mornin’ merrymakers 🌉🌀🚧📦🤡

before we get into today's letter, i want to acknowledge the devastating shooting at seattle center last weekend. my previous note was written and scheduled before it happened. i apologize if the timing felt jarring to anyone.

my heart is with the victims, their loved ones, & everyone impacted.

🫶

now let’s rewind to when i last lived on the west coast.

in 2015 on my way to see the san francisco ballet, i bought my first pair of warby parker glasses on hayes street.

at the time, i was just a customer wanting bolder glasses.

i had no idea that two years later, i’d be joining the team to help them scale from 20 to 200+ stores. once at corporate, i learned the little shop where i picked my frames was one of the most strategic openings.

not because of what it sold or what it looked like.

because of when it opened in the company’s overall rollout.

the store was approved by the city before warby parker had 11 locations. this is a milestone that only matters in sf, where it’s a legal line that makes a store a “chain.”

this store was and is in hayes valley which bans chains outright. no permit, no hearing, no exception.

meet the topic of today’s newsie, sf’s very unique formula retail regulations, inspired by a reply from a reader that’s worked her whole career in retail!

the formula retail rules started in 2006. eleven or more locations anywhere on earth, & you need special permission to open in most neighborhood shopping districts here. how it applies depends entirely on the block:

→ banned outright in north beach, chinatown & hayes valley. no application, no hearing, no path in.

→ hearing required across most other neighborhood districts. this is where nearly everyone lands.

→ no rule at all downtown, & as of last year, on the van ness corridor.

side note: people blame this law for downtown, but the law never applied there. union square’s retail struggles are a whole different beast.

the rule catches wider than most operators expect with retail, restaurants, bars, liquor stores, banks, financial services, & personal services, which includes salons, massage & gyms (but generally not medical or professional offices).

confusingly, the planning commission approves almost everything.

roughly 97.6% of applications since 2014, & reportedly 100% since january 2020.

so store 12 opens. so does store 40.

the city just requires you wait more time & pay them more money. which is quite the predicament for brands with 10+ locations where cash & opening timelines can make or break a brand’s rollout.

running a store in sf is operationally more complex and financially more expensive than most other parts of the the country. specifically:

→ the permits. maven commercial puts the hearing process at 7 to 8 months & up to $80,000 before you open. then many more permits to actually get you open for business.

→ the construction costs & complications. city is expensive to build in just about every way possible.

→ the labor stack. $19.61 minimum wage as of july 1, plus $2.74 to $4.11 an hour toward healthcare. cross 40 locations & scheduling rules add on-call pay & worker retention.

for example, ike shehadeh, who founded ike's place, says a second san francisco location took him two years to permit. the same thing took about two months in oakland.

& that permit cost hits twice. the filing spend leaves before open. the delay is dead time on a space you're likely already paying to hold. shehadeh's argument is that chains can absorb a year of both.

most smaller brand operators can't.

so the process doesn't filter out chains. it filters out anyone who can't pay $$$.

which is also why 97.6% reads so generous. every operator who ran this math & chose oakland never filed at all.

which is a v big problem.

as i’ve walked the streets the past week, i’ve realized that every storefront is one of three things:

we spend all our energy arguing about the first two. the third is where the story is.

a law like this can stop a chain from opening. it cannot make an independent open.

it's a filter, not a faucet.

so what fills the gap comes down to whether anything wanted that block in the first place.

hayes valley shows you the best case. boutiques, small formats, no repeating logos. brooklinen & cotopaxi have used it as showroom space. it's the corridor every other city says it wants.

this is intentional zoning.

the policy did what it set out to do.

now walk two miles north.

north beach has the exact same ban as hayes valley. no hearing, no exception, just no.

way more north beach storefronts sit empty.

same law. opposite result.

hayes valley works because of what surrounds it. city hall & tech offices next door, dense transit, new housing stacked on the retail. the ban protected something already headed somewhere good. it couldn't create that from nothing.

so the honest version isn't "controls make neighborhoods vibrant." controls shape what a good corridor becomes. for a struggling one they do almost nothing, except narrow the list of who can rescue it.

& you pay a cost you never see. the city's controller found in 2014 that independents charge about 17% more than chains, enough to outweigh the extra local spending.

a street worth walking down is worth something. it just isn't free.

& here's where the law turns on itself.

it set out to protect small businesses from chains. but it draws the chain line at eleven stores. so it now catches the exact businesses it meant to shield, right when they start winning.

el farolito, a mission taqueria, crossed eleven locations & the city blocked its north beach opening in 2021. the fix took a year, legal fees, & help from the supervisor who wrote the law.

a rule meant to keep san francisco full of local businesses, blocking a local business.

the law came out in 2006. the time of no iphone, no prime, no instacart. blocking a chain from a corner back then meant something else might open there. the competition for that space was another store.

it isn't anymore.

when a space sits dark for eight months waiting on a hearing, the customer doesn't wait with it. she orders the thing online. then the next thing. six months later there's a habit where a shopping trip used to be.

the empty storefront doesn't become a local business.

it becomes an ecommerce order.

it pays no san francisco rent, hires nobody on the block, & shows up on no streetscape.

the city is noticing this more & more.

in april 2025 supervisors dropped the hearing requirement on a stretch of van ness where the sponsor's office put ground floor vacancy above 50%. when half a major corridor goes dark, the argument stops being philosophical.

meanwhile the city is topping the charts in other areas like office space, residential rents, home prices, & ofc all things ai.

cbre put office demand at 8 million square feet at the end of 2025, an all-time high. about 60% of it tech & nearly half of that ai.

none of it needs a storefront 👀

consider what all of this does to anyone deciding what business to build. starting an ai company here takes an afternoon & a laptop. opening a second location takes eight months, a hearing, & a landlord willing to wait it out.

same city, same ambition,
wildly different cost of trying.

so the person who would have opened a shop in 2006 is creating ai agents in 2026. not because retail got less interesting. because one door is open, easier, & significantly cheaper.

san francisco wrote the most aggressive law in america to protect the character of its streets. but looking back 20 years, they got the threat wrong, focusing on the big chains.

the much bigger threat is the whole transaction leaving the street.

so if you're weighing san francisco for a store, don’t just worry about the permit and timeline, worry about opening something that will get people to leave their house to visit.

p.s. if you live or work in sf, i’d love to hear your perspective on this too!