Castro coffee shop, nail salon still open after negotiation deadline passes

The 60-day deadline set by San Francisco Mayor Daniel Lurie for good faith negotiations between the two businesses flanking the Castro Theatre and the building’s owners and managers came and went over the weekend without any substantive update as to the businesses’ future.

As the Bay Area Reporter previously reported, straight allies Ken Khoury of the Castro Coffee Co. at 427 Castro Street and his brother, Riyad Khoury, who owns the Castro Nail Salon at 431 Castro Street, want to stay in their storefronts. However, their leases were not renewed by their landlords, the Nasser family, who own the three-unit building that contains both their businesses and the Castro Theatre, at 429 Castro Street.

The leases ended June 30. Since 2022, the theater has been managed by Another Planet Entertainment, and is currently closed for an ongoing restoration and renovation project. As of July 1, APE began subleasing the three-unit building that includes the theater and the two storefronts, the brothers said. Initially, APE disavowed involvement in the non-renewal of the brothers’ leases. Later, however, APE changed tact, telling the San Francisco Chronicle that it wants to use the spaces for an expanded box office. The theater is slated to reopen by March. 

Gay Board of Supervisors President Rafael Mandelman, who as District 8 supervisor represents the Castro neighborhood on the board, told the B.A.R. July 8 that Lurie personally set a 60-day deadline for good faith negotiations between the parties. Saturday, September 6, was 60 days after that date.

As of midmorning Monday, September 8, both businesses were still open for customers, as usual. At that time, Dan Drummer and Paul Loesel, both gay men, were enjoying coffee outside the coffee shop. They were already aware of the dispute, and of Lurie’s deadline. 

“It just seems like they’re being jerked around,” Loesel said of the Khourys, saying neither the Nassers nor APE want to take responsibility in the situation.

“It’s nasty. It’s just nasty,” added Drummer. “Instead of trying to work with longtime institutions of this neighborhood, it’s just treating them like crap, not respecting the neighborhood.” 

Asked on August 26 if there was any update, Ken Khoury said the brothers will “hopefully” know something by the 60-day deadline.

“I already paid my rent check for September,” he said.

Riyad Khoury didn’t return a request for comment September 8.

Mandelman told the B.A.R. September 8, "It's taking longer than I had hoped, but I'm still hoping the parties will manage to arrive at a resolution that keeps the Khourys' businesses in the neighborhood, where they belong."

A spokesperson for the mayor’s office stated only that Lurie has been in talks with the Khourys and APE.

The Nassers didn’t return requests for comment for this report.

David Perry, a gay man who is a spokesperson for Another Planet Entertainment, stated to the B.A.R. September 8 that, “We understand that the Nassers – owners of the Castro Theatre – are in ongoing amicable negotiations with their tenants in question and we look forward to a mutually beneficial outcome of those discussions.”

Meanwhile, work on the theater project is moving forward, Perry added.

“The restoration and revitalization of the Castro Theatre continues apace with a new HVAC system being installed and the new organ in November,” Perry stated.

Perry stated to the B.A.R. that the renovation and restoration project's budget has grown to some $41 million. Earlier this year, the reported figure was $35 million. The B.A.R. toured the theater last year.   

Ralph Hibbs, a gay man on the board of the Castro Community Benefit District, has been outspoken in his support of the theater project.

"I think it'll be a catalyst for the neighborhood," he said. "I'm super excited about the progress they're making. I saw a video about the chandelier going in and I saw the lights."

Regarding the coffee shop and nail salon lease situation, he said he "views it as a business challenge."

"I have high confidence they'll find a solution that works for them," he said of the Khourys, mentioning that there are vacant storefronts elsewhere in the Castro neighborhood. "What's going on ... is just kind of business. You don't always get along with your landlords."

Updated, 9/8/25: This article has been updated with comments from Board of Supervisors President Rafael Mandelman and additional comments from APE.

Updated, 9/9/25: This article has been updated with a comment from the mayor's office.

Updated, 9/10/25: This article has been updated with comments from Ralph Hibbs of the Castro Community Benefit District.