The story behind San Francisco’s law blocking a new North Beach El Farolito

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Popular San Francisco taqueria El Farolito has been barred from opening a new location in North Beach by the San Francisco Planning Department, which enforces a “formula retail” ban.

The city planning code defines “retail formula” as businesses with 11 or more locations and a standardized brand image. These businesses are prohibited from opening new locations in designated Neighborhood Business Districts (NCDs), such as North Beach. El Farolito currently has 12 locations in the Bay Area.

“Given the code ban on the use of retail preparations in North Beach, this new El Farolito would not be allowed,” Dan Sider, chief of staff for the San Francisco planning department, wrote in an e- mail to the San Francisco Chronicle (SFGATE and the San Francisco Chronicle are both owned by Hearst but operate independently of each other).

Some San Francisco residents were not thrilled with the news, and neither was an elected official.


The San Francisco Examiner Editorial Board wrote, “The planning department’s decision may reflect the letter of the law, but it clearly does not reflect the spirit of San Francisco,” while District 6 supervisor Matt Haney tweeted, “Let’s change this law. El Farolito and Starbucks shouldn’t be treated the same.”

The law banning formula retailing was first introduced in 2004, when the city sought to limit the number of locations owned by brands such as Starbucks and McDonalds in an effort to protect small businesses.

The ban on the retail formula was changed several times until 2014, and an extension of regulation even faced city voters via a voting measure in 2006. At the time, 55 % of voters approved an extension of the ban that requires Planning Commission hearings for the approval of any “conditional use authorization” granted to retail formulas.

In 2014, the last time the rule was changed, the ban was extended to other NTMs and extended to banks and other businesses with more than 11 locations and a standardized branding image.

While no changes have been made to the ban since 2014, some major brands have been able to obtain exemptions.

For example, in 2019, the city’s supervisory board voted to grant Trader Joe’s an exemption to open a new location in Hayes Valley.

“Hayes Valley is a thriving shopping district, but people forget that the median household income on the north side of Fulton is $ 24,041, and more than a third of the residents who live there live below the poverty line,” Supervisor Vallie Brown said in explaining her vote. “It is important to bring an affordable grocery store that offers fresh and organic food. “

At this point, Haney is the only supervisor who has expressed interest in changing the law again in light of El Farolito’s situation.


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