After eight years in business, the last five under current management, Wenhua Xiang (文化巷) institution The Box is calling it a day. Business is not down and owners Francesca De Andrea and Diego Triboli do not want to retire.
They are shuttering their bar because of a common problem in this part of the city — their landlord is attempting to double the rent.
A little background
Kunming, like most of China, has seen real estate prices sore over the past decade. Rent has risen along with value. Another Wenhua Xiang mainstay, Salvador's, has seen its rent more than quadruple in the past four years.
Business leases in the Wenlin Jie (文林街) area used to be signed for four to five years but one or two year agreements are the new standard. When a lease ends, the landlord can simply dump the old tenant and find a new one.
At The Box, not only was the rent doubled, but the contract was only offered for one year. De Andrea assumed at the end of that year she could again expect her rent to double.
There is no protection for renters and right of first refusal does not exist in the Kunming real estate market. Nor do caps on rent increases. If a landlord demands triple the rent when presenting a new lease, tenants have to pay or leave.
Compounding this situation, especially for small business owners, is the practice of zhuanrangfei (转让费), which loosely translates as a lease "handover fee." Under this quasi-legal practice, outgoing tenants can charge exorbitant fees to incoming tenants simply to take over existing leases.
This process of "flipping" storefronts has led handover fees in Kunming to spiral upward. The landlord is typically left out of the equation.
In response, landlords in the Wenhua Xiang/Wenlin Jie area began drawing up contracts that forbid zhuanrangfei. They then increased their rents to include what former tenants had charged for the handover fee.
GoKunming did an impromptu survey of the area and found the current asking-price for a storefront on Wenhau Xiang lies somewhere between 300-500 yuan per square meter.
These rates are equivalent to, or higher than, what people looking for office or retail space in Midtown Manhattan, New York, can currently expect to pay.
We sat down with Francesca, Diego and Stefania over a few bottles of Prosecco to talk about The Box, leases and their five years spent of Wenhua Xiang.
GK: What was Wenhua Xiang like when you guys took over The Box?
Francesca: Well, the trash room on the corner didn't exist and people and restaurants dumped their garbage in the middle of the street. Also, despite the trash, there was more of a cafe culture. Tables and chairs were outside on the sidewalk and more and more shops were moving in all the time.
GK: How has the street changed over the past five years?
Francesca: There have always been a few students in the summer baitan [selling merchandise from the street]. But never like this. All the cars parked on the sidewalks and people using their cars as shops. Everyone milling around at night not being able to move on the street. That's the biggest change.
GK: When did you start your import business, Sapore Italia?
Francesca: Almost at the same time as The Box. We were waiting for the license for Sapore Italia for a long time. We weren't legal for the first ten months we were open. But don't worry, we paid a fine and now everything is ok.
GK: What was the biggest challenge in opening the bar?
Francesca: I had never run a business before. Diego had, so that was a great help. But for me, human resource management was the hardest thing. I had experience managing an office in China but not a restaurant. At first my employees wouldn't tell me the simplest things out of fear. I would find out the refrigerator was broken two days after it happened. Things like that.
Another challenge was convincing the government to let me hire a foreigner. I had to give up my liver to baijiu meetings to hire another Italian. I got through that because of my father. He is a mountaineer and taught me how to drink.
GK: Are you bitter that now, after all this work, you have to close?
Francesca: Not bitter, just angry at our landlord. She said we could sign a new lease for 22,000 yuan a month. Then she called and told us never mind because she found someone else.
This is all before our current lease had even ended. When I asked how much we would have to pay to keep the lease she upped it to 30,000. There was just no consideration to our lives and our efforts to make the property valuable. It was underhanded the way she tried to leverage more money from us.
GK: So after all of this, why a bar/restaurant in the first place?
Francesca: Originally we only had a license to make gelato. It took forever to switch it legally to a restaurant. At first we thought we just needed a window onto the street to sell gelato and run the import business. But I have always loved cooking. It is a way for me to relax.
As for the bar, little nips of schnapps from my father at a young age gave me an affection for alcohol, so it was a natural fit.
GK: What is the hardest part of running a bar in Kunming?
Diego: Dealing with Francesca. No, no...Kunming is not a typical place. There are a lot of crazy people here, good and bad ones. Being psychologists for our customers and trying to balance the insanity of everyone who comes in here is difficult. It is always a compromise between rationality and craziness.
The result has been good. When you put your soul into something, like we did with The Box, it's never easy.
GK: Any crazy party stories?
Diego: That's difficult, a lot has happened here. Once, a guy jumped out of the second story window to meet his friends on the street. That was normal craziness.
Stefania: As far as absolutely crazy, we had a customer leave who was quite drunk. On the way home he fell down, or something, and split his head open. He came back to the bar, bleeding everywhere, and ordered another drink. Then he started wiping the blood off his face and licking it off of his fingers.
GK: What's your favorite memory from the bar?
Francesca: I was drunk for the first two years, so I don't remember those times. But seriously, John Lundemo giving us a huge basket of fresh fruit for the bar's anniversary was unexpected and wonderful. I spent the night posing for pictures like Carmen Miranda.
GK: What do you think Kunming needs more of?
Francesca: More Yunnan. Kunming is growing up and becoming a big city. Right now it is somewhere between big and small. I preferred it when it was a bit slower. Now things start and then they have already happened. They are over so fast. I miss the chill days.
GK: What's next for you?
Francesca: We will keep expanding the import business and we have plans to open a grocery store in Zhongdian like the one we already have in Lijiang.
GK: Any advice to people wanting to open a restaurant or bar in Kunming?
Francesca: Running The Box has been the most demanding thing ever in my career. I have learned new things every day. You don't make money in this business without killing yourself on a daily basis. But it has all been worth it.
Editor's note: The Box will hold a closing party on September 7. They encourage newcomers, regulars and furniture to attend. The owners also asked that GoKunming publish this thank you letter, which we do gladly:
To all the friends of The Box Bar...
To those who loved us and to those who hated us.
To all of you who spent at least one special night with us in our cozy house.
To all of you who saw and experienced what we've done these past years to keep The Box's spirit alive.
We've always tried to put our heart and soul into the bar, but unfortunately it is now impossible for us to continue.
We don't blame the system or the exorbitant amount our rent has been raised over the years, we only blame ourselves for giving up.
We're even sorry for having to justify ourselves, but this is just our style, as you know.
Life continues and goes on, enriched by the pleasure of having seen you happy in our bar for such a long time.
Now we ask only that you to bring your low, fat asses to The Box on September 7, to have one more "last one" with us.
Francesca, Diego and Carlo