Raise prices or go out of business.
That's the choice Joe and Paula Cavallaro face if the city of Pacific Grove raises rent on the Grill at Lovers Point, which the Cavallaros have operated for 22 years.
The popular hamburger, hot dog and snack stand has been hit, like other businesses, by the economic turndown, Joe Cavallaro said.
In addition, closure of the children's swimming pool, and downsizing of the city's annual Feast of Lanterns have taken a toll on snack sales, Cavallaro said.
The stand did about $25,000 in sales annually when he started, Cavallaro said, and when the current lease was signed about 10 years ago, the city sought a flat rent rate based on 10 percent of that figure.
Since then, he said, sales have dwindled to about $86,000 a year.
His lease with the city expired Jan. 23, Cavallaro said, and he was told the rent would go up from the present $1,250 to $1,850.
Cavallaro said he has sought to negotiate a lower rate and was given a three-month extension on his lease at $1,530 a month. Last week, he said, he was presented a "final offer" from City Manager Thomas Frutchey of $1,725 a month, with yearly increases based on the Consumer Price Index.
That rent equates to $5.14 per square foot of his 300-square-foot stand, Cavallaro said, adding that he surveyed Pacific Grove's downtown and found rents for a street-front business average about $2.25 a square foot. The two other restaurants operating on city-owned land — Point Pinos Grill at the Pacific Grove Golf Links and the remodeled Old Bath House Restaurant at Lovers Point — are charged similar rents, and pay the city a percentage of gross sales.
He would propose rent based on $2 per square foot — $600 a month — and pay 10 percent of gross receipts, Cavallaro said, more than the Point Pinos Grill or the Bathhouse pay.
"All I'm asking," Cavallaro said, "is a base rent at the prevailing rate and 10 percent on the gross."
If he can't get the rent lowered, he said, "I'll have to raise prices today, and I don't want to do that. This is just a beach snack shop."
The issue of his lease is scheduled to come before the City Council for consideration at its Feb. 20 meeting, he said.
A Pacific Grove resident since 1971, Cavallaro owned a liquor store in Monterey before becoming a co-owner of the Tinnery Restaurant at Lovers Point 25 years ago, at which time he also took over the Lovers Point Grill operation.
City officials did not respond to inquiries about the lease Tuesday.
Kevin Howe can be reached at 646-4416 or firstname.lastname@example.org