Tumbleweed restaurant at Waterfront Park behind on rent, not tur - WDRB 41 Louisville News

Tumbleweed restaurant at Waterfront Park behind on rent, not turning profit

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LOUISVILLE, Ky. (WDRB) -- The Tumbleweed Tex-Mex Grill and Margarita Bar at Waterfront Park owes the Waterfront Development Corp. about $30,000 in rent, said Cordell Lawrence, the Waterfront agency's finance director.

Tumbleweed has not paid the agency for the three-month period ended in June, and it has another quarterly payment due in about 30 days, Lawrence said.

He could not say exactly how much the restaurant owes because the rent is not fixed; rather, it's 3.5 percent of the restaurant's gross sales, which usually is about $30,000, Lawrence said.

Rick Schardein, a spokesman for Tumbleweed, acknowledged the withholding of the quarterly rent payment to the Waterfront, which he said is a “negotiating tactic” to gain more favorable terms in the restaurant's lease, which expires July 15, 2015.

Tumbleweed also pays about $20,000 a month to a company called WaterWeed  LLC, Schardein said. That obligation to WaterWeed apparently stems from the financing of the 2004 construction of the building at 1201 River Road.

Schardein said the lease – with payments to both WaterWeed and to the Waterfront agency – is too costly for the restaurant, which is not profitable.

He said the 27 other Tumbleweed restaurants in the Louisville-based chain are “subsidizing” the operation of the Waterfront restaurant.

“(T)he current lease structure makes it impossible to operate that facility in a profitable manner,” said Matt Higgins, president and CEO of Tumbleweed Restaurants, Inc., in a prepared statement.

Schardein acknowledged that Tumbleweed agreed to the lease in 2004, though he said the restaurant group was under different leadership at that time.

WaterWeed – which leases the property from the Waterfront and subleases it to Tumbleweed – served Tumbleweed notice on Sept. 3 that is attempting to evict the restaurant, according to Tumbleweed's statement.

While Tumbleweed has withheld payments from WaterWeed in the past, the restaurant is current with WaterWeed through August, Schardein said. However, WaterWeed also acts as the “landlord” on behalf of the Waterfront agency, Lawrence said.

Larry Shapin, the principal of WaterWeed, referred comment to his attorney, Steve Berg -- who declined to comment.

The last payment the Waterfront agency received from Tumbleweed was about $18,000 for the first three months of 2014, Lawrence said.

He said Waterfront officials are baffled by the restaurant's apparent underperformance.

“The foot-traffic is phenomenal at that location,” he said.

Tumbleweed first executed a lease with the Waterfront agency in 2004, then sold its rights in that lease to WaterWeed in 2005 for $2.56 million, according to documents obtained from the Waterfront. At that time, Tumbleweed entered into a 10-year sublease with WaterWeed.

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