The City Council voted unanimously Tuesday to approve a lease with California Roadhouse for the vacant restaurant space at 256 Santa Monica Pier, including incorporation of language from the city’s new worker retention ordinance requiring rehiring of staff who worked at the now closed business previously occupying the space.
Even as council members praised the deal as a hard-won victory for both workers and business, operator Sean Ahaus has raised concerns over his ability to do business under the terms of the lease.
Ahaus is concerned that the mechanism for requiring rehiring may be too onerous to let his business succeed but he wants to make the deal work.
Lease Terms
The approved framework calls for a five-year initial lease with a five-year extension option at 256 Santa Monica Pier, the approximately 4,100-square-foot space that housed Rusty's Surf Ranch for more than 30 years before it shuttered.
Base rent would be set at roughly $26,728 per month, based on $6.25 per square foot for interior and patio space, subject to a 3% annual increase and Consumer Price Index adjustments. The tenant would also pay Common Area Maintenance charges at $10.66 per square foot annually.
The city agreed to a one-time capital contribution of up to $500,000 — disbursed in three stages — to fund kitchen systems, HVAC and electrical upgrades, stage and sound infrastructure, and bar improvements. All city-funded improvements become city property at the end of the lease. The city will also spend approximately $125,000 on pre-occupancy building repairs and waive roughly $100,000 in base rent, outdoor dining rent and CAM charges during an initial 60-day stabilization period, bringing total public expenditure to approximately $725,000.
The lease includes structured disbursement safeguards, audit rights and a five-year declining repayment provision to protect public funds. The city projects the deal will generate $325,000 annually in rent revenue to the Pier Fund.
California Roadhouse was selected from nine proposals following a competitive process that drew more than 100 initial inquiries. The concept was chosen in part for its commitment to daily live music programming and its ability to quickly activate the space, including free performances during the permitting and construction period.
Council’s Decision
The vote was unanimous, but the debate was not without friction. Councilmember Lana Negrete cast her yes vote while registering pointed concerns about the precedent set by embedding worker retention language into the lease of a brand-new business.
"We are now in a position where we have allowed outside forces to enter in lease negotiations and force a right to recall ordinance that is not applicable legally to this entity," Negrete said during the meeting. "I just want to be very clear for anyone in the public who doesn't understand — right to recall works when there's a takeover of an existing business and it changes hands. That is not the case here."
Negrete also questioned the scale of the financial concessions the city made to get the deal across the line, noting that the previous operator had been denied tenant improvement funding.
"We are now giving $800,000 in tenant improvements as a way to say, 'Hey, we are going to force you and tell you who to hire,'" she said. "I don't even know why they would want to continue to do business with us if we put any more pressure or strings attached to this potential lease."
Mayor Caroline Torosis offered a sharply different framing, arguing that as landlord of a publicly owned asset, the city has both the authority and the obligation to set terms that reflect its values.
"The Santa Monica Pier belongs to the people of the city," Torosis said. "We as the landlords get to set the terms. Hiring experienced pier workers is not a concession to the California Roadhouse. It's a head start for them. These are people who know the space, they know the clientele, they know the operations on the pier."
Councilmember Dan Hall said the city was finally backing its stated values with public dollars.
"For too long, this city has told businesses that they had to live out our values and then forced the cost of those values on the business community," Hall said. "Tonight, we're actually putting our money where our mouth is to protect the workers and to bring the workers back."
A Long Road
Tuesday’s vote comes after the lease has been twice delayed at the behest of hospitality union Unite Here Local 11. The first was a procedural objection and the second was over proposed lease terms.
Ahaus has said he has no objection to hiring back former Rusty's workers and has actually offered to rehire far more workers than the Union-backed mandate requires including managers and supervisors who are not covered in the original ordinance.
However, he said the city lacks the legal authority to force the current lease terms upon him and if he can’t get a lease that makes his business viable, he will go to another city.
“If California Roadhouse, Inc. is unable to reach an agreement with the city by the next city council meeting, we will be considering other options, including, but not limited to moving our California Roadhouse venue to Venice Beach and offering all of the same former Rusty's worker's employment opportunities at our new relocated Venice Beach Location,” he said. “Not because Los Angeles would require us to hire the former worker (because they wouldn't), but because we believe the former Rusty's workers could be a great asset to the company.”