By Sabina Mollot
East Side Diner, which opened at the corner of First Avenue and East 23rd Street on Labor Day of 2016, suddenly closed last Wednesday.
Owner Nick Kaloudis, who opened the business in a space that had previously been home to another diner, the East Side Café, told Town & Village he decided to cut his losses due to a few factors.
Reached on the phone, Kaloudis said the main issue is that he recently learned he was on the hook for about $50,000 in back taxes that were owed by the prior diner. He said he fought the landlord, Magnum Real Estate Group, over this in court and lost, and is now attempting to get out of his lease five years early. Other reasons for his deciding to close are a rent hike and the raising of the minimum wage.
“It’s a shame for me to put the prices up and make the customer pay for it,” said Kaloudis, adding that even though the diner has been busy, if it remained open it wouldn’t be profitable. “So I’m buying myself out. By the 31st I have to be out, or they’ll charge me for the next month’s rent.”
As for his plans? “Maybe I’ll work for someone else.”
Kaloudis, who comes from a restaurant-owning family (his cousin owns Tivoli diner on Third Avenue) has in the past bought diners to flip them, but felt differently about East Side Diner. At the time he told T&V he felt it was important to offer value to customers who “don’t want McDonald’s but you don’t want to spend $100 either.”
He took over the space after the owner of East Side Café closed after 38 years to retire. The business was only closed for five weeks as it underwent renovation.
Ironically, the closure came just two days after Kaloudis showed off the restaurant’s “A” grade received from the Department of Health, on Instagram. A post that followed that one last Tuesday showcased dessert displays, but didn’t mention the impending closure.
Magnum Real Estate is owned by Ben Shaoul and his parents, who own multiple properties in Manhattan.
Meanwhile, according to one source with knowledge of the situation, Kaloudis knew about the back taxes prior to signing the lease and was in court with the owner over back rent he owed, not back taxes. The owner couldn’t be reached for comment.
Kaloudis denied this, though, saying the back taxes were a surprise to him and he always paid his rent.