Amid lease dispute, Castro coffeehouse, nail salon remain open

A nail salon and beloved coffeehouse remain open, for now, in San Francisco’s LGBTQ Castro district. The two businesses flanking the Castro Theatre were welcoming in patrons July 1, despite their leases with the property owners having ended June 30.

As the Bay Area Reporter previously reported, the Castro Coffee Co., owned by Ken Khoury at 427 Castro Street, and Castro Nail Salon, owned by Riyad Khoury at 431 Castro Street, have long operated in commercial storefronts to the sides of the theater’s entrance. Now managed by Another Planet Entertainment, the historic venue is currently closed for renovations.

As the B.A.R. first reported in March, the Khoury brothers, both straight allies, said they had till June 30 to vacate their spaces because their leases were not renewed by the Nasser family, which owns the theater building in which the businesses are housed. As of Monday, June 30, APE was subleasing the three-unit building that includes the theater and the two storefronts. 

Ken Khoury told the B.A.R. in a phone interview July 1 that neither brother has been served with an eviction notice. He said he’s already paid his rent this month to the Nassers. 

“I’m not sure we’ll be closing shop any time soon,” he said. “Hopefully – if we must leave, if there’s no resolution – we should have enough time to transition to move on.”

He added that negotiations are ongoing, and that the offices of gay Board of Supervisors President Rafael Mandelman, who as District 8 supervisor represents the Castro neighborhood, and Mayor Daniel Lurie, are involved. The brothers had asked customers and supporters to contact Mandelman and Lurie to ask for support.

“My understanding is that the Khourys will be able to stay in their spaces for a little while longer at least while we try to work out a solution that works for the parties and the neighborhood,” Mandelman stated to the B.A.R. July 1, adding that, “I’m grateful for the mayor’s engagement.”

The Nassers and a spokesperson for Lurie did not immediately return requests for comment Tuesday.

APE has insisted it will not be a landlord to the Khourys' businesses. The events and concert promoter also initially disavowed involvement in the situation, saying through spokesperson David Perry that it had no plans for the space and the matter was between the Nassers, who’ve never returned comment for the B.A.R.’s reporting on this matter, and the Khourys.

However, the company later changed tact, telling the San Francisco Chronicle that it wants to use the spaces for a box office. The theater is slated to reopen in early 2026.

Perry stated to the B.A.R. July 1 that, “As we have always said, we are hopeful that the tenants in question and their landlord, the Nassers, can come to an equitable and amicable resolution of this situation. We remain focused on our $41 million renovation and restoration of the Castro Theatre to get it returned to serve the film, cultural and LGBT community as soon as humanly possible.”

As the B.A.R.reported June 23, Mandelman and San Francisco Planning Department staff concur that because the nail salon is a legacy business, under November 2024 legislation covering the Castro neighborhood commercial district that applies for 18 months thereafter, the city government would need to approve a conditional use authorization for anything to replace it – including an expansion of the theater.

Despite being open since 1987, the coffeehouse is not a legacy business. Due to changing its name, it hasn’t been open long enough under the new name to qualify for the distinction offered by the city to provide some protection to longtime businesses.