Apple's Grand Central Neighbor Seeing 7% Increase In Sales

[MacRumors]

New York City's Metropolitan Transportation Authority (MTA)'s sweetheart deal for Apple's just-opened Grand Central Terminal retail store seems to be paying dividends for the MTA and neighboring stores. One restaurant is reporting a 7 percent increase in sales since the store opened in December.

Michael Jordan's The Steak House is located across the terminal from the new Apple Store, Grand Central and co-owner Peter Glazier says the restaurant has seen a 7 percent jump in sales in the seven weeks that the Apple Store has been open, reports Crains New York. Glazier also says the rise isn't because Apple replaced another restaurant, Metrazur, in the terminal. "The jump only happened after Apple opened," said Glazier, not in the several months that the space was being renovated as the store was built.

There was some criticism of the deal that Apple and the MTA worked out, most notably around the lack of a revenue sharing agreement which is standard for most tenants of Grand Central. Apple's $60-per-square-foot lease agreement is also significantly lower than what most other tenants are paying. The MTA argued that a flagship Apple Store would bring in significant foot traffic to the terminal, benefiting both other GCT tenants and the terminal as a whole.

The MTA has previously noted that for every 1% increase in sales across the terminal's retailers, the MTA will gain $500,000 in rent due to the percentage rent provisions in place on the leases of nearly every other tenant with the exception of Apple.

MTA's gamble appears to be paying off, for at least one establishment.

(Photo via Yelp/Chris F.)

Article Link: Apple's Grand Central Neighbor Seeing 7% Increase In Sales

 

[*LTD*]

A nice twist on the Halo Effect.

 

[PlaceofDis]

its impressive that one store could increase traffic that much, but i am not surprised given just how busy all the apple stores are that i have been to, so there is obvious demand for more stores.

 

[thejadedmonkey]

That seems a bit low. You both remove an empty anchor store, increase foot traffic, and there's a 7% increase? That's the equivalent of an extra 10 tables a night I would estimate. I don't understand how this is news.

 

[gotluck]

That seems a bit low. You both remove an empty anchor store, increase foot traffic, and there's a 7% increase? That's the equivalent of an extra 10 tables a night I would estimate. I don't understand how this is news.

I agree. How would a 7% increase in sales even break even for MTA given Apple's significantly lower rent and lack of revenue sharing.

 

[daxomni]

A little early for the conclusions, don't you think? Not to mention the economy in general is recovering. I'd be shocked if MR was going to give all that credit to Apple alone. Oh, wait...

 

[basesloaded190]

That seems a bit low. You both remove an empty anchor store, increase foot traffic, and there's a 7% increase? That's the equivalent of an extra 10 tables a night I would estimate. I don't understand how this is news.

10 extra tables a night, and let's say $50 a table (which is probably on the low side) X 7 days a week X 7 weeks so far = almost $25000 in extra sales without doing a single thing.

 

[ernbrdn]

That seems a bit low. You both remove an empty anchor store, increase foot traffic, and there's a 7% increase? That's the equivalent of an extra 10 tables a night I would estimate. I don't understand how this is news.

I voted you back up, not sure why you were voted down in the first place. 7% is nothing to brag about. It's a 7% average for one thing, heck christmas traffice could account for that miniscule amount of increase over a 7 week period. Sure the Apple Store is great but come on everyone wants to make out like it's going to make or break or a buisness. Give it time and let the numbers speak for themselves.

 

[gotluck]

10 extra tables a night, and let's say $50 a table (which is probably on the low side) X 7 days a week X 7 weeks so far = almost $25000 in extra sales without doing a single thing.

Sure nothing but MTA losing a boatload of money on a sweetheart deal with Apple. Someone is paying a price.

 

[tlevier]

Sure nothing but MTA losing a boatload of money on a sweetheart deal with Apple. Someone is paying a price.

They aren't losing a boatload. The previous tenant had a lower rent than Apple is paying and their contract had another 7 years or so (can't remember). So, by Apple getting in this space, MTA is making more than they would have.

Further, the $60 per square foot Apple is paying to MTA isn't the total cost. Apple bought out the previous tenant with Millions of dollars up front, and Apple contributed even more to necessary renovations to the building (new elevator is what I heard.)

So, if you're the MTA, and you have someone willing to come in and bring more foot traffic, and that person agrees to improve your building, and that person agrees to pay more than a low rent tenant with a long contract, and they agree to pay-off that tenant.... what is there to say no to?

 

[rnizlek]

Sure nothing but MTA losing a boatload of money on a sweetheart deal with Apple. Someone is paying a price.

Correct me if I'm wrong, but I thought the MTA was actually getting more per square foot than they did from the previous restaurant that occupied the premises.

 

[gotluck]

Fair enough, Yes - looked at the rest of the terms versus the previous tenant.

 

[ThisIsNotMe]

BUt i thOUgHt APplE CheaTEd oN THeiR LeAsE!!!.

 

[gotluck]

well sweetheart deal does imply that it was not a totally at arms length transaction, one party gets a better deal

 

[hobo.hopkins]

So, if you're the MTA, and you have someone willing to come in and bring more foot traffic, and that person agrees to improve your building, and that person agrees to pay more than a low rent tenant with a long contract, and they agree to pay-off that tenant.... what is there to say no to?

Ah that would be the rational response that one would have to the entire situation. However some in these forums think that Apple can do no right, so your logic won't have any effect on them.

The entire deal works in the MTA's favour.

 

[writingdevil]

They aren't losing a boatload. The previous tenant had a lower rent than Apple is paying and their contract had another 7 years or so (can't remember). So, by Apple getting in this space, MTA is making more than they would have.

Further, the $60 per square foot Apple is paying to MTA isn't the total cost. Apple bought out the previous tenant with Millions of dollars up front, and Apple contributed even more to necessary renovations to the building (new elevator is what I heard.)

So, if you're the MTA, and you have someone willing to come in and bring more foot traffic, and that person agrees to improve your building, and that person agrees to pay more than a low rent tenant with a long contract, and they agree to pay-off that tenant.... what is there to say no to?

The whole rent thing has been debunked long ago and it works in MTA's and other retailers favor, consistently, and that's from independent accounting reports. Some people just won't let go or have to find fault somewhere, and here they land.

"...10 extra tables a night, and let's say $50 a table (which is probably on the low side) X 7 days a week X 7 weeks so far = almost $25000 in extra sales without doing a single thing..."
It's actually more than that. The place is very spendy, food is great, often hard to make a reservation, and serves 200 to 360 depending on configuration. Figure all that in and it's like a grand a night. And both MTA and Apple got so much criticism (mainly from people who didn't know the facts), why not show a first look response....or is it only good to show the negatives?

 

[iMikeT]

Nice halo effect.

I say these guys give some discounts to Apple Store customers. Buy an iPad, get 15% off your steak.

 

[aristotle]

I agree. How would a 7% increase in sales even break even for MTA given Apple's significantly lower rent and lack of revenue sharing.

1. Apple is paying significantly "MORE" per square foot for the space that they are occupying than the previous tenants were because they were paying rent + revenue sharing whereas Apple is paying a flat fee.
2. Apple paid for significant upgrades to infrastructure.

The MTA has the option to either charge a lower rental rate and then collect some more in a revenue sharing agreement or they can simply pay a higher rate and forgo the revenue sharing agreement which is what Apple has negotiated there.

If they were renting out office space, they would likely go with the same kind of arrangement since it is likely that revenue would not actually be directly generated by that office space for a company and would rather be used for supporting internal logistics.

 

[rdowns]

OMG, a NYC-based restaurant reports higher sales around Christmas and New Year's.

 

[Thunderhawks]

The whole rent thing has been debunked long ago and it works in MTA's and other retailers favor, consistently, and that's from independent accounting reports. Some people just won't let go or have to find fault somewhere, and here they land.

"...10 extra tables a night, and let's say $50 a table (which is probably on the low side) X 7 days a week X 7 weeks so far = almost $25000 in extra sales without doing a single thing..."
It's actually more than that. The place is very spendy, food is great, often hard to make a reservation, and serves 200 to 360 depending on configuration. Figure all that in and it's like a grand a night. And both MTA and Apple got so much criticism (mainly from people who didn't know the facts), why not show a first look response....or is it only good to show the negatives?

Slow news day, so throw in anything to get clicks

 

[NutsNGum]

OMG, a NYC-based restaurant reports higher sales around Christmas and New Year's.

Thumbs up, my friend. Thumbs up.

 

[thundersteele]

I'm sure there will be an effect in the long term.

However, a mere 7% increase when going from sitting next to a building/renovation site for several month to sitting next to a extremely frequented store is not really that much.

Maybe things get better when there are more new product launches... serving $5 coffee for people waiting in line will be a lucrative business.

 

[chrmjenkins]

OMG, a NYC-based restaurant reports higher sales around Christmas and New Year's.

No indication whether that was a YOY number or not. I would hope that they would adjust for seasonal income.

 

[rdowns]

No indication whether that was a YOY number or not. I would hope that they would adjust for seasonal income.

Well his son's scientific evidence is enough for me.

“We know their customers are coming here,” added Mr. Glazier's son, Matthew Glazier. “I'm always looking for the little white bags.”

 

[chrmjenkins]

Well his son's scientific evidence is enough for me.

Retract my previous statement. Can't argue with anecdotes like that.