Xelva Mayan Kitchen shutters after lease snafu

Business rookies learn about due diligence the hard way

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By Bob Uphues

Editor

Just three months after taking the reins at Xelva Mayan Kitchen at 8819 Ogden Ave. in Brookfield, Karla Marin and Luis Alvarez suddenly got some unexpected news. The owner of the property served them with a 10-day notice to quit the property over unpaid rent.

That confused the couple, said Marin, because they'd been paying rent to the person from whom they'd bought the business and they thought that money was being passed along to the landlord.

The news got worse. Marin said at the time they signed the deal to buy the business, they understood that the lease ran for two more years. In fact, they learned, the lease was set to expire at the end of February.

Just prior to the end of January, the couple's dream had vanished. Their $15,000 investment to buy Xelva was gone, leaving them without a place to do business or the kitchen equipment they thought they had bought along with the restaurant business.

And now the small food stand sits empty, its owner waiting until the lease finally runs out at the end of February, so he can either lease or sell the property.

"I'd like to lease it. I'm going to be listing it with a realtor who does commercial leasing," said Gus Valkanas, of Soto Investment Group, who bought the property in 2006. "I'd love to sell it."

Just how everything unraveled in the past couple of months is complicated, and started several years ago.

The fast food stand at 8819 Ogden Ave. has seen a parade of small restaurants come and go since the last real success – Chicago Burgerwurks – closed its doors in 2014. A year later, Valkanas rented the space to a man who started another burger place, Burger Colony. 

Burger Colony struggled from the start. After opening its doors in December 2015, it rebranded within two months with a new management team. A couple of months later the new management team was out and the original one was back in.

By mid-2017, Burger Colony closed its doors for good and the lease holder subleased the space to the folks who would open what was originally known as Taco Bout It and, later, Xelva in August 2018. 

Valkanas said he knew about that sublease, though he didn't have a written agreement for that deal. He was still getting paid rent from the Burger Colony owner.

In October 2019, Valkanas received word that the Burger Colony owner did not want to renew his five-year lease, meaning it would terminate at the end February 2020. It was also in October that Marin and Alvarez finalized their purchase of Xelva.

Marin told the Landmark that they paid their $3,500 rent every month, but that the money apparently wasn't making it back to the landlord. When rent checks stopped coming to Soto Investment Group late in 2019, Valkanas said he issued the 10-day notice to Xelva to vacate.

It was only then, he said, that he found out that the business had been sold to Marin and Alvarez.

"I was the last person in the loop," Valkanas said.

Marin admitted they didn't contact the landlord prior to the deal and did not hire a lawyer to look at the purchase contract or perform other due diligence. It was their first business venture.

"We saw the paperwork and the numbers," Marin said. "I believed them."

The Landmark did not get a response to an email sent to the original owner of Xelva Mayan Kitchen.

Marin said her understanding was that the sale of Xelva also included the kitchen equipment. But, according to Valkanas, the equipment still belonged to the former owner of Burger Colony, whose lease-to-buy arrangement for the items with the original Xelva owners was never completed.

Marin said she was told by the owner of the kitchen equipment that she and Alvarez could buy it outright for $10,000. They didn't have the money to do that, and with the lease running out at the end of February, the couple walked away with nothing.

"Now we know," Marin said. "You believe in words and people. We're not the first and we're not the last."

Part of the reason it's been tough for businesses to succeed at 8819 Ogden Ave. is the cost of doing business there. It's a small space, with no room for tables. Had Marin and Alvarez been able somehow to work out a way to stay in the space, rent would have increased to $4,200 a month, Marin said.

That's a lot of tacos.

Rent is so high, said Valkanas, because of the taxes on the three parcels that comprise the property – more than $19,000 a year, according to the Cook County Treasurer's Office.

"When we rent it, part of the lease agreement are the taxes so, you know, that takes quite a chunk out," Valkanas said. "The taxes are what's killing the location."

For their part, Marin and Alvarez are not out of business completely. They have dropped the Xelva name and have renamed their business Xocalo – in reference to the main square in Mexico City, Marin's hometown.

Marin said they're working on a website and a catering menu. They are also looking for a new space to open, possibly just down Ogden Avenue in Lyons. They are taking catering orders and can be contacted at this point through their Facebook page (facebook.com/xocalocdmx).

"We love the community; we got so much support," Marin said. "We're going to go little by little. Meanwhile, we're planning to build a working kitchen, so we can start working for events and for catering orders.

"We want to start fresh. This was a lesson."

Contact:
Email: buphues@wjinc.com Twitter: @RBLandmark

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Alan Majeski  

Posted: February 12th, 2020 4:25 PM

Is this the same Gus that ran the grocery on 100 south block of oak park ave?

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