Russell Street Deli closing in Eastern Market over dispute with landlord

The Russell Street Deli, an Eastern Market mainstay for 30 years, will close at the end of September following a dispute with the building’s new landlord, according to chef and co-owner Ben Hall.

The building was purchased last year by a group of investors, led by Sanford Nelson, who have acquired more than 20 buildings in the historic district since 2017.

Nelson and his partners have publicly pledged to maintain the independent, food-centric character of the district, but numerous businesses in his recently acquired properties — including the ice cream shop next door to the deli — have closed in the last few months.

As Hall tells it, the impasse at Russell Street began over a complaint about the nearly 130-year-old building's floor.

“Basically, we had an early conversation with the landlord in January and he said, 'I know you’ve probably heard a lot of stuff but I plan to honor your lease and take care of all the deferred maintenance,'" said Hall, who has co-owned the restaurant since 2007 after starting there as a dishwasher in 1996. “Under that guise, I said, 'Hey, our floor is really soft because it's 128 years old.' Then he proceeded to say, 'You’ve destroyed the floor and you owe me $50,000.'”

Hall said Nelson then told him he was going to do the repair "whether he liked it or not" and was going to charge him for damage he alleged was caused by the deli's dish tank.

Nelson could not be reached directly for comment, but a representative from Firm Real Estate provided this statement: "We want Russell Street Deli to stay where it is. The matter in question involves safety issues caused by the Deli's failure to address key maintenance matters over several years, creating a safety concern. Per the lease they agreed to in 2007, which remains in effect until 2021, these repairs are their responsibility. We care deeply about the security of anyone who enters our buildings and are committed to ensuring facilities are well-maintained and up to code for the safety and security of all."

Hall said he had a very agreeable lease from the building's previous owners and currently pays $1,700 a month through 2021, but is guaranteed rent of less than $2,000 until 2026. He said Nelson offered to roll the estimated $50,000 it would cost to repair the floor into the monthly rent for a year, bringing the monthly total to $6,000. Nelson's other offer was a new five-year lease that would raise the rent to $3,704 a month, a 118% increase.

Hall provided an audio recording of an April 3 meeting with Nelson that corroborates the two offers. In the recording, Nelson characterizes the repairs as 100% the responsibility of the tenant, per his and his lawyers' interpretation of the current lease, and that it would take a month to perform the necessary work.

"If this is the case and if you bought these buildings essentially unseen and we have a problem and you're giving me options that are going to be very cost prohibitive ... I can't be the kind of company that builds community, which is something the market is desperately lacking now," Hall says in the recording. 

Russell Street Deli currently employs 22 people, 75% of whom are African-American. Hall said the average employee wage is $16.50 an hour and the average tenure of his employees is 7.6 years. 

Hall said both the building department and the health department recently inspected the restaurant, and it passed both inspections without issue.

"If they’re asking me for $3,700 a month and I’m paying $1,700 a month, then they see it as losing $2,000 a month," Hall said. "I understand why that isn’t good. But that’s the lease that they bought and that’s the building that they bought.”

Hall said the issue came to a head a few weeks ago when Nelson scheduled tradespeople to come to the restaurant, which had to close down for the day. No one showed up, Hall said, and Nelson blamed his property manager for a scheduling mix-up. But the restaurant was out $3,000 in lost revenue.

"They basically closed us down to show they could," Hall said. “We can’t even absorb the $3,000 we lost two weeks ago."

Instead of taking either of Nelson's offers or taking the issue to court, Hall said he conferred with his employees and they all agreed to shut down.

"Part of the reason we’re closing is that we don’t have any recourse," Hall said. "There’s not much we can do. He closed us down for that one day and there’s no way I can get that money back. Even if I chose to litigate … it wouldn’t really be a thing where we would have the opportunity to recoup the expenses. And it doesn’t make a difference to the employees, because they have lives. The minute I told them, they were like, 'Should we get other jobs?'”

On the recording, Nelson says numerous times that he doesn't want the deli to close, but Hall said he sees no other option. 

In 2013, Hall started a packaged soup company that is poised to expand its distribution this summer to 60 Whole Foods locations around the Midwest. He hopes to absorb half of his current employees into the growing retail company. At least 10 of his employees will lose their jobs regardless.

As for the restaurant, he said the owners of Frame and Joebar in Hazel Park have offered their space for an extended residency and so have others, but he's not ready to make any decisions yet.

“I suspect that we will find a place that’s a better fit," Hall said. "It won’t be part of the Market and it won’t be necessarily my history. But maybe it can be part of somebody else’s history.”

Russell Street Deli's last day in Eastern Market will be Sept. 28.

"This is the very first we are hearing of a potential closure of Russell Street Deli," Firm Real Estate said in a statement. "We have never wanted them to close and, from the very beginning, have sought to resolve the matter in good faith. At every turn, they have refused to work with us to come to mutually beneficial agreement to address this important safety concern."

Free Press special writer Ryan Patrick Hooper contributed to this report.

Send your dining tips to Free Press Restaurant Critic Mark Kurlyandchik at 313-222-5026 ormkurlyandc@freepress.com. Follow him on Twitter @MKurlyandchik and Instagram @curlyhandshake. Read more restaurant news and reviews and sign up for our Food and Dining newsletter.