A proposed lease for the vacant restaurant space at 256 Santa Monica Pier would give Santa Monica Brew Works more city money for improvements and lower rent than the city offered the operator it chose for the site in April, while scaling back guarantees for workers who lost their jobs when Rusty's Surf Ranch closed.
The City Council is scheduled Tuesday to consider authorizing City Manager Oliver Chi to negotiate and sign a lease with Santa Monica Brew Works, a craft brewery that has operated in Santa Monica since 2014. A prior deal with a proposed restaurant California Roadhouse, Inc. fell apart earlier this year after the operator questioned council mandates around.
California Roadhouse, led by owner and CEO Sean Ahaus, won a competitive selection process in 2025. The Santa Monica Pier Corporation Board approved the proposal twice, the second time in December following a re-notice. The lease was pulled from a scheduled March City Council vote after UNITE HERE Local 11 secured an emergency meeting with senior city staff to oppose it. On April 28, the council authorized lease terms that included Labor Peace and Employee Retention provisions, which Ahaus said were unfair and/or illegal. The negotiations fell apart ending with threats of litigation by Ahaus.
City staff describe the new terms as "similar in nature" to the prior deal but a comparison of the two staff reports shows several significant differences.
The largest involves former Rusty's employees, who were displaced when the restaurant closed in February 2025, before the city's Worker Protection Ordinance took effect in March 2026. Under the California Roadhouse terms, staff said the ordinance would apply to the lease going forward, and former Rusty's workers who completed a structured interview process would be rehired, subject to the company's operational needs, and guaranteed at least 90 days of employment. During that period they could be fired only for good cause, lawful cause or a bona fide reduction in force.
The Brew Works report states the tenant "is not currently and will not be subject to" the city's worker recall and retention ordinances at the property. Instead, Brew Works would interview eligible former Rusty's employees who apply during a 30-day hiring window before opening and offer jobs to qualified applicants for available positions based on its operational needs. Those hired would serve a 90-day introductory period, then fall under the company's standard employment policies. The report includes no guarantee of rehiring or limits on termination during that period. Managerial, supervisory and confidential employees are excluded.
On improvements, the city would give Brew Works a tenant improvement allowance of up to $750,000, compared with a $500,000 "City Advance" for California Roadhouse. The Roadhouse deal set out a three-stage disbursement schedule, audit rights and a five-year declining repayment provision. The Brew Works report describes no disbursement schedule or clawback, though it conditions the allowance on continuous operation of the business.
The city also would pay to repair or replace all base building systems before handing the space to Brew Works, including the roof, structure, electrical, plumbing, HVAC and fire and life-safety systems, and would waive city permit and plan check fees. The report does not estimate the cost of that work. California Roadhouse would have taken the space largely as-is, with about $125,000 in city repairs and roughly $100,000 in waived rent and fees, for a total city expense of about $725,000.
Rent would also be lower. Brew Works would pay $5 per square foot on 3,039 square feet of interior space, with 3% annual increases, generating about $214,800 for the Pier Fund in its first rent-paying year. California Roadhouse would have paid $26,728 a month, with annual increases, which staff estimated at $325,000 a year. Common area maintenance charges are nearly identical under both deals.
Brew Works would receive a five-year term with two five-year extension options. California Roadhouse was offered one option, contingent on finishing improvements on schedule.
Council will meet at 5:30 p.m. on Tuesday, Oct. 13, in City Hall at 1685 Main Street.