Three years after deciding to replace the longstanding Joe’s Crab Shack with a more lucrative tenant, Port of San Diego officials are moving forward with a Texas-based restaurant to take over the waterfront site.
While it’s still unknown how long it will be before the now-shuttered location is revived, the new restaurateur hopes to start construction in about a year.
The Rustic, a rapidly expanding dining brand out of Houston and Dallas, secured this month a lease option with the port that would allow it to operate a full-service restaurant and bar and wrap-around outdoor patio, 56 parking spaces, dock and dine facilities, and live indoor music.
Patio area of The Rustic, the proposed replacement for Joe’s Crab Shack, as seen in this rendering. (Gensler)
Before an actual lease agreement can be inked, The Rustic’s ownership will need to obtain project financing and all construction and project permits, plus complete a parking study and management plan. Although the restaurant group has up to 24 months to satisfy the port’s conditions for a lease, it’s hoping it can move more quickly than that, said Kyle Noonan, co-founder of parent company FreeRange Concepts.
Located behind the San Diego Convention Center and just steps from the Rady Shell at Jacobs Park, the restaurant site holds some historic significance, as it’s the original home of the San Diego Rowing Club, which found new life as a Chart House restaurant in the early 1980s. It later transitioned in 2002 to Joe’s Crab Shack, a casual seafood-centric eatery that was known for its buckets of seasonal seafood. It closed in August.
“Coincidentally, my youngest daughter rows crew for SMU (Southern Methodist University) in Dallas so I have an affinity to crew,” Noonan said. “My partner and I had the pleasure of visiting the current San Diego Rowing Club and they still have a ton of memorabilia going back 100 years ago, so our plan is to restore it to its original boathouse esthetic and design and incorporate a lot of the vintage rowing club memorabilia, whether it’s a 100-year-old crew boat, old wooden oars, jerseys, and trophies.”
Noonan acknowledged that he has no control over how quickly he’ll be able to secure building permits. He would like to have that completed within a year, followed by a six-month-long construction period.
San Diego would be The Rustic’s first California location. There are currently four locations in Texas, with its flagship restaurant situated in Houston adjacent to the Houston Convention Center, Minute Maid Park, and Houston Toyota Center. The chain currently is in expansion mode, with three other restaurants to open in Scottsdale, Ariz., Salt Lake City and Destin, Fla.
The port’s proposed lease includes a tenant improvement allowance of $2,185,000, which would cover, in part, repairs to the existing structure, roof, and the HVAC and mechanical systems. The remaining funds would be used to reinvent the space in keeping with The Rustic brand, but the port still requires the restaurant group make an investment of at least $3 million.
In seeking out a replacement for the Crab Shack, the port was focused on bringing new life to the site while at the same time generating more foot traffic to the South Embarcadero area. Toward that end, port commissioners agreed three years ago to hire a brokerage firm to seek out prospective tenants.
“The Rustic brand is a restaurant and bar that has live music as opposed to a concert venue that serves food,” said Noonan. “So we have a robust food and beverage program, and for each of our locations we tap into local resources, whether it’s produce from local farmers, beef from local ranchers, or beer from local brewers.
“Our whole kitchen is centered around giant live wood grills, and we have a proprietary blend of the wood we use – cherry, mesquite and hickory — to create a unique flavor.”
The live entertainment component of the restaurant operation would rely largely on local artists, Noonan said. In addition, The Rustic would be permitted to schedule up to a dozen ticketed concerts featuring national touring acts throughout the year.
The port’s proposed option-to-lease agreement calls for a minimum yearly rent of $585,000, which would increase each year by 3%. But a higher percentage rent that equates to 6% of all gross sales would kick in once sales revenue reached a threshold of $9,750,000. That would be in addition to the minimum rent payment.
Port officials estimate that over the initial 15-year lease term, net revenue to the agency would exceed $11 million.
“With its historic designation, this is one of the most distinctive restaurant properties on San Diego Bay,” said Danielle Moore, who chairs the Board of Port Commissioners. “It’s important that we have the right partner—one that will both invest in the property and build on the success of The Rady Shell and the Convention Center. The Rustic will bring new energy and a fresh experience to the site and to our waterfront.”
As part of the lease, The Rustic and San Diego Symphony Orchestra would work together on scheduling to ensure performances at each venue would not conflict with each other as it relates to sound and operations.