Despite some opposition from residents, Miami Beach elected officials narrowly approved a proposal by Boucher Brothers and Major Food Group to take over the Nikki Beach Club site in the city’s South of Fifth neighborhood.

The city commission voted 4-3 Thursday night to authorize City Manager Alina Hudak to negotiate a new 10-year lease with the joint venture to take over the city-owned property at 1 Ocean Drive when the agreement with the current operators, Jack and Lucia Penrod, expires in 2026. 

The decision marks the end of a contentious procurement battle that began in April when city commissioners initially awarded Miami Beach-based Boucher Brothers a no-bid, non-binding term sheet for Nikki Beach Club, a restaurant-and-entertainment venue the Penrods have controlled for 38 years. A month later, the city commission rescinded its decision amid complaints from residents, and ordered a competitive bidding process. 

“I know in my heart that this was a fair process,” said commissioner David Richardson, who voted yes. “It was objective. At the end of the day, the city administration has recommended an operator we know and has been a responsible operator for many, many years.” 

Boucher Brothers, which has a longstanding contract to provide beach chairs and other concessions in Miami Beach, and Major Food Group beat three other proposals by The Group, RH (formerly known as Restoration Hardware) and Tao Group Hospitality. 

However, the Penrods have a pending lawsuit and a court petition against the city, alleging Miami Beach officials violated procurement rules in initially going with Boucher Brothers and for rejecting its proposal because they submitted it 15 minutes after a city-imposed deadline. 

A “flawed” competitive process

Commissioner Steven Meiner, who voted no, said the city’s process in finding a new operator for 1 Ocean Drive was flawed from the beginning. “We started off on the wrong foot,” Meiner said. “There was such an outcry from our residents that the commission voted again to open it up for bid. It ultimately soured the process.” 

In addition to Richardson, Mayor Dan Gelber and commissioners Ricky Arriola and Kristen Rosen Gonzalez voted for the Boucher Brothers and Major Food Group, which owns and operates fancy restaurants such as Carbone at 49 Collins Avenue in Miami Beach. The New York-based firm is also partnering with David Martin’s Terra to develop a 58-story condominium in Miami’s Edgewater. 

Commissioners Laura Dominguez and Alex Fernandez joined Meiner in voting no. 

Boucher Brothers and Major Food Group are offering the city annual payments equaling 10 percent of the proposed new beach club’s gross operating revenue, or $4 million per year. The payments would increase by 3 percent each year with Miami Beach receiving about $41 million during the 10-year term, a city memo states. Executives for the two companies also have cozy relationships with some city officials, at times helping them score reservations for beach concessions and at Major Food Group restaurants, according to city emails the Penrods obtained in discovery for their lawsuit.

The joint venture is proposing a $26 million renovation of the existing building that would include a pool, a wellness center and spa, a “kids corner” and a beach concession area, according to bid documents. The proposal also includes Sadelle’s, an all-day dining restaurant by Major Food Group. 

Rush to pick Boucher Brothers and Major Food Group

Ahead of the meeting, RH CEO Gary Friedman issued a statement that the city’s selection of Boucher Brothers and Major Food Group “certainly seemed rushed.” He also said “the final outcome will remain uncertain for some time” due to the Penrods’ litigation, the upcoming election and the current lease that still has more than two years left. 

“We continue to believe in our vision for One Ocean Drive,” Friedman said. “And we hope that the people of Miami Beach will be given a meaningful opportunity to have a voice in defining the future of this irreplaceable public property.”

RH submitted a proposal that offered the city the most money: a minimum guaranteed rent of $333 million over the life of a 30-year lease. The Santa Monica, California-based firm also proposed investing $150 million to $170 million in redeveloping the existing two-story building. 

The Group, a New York-based hospitality company that is opening Le Jardin Boucherie in Miami Beach, also proposed tearing down Nikki Beach Club and replacing it with a $36 million three-story restaurant and cultural theater, a beach concession area and a “lagoon” for wellness programming. The Group offered the city $3 million in annual rent, increasing by 10 percent every five years for a 30-year lease. 

Paula Allen was among several South of Fifth residents who criticized the city’s decision to go with Bocuher Brothers and Major Food Group. “The city manager’s recommendation [came out] in a very short time,” Allen said. “It didn’t seem clear or transparent why there is such a rush to give Boucher Brothers more business.” 

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