The operator of the Pythian Market on Loyola Street in the Central Business District has been served with an eviction notice for failing to pay more than $2.5 million in back rent, throwing into question the future of the popular downtown food hall and its 10 vendors.
Local investment group ERG Enterprises, which owns the historic, nine-story Pythian Building that is home to the food hall, filed the court papers earlier this week. They seek to evict Pythian Public Market, LLC, which operates the first-floor food hall and also an event venue on the building’s second and third floors.
ERG executives said that while they have moved to evict Pythian Market’s operating entity, they don’t want to shut down the food hall or evict the vendors.
“Our hope is to work with the vendors, with the goal of having a seamless transition into continued operation under new leadership,” said Barrett Cooper, who manages ERG’s real estate portfolio. “We are working through the transition process now.”
Pythian Market co-owner Jackie Dadakis acknowledged her group has been unable to pay its rent in full — $89,000 a month — since the early days of the pandemic, though it has paid more than $820,000 to date. But she said the two sides had been negotiating to try to find a solution.
“We have been negotiating around this issue for more than two years,” Dadakis said. “We had kind of come to the end of the road, but still we were in shock when we got an eviction notice.”
Vendors also were stunned when Dadakis told them Monday about the eviction, which goes into effect Dec. 2. But they say they hope to strike a deal with ERG that will allow them to stay open.
“This all just fell into our laps very abruptly,” said Rachel Angula, whose South American street food stall, LaCocinita, was one of Pythian Market’s original vendors. “We want to stay. I hope vendors who are committed to the food hall and everything we have put into it will stick around and work together with ERG to come out stronger on the other side.”
The overhang of COVID
Dadakis blamed the pandemic on the difficulties Pythian Market has had making ends meet. Opened in 2018, the food hall had just begun to hit its stride when COVID mandates forced it to shut down, she said. Even once the eateries were allowed to reopen, diners were slow to return.
But food vendors have kept up with their rent. The problem, Dadakis said, has been in attracting events to the second- and third-floor venue spaces in the building.
Sublease payments from food vendors only make up about 40% of the monthly rent Pythian Market pays to the building, she said. The other 60% is budgeted to come from events, which have not rebounded.
“Ultimately, I think this is going to be the story with a lot of people,” Dadakis said. “The overhang of COVID is just too much.”
Pythian Market did not receive any pandemic relief money from the Paycheck Protection Program or rental abatement assistance, Dadakis said, though it did secure an emergency disaster loan from the U.S. Small Business Association.
“We’re current on those payments, but that’s a 30-year loan that we still have to pay off,” she said.
Complicating the situation at Pythian Market is the complex series of relationships between the individuals involved in the food hall operating entity and the ownership of the building, which also has 69 apartments and office space on its upper floors.
The 114-year-old Pythian Building was acquired in 2015 and subsequently redeveloped by a partnership comprising ERG Enterprises, Crescent City Community Land Trust, and Green Coast Enterprises, a real estate development company.
Green Coast executives, including Dadakis, also own Pythian Market, meaning the food hall operator had an ownership stake in the building.
But last month, ERG Enterprises bought out Green Coast’s and Crescent City’s shares of the building for an undisclosed price, becoming the sole owner.
It is unclear whether ERG intended at the time of the purchase to evict its former partners in the building project. Cooper said only that “there was a business transaction on the building that is separate from the lease issue with the food hall operator.”
If ERG is able to successfully negotiate leases with the vendors and keep the food hall open, it will serve as the operator of Pythian Market, which includes things like maintaining equipment in the commissary kitchen, paying the utility bills and employing staff to bus and clean the tables, Cooper said.
A flash in the pan?
The multivendor food hall concept, pitched as a less risky way for new chefs and food brands to try out their concepts, was all the rage around the country when Pythian Market opened its doors in May 2018 after a three-year renovation.
At the time, New Orleans had the St. Roch Market, then three-years old, and the Auction House Market in the Warehouse District, which had opened just weeks earlier.
But Auction House Market also failed during the pandemic, and has since been replaced by a hybrid food hall-restaurant concept.
Angula, whose La Cocinita also operates a food truck locally — along with a brick-and mortar restaurant and two food trucks in Chicago — continues to have faith in the food hall concept, which, she said, is supported by the return of customers in recent months to Pythian Market.
“Weekday lunches have been good and we’re getting convention traffic and a nice boost from Saints games,” she said. “We were just getting back to being really busy.”