Co. at 427 Castro Street, and Riyad Khoury, of the Castro Nail Salon at 431 Castro Street, both straight allies, flank the Castro Theatre, managed by APE and currently closed for renovations. As the B.A.R. first reportedin March, they say that they have till the end of June to vacate their spaces because their leases are not being renewed.
The brothers have petitions at their businesses, asking patrons to sign to convince the Nasser family, the longtime owners of the theater, and APE as the leaseholder of the three-unit building containing it and the coffee shop and nail salon to change their minds. A sign at the businesses also contains a QR code people can use to email the office of gay Board of Supervisors President Rafael Mandelman, who as District 8 supervisor represents the Castro, at [email protected].
Ken Khoury, 74, has had the coffee shop since 1987. Riyad Khoury, 78, opened the nail salon in 2004. The B.A.R. sat down with them for an interview at one of the coffee shop’s outdoor tables May 1.
“These businesses are essential,” Ken Khoury said. “You take these businesses out, this part of the 400 block would be totally dead. Is this what the city wants? You’re taking a thriving business that serves the community for so long and just basically throwing it out. … I have five employees with dependents. How can I turn my back on them, and tell them to go away?”
Riyad Khoury added, “You can’t evict an existing business that is successful and is serving the community. We’re part of the community. We are not like Walgreens. … We have relationships, stories we share together a long time.”
As of May 6, they’ve gotten 900 signatures on the petitions. Six hundred of these have been sent to Mandelman’s office, Ken Khoury said.
Mandelman – who nominated the nail salon for legacy business status earlier this year, which it attained – told the B.A.R. on May 6 that, “I think APE and the Nassers should find a way for these two long-standing and beloved businesses to remain in the Castro.”
Asked if he was planning on meeting with the parties, or had already, Mandelman stated that he had.
Ken Khoury said he first learned there’d be a problem with renewing the lease in January, when he sat down with Chris Nasser to discuss its renewal.
Ken Khoury said Nasser told him that Bay Properties Inc. – the company that owns the theater, of which he is the president – could not renew the leases because the three-unit building containing it was leased to APE as of July 1.
The B.A.R. reached out to APE to ask what it had to say. An APE spokesperson confirmed the company will hold the master lease of the spaces as of July 1, and added that the brothers had been informed far in advance of January 2025 that their leases would not be renewed.
It was widely reported in 2022 that APE leased the theater itself when it took over management. The theater is currently undergoing a massive renovation and restoration project, to the tune of $35 million, according to APE. As the B.A.R. reported in February, the theater was originally supposed to be open this summer, but this has been pushed back to fall.
An email viewed by the B.A.R. confirms that Nasser stated that Bay Properties Inc. cannot extend the leases. He also stated he was working with APE on a resolution.
Indeed, the Nassers, APE, and the Khourys had a meeting at the Bill Graham Civic Auditorium on March 18, though those negotiations did not result in a resolution all parties could agree upon.
“As of end of June, they [APE] will be the leaseholders,” Ken Khoury said. “We suggested we sit down with them to talk about the new lease. What’s going to happen to us here?”
APE wants the two spaces, brothers say
Added Riyad Khoury, “At the end of conversation, they said, ‘In a perfect world what would you like?’ I said, ‘I would like to stay here. That’s it’”
Continued Ken Khoury, “At the time we felt they might be interested in a solution. But after that meeting? Silence.”
Nasser didn’t return multiple requests to comment.
Asked if they were told of anything that might be replacing them in the storefronts, Ken Khoury said, “Up to this day we don’t know. They will not say. They’re tight-lipped about it. All they’re saying is they need the spaces, that APE needs the spaces. Why?”
The APE spokesperson stated that APE has no plans to utilize the spaces for its own use, though this may change going forward, and stressed the company hopes the matter can be resolved between the Nassers and the Khourys before their leases end.
“We are not party to any negotiations between the Nassers and any of their tenants,” David Perry, a gay man who is a spokesperson for APE, stated. “We have one focus, which is restoring, renovating, and upgrading the Castro Theatre to make a safe and sustainable venue as soon as possible for the LGBTQ, film, cultural, and greater Castro and entertainment community.”
Ken Khoury said May 6 that the businesses each pay $3,166.92 in monthly rent.
Ken Khoury went on to say that Nasser “suggested we could move some place and they … would help fund” the moving costs.
Added Riyad Khoury, “We asked [Nasser], suppose one of the shops moved? Would you guarantee a lease for the other shop? His response was two days ago, ‘No.’ The response was ‘APE wants two shops.’”
Earlier the same day as the interview, Ken Khoury made an appearance at the Castro Merchants Association's monthly meeting asking for fellow merchants to sign the petition. Patrick Batt, a gay man who is proprietor of AutoErotica on 18th Street, brought up that Khourys’ relatives own the building next door (which the B.A.R. confirmed). That building includes the newly-vacant Double Rainbow Ice Cream space at 415 Castro Street.
At the merchants’ meeting, Ken Khoury said, “We suggested [APE] take it if they want a box office. They can take it. It’s 209 square feet.”
During the interview later that day, he said that moving one of the businesses there would not work.
“It’s too small. We had an architect come and measure it, and if you want to follow city regulations, I can hardly put my espresso machine in there,” Ken Khoury said. “It’s 209 square feet versus 300. Neither shop can fit, in either case.”
He also said that, “My youngest brother who owns it, him and my sister, we offered it [to APE].”
Riyad Khoury said after the lease situation became clear earlier this year he was eager to apply for his store to become a legacy business, which he did successfully, as the B.A.R. reported. Because the coffee company changed its name in 2009, it was ineligible to apply for the designation.
He also said the pair met with Mandelman, and that he briefly discussed the matter with Mayor Daniel Lurie, who said he was aware of the situation. Though he did not get a response from a Lurie aide, he did hear from Katy Tang, the executive director of the Office of Small Business and a former supervisor.
“She reached out to me,” he said. “She emailed and called me and said she'd try to find a solution for you but so far nothing came of it.”
Reached for comment May 6, Office of Small Business communications manager Michelle Reynolds stated, “OSB has been in touch with the Khourys dating back to early this year. We continue to offer our small business services and programs that may be of help to them.”
OSB can help in lease negotiations, relocation support, and permitting, a spokesperson told the B.A.R. in March.
While the B.A.R. was visiting the coffee shop for follow-up questions May 6, Skye Dow, a straight ally and San Francisco native, expressed dismay upon seeing a sign on the business explaining the situation.
“This is something that makes us San Francisco,” Dow said. “This makes us who we are, and if you take it away, you are taking away our identity – for what? Profit?”
The Khourys hope they can stay where they are now, and that the petition and emails to Mandelman and Lurie’s offices can change the minds of the Nassers and APE.
Nate Bourg, a gay man who is president of the merchant’s association, stated to the B.A.R., “The Castro is home to hard-working small business owners and passionate residents who support them through thick and thin — this is one of our community’s greatest strengths.
“While the Castro Merchants Association cannot intervene in negotiations between landlords and tenants, we strongly hope for a good-faith resolution that enables these businesses to continue operating, and keeps this vital block of Castro Street active and thriving,” he concluded.
Ken Khoury told the merchants, “They’re setting a precedent of evicting businesses from the neighborhood. It never happened before.”
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