Missed rent payments dating back to 2019 led to an eviction notice for the franchisee.

On Monday, a New York Supreme Court judge issued an eviction notice to the Applebee’s in Times Square, along with orders to pay about $7 million in back rent. 

Though blaming COVID-19 has become a popular excuse for all business woes since 2020, the restaurant—owned by franchisee Apple Metro—started missing rent payments in June 2019 due to cash flow issues, according to court records. 

The 11,000-square-foot restaurant began leasing the prominent location at 234 W. 42nd St. in 1999, and currently employs about 80 people. Last November, Apple Metro was hit with a lease termination by landlord Madison International Realty after failing to catch up on back rent. 

Apple Metro began racking up the majority of its overdue balance when New York shuttered dining rooms during the pandemic. The franchisee filed a hardship declaration, claiming it was struggling to make ends meet due to those restrictions. 

Although Apple Metro co-founder Roy Raeburn was able to reopen his dining room in June 2021, sales were still down 23 percent compared to the same 10-month period prior to the pandemic, according to an affidavit filed in April. Raeburn added that his business was hurt when the attached Hilton Times Square hotel, which garnered a consistent flow of customers for the restaurant, permanently shuttered its doors in September 2020. 

Apple Metro sought to stay in the location and hoped to reach an agreement with Madison International Realty, but the landlord demanded it pay the overdue balance in full, said Peter Sartorius, who served as the franchisee’s attorney. Sartorius suggested that Apple Metro did not have the ability to “write a check tomorrow, frankly,” according to a court transcript. 

Deborah Riegel of Rosenberg & Estis, who served as the landlord’s attorney, noted an eviction would allow another tenant to fill the space who would be in a better position to pay the asking rent. 

While office towers in Times Square sat largely empty during the pandemic and tourism waned to a dribble, investors and developers see entertainment venues as the ticket back to success. In mid-April, weekly Broadway show attendance reached nearly 90 percent of pre-pandmic levels, according to trade association Broadway League. 

The Planet Hollywood in Times Square, a global chain of glitzy, Hollywood-themed restaurants, permanently closed in 2020 due to high rent and property taxes. But owner Robert Earl found a cheaper space at 140 W. 42nd St. and plans to open a new Planet Hollywood, which will be housed alongside several other restaurants in the 17,500-square-foot space—including celebrity chef Guy Fieri’s concept, Chicken Guy. 

Related: John Peyton, CEO of Applebee’s and IHOP parent company Dine Brands, topped the FSR list of the 15 highest-paid CEOs of public full-service restaurants this year.

Casual Dining, Chain Restaurants, Feature, Franchising, Hotel & Lodging, Legal, Applebee's, Planet Hollywood