Dish-Houston

Katz's Deli is such an iconic spot that when CNBC did a story last week about Texas being one of the best places to do business, they broadcast live from Katz’s Deli on 6th street. CNBC possibly chose the wrong location considering they parent company M&M Katz Inc filed for Chapter 11 protection July 20th.

Despite the filing, owner Marc Katz said the deli’s motto — “Katz’s Never Kloses” — will remain true, albeit probably not at the 618 W. Sixth St. location has called home since 1979.

Katz’s Deli was founded when the then-33-year-old New Yorker had “more hair and a lot less belly,” moved his family down to Texas and with a loan from his ex-wife's mother was able to achieve his dream of serving New York-style deli classics and traditional Jewish kosher-style cuisine.

Most around the state know Katz as the man who would do anything for free publicity including running for Mayor of Austin and most recently, Lieutenant Governor of Texas. He said the bankruptcy is not related to the failed campaign attempt. Instead, he said rent is too expensive and his landlord has threatened to evict him, after Katz sold him the building during hardship and leased space back.

In 2006, Katz said he leased back the deli space and nearby parking for the next 20 years, after selling three downtown properties for $4.4 million. Current court records show he is paying $22,478 a month in rent, or $269,000 per year.

Katz said agreeing to his lease terms was his “biggest mistake,” but also said he was “asleep at the wheel” and did not respond to rising costs and declining economic conditions quickly enough.

Also according to court records, Katz’s Deli owes $121,900 in federal, state and county taxes. The company owes about 14 vendors about $30,000 and owes more than 55 past and present employees about $26,000. The company has annual revenue of about $2.7 million, based on court records that said monthly revenue is $225,900.

Katz said he is looking at several new locations, but did not disclose what parts of town they are in, although he hinted at leaving downtown.

“All options are open. I’ve been looking north and south,” he said.

Katz said he never recovered financially after choosing to enter into a law suit with his son, Barry, who owns and operates delis in Houston, including a Katz's Deli on 616 Westheimer St. and Kattz's Express in The Woodlands. Records show the elder Katz sued his son and the younger Katz decided to separate entirely. The Austin store went to the Marc Katz and Barry built Houston.

This is not the first time Marc Katz has filed for Chapter 11 bankruptcy. In 2004, with about $6 million in debt and as many as 99 creditors, including the IRS, lender Amresco Commercial FinanceLLC, Dallas-based law firm Hughes and Luce LLP, and Katz’s son. A restructuring plan for the bankruptcy was approved in 2005.

Today, the cost of doing business, including insurance and taxes, is rising, and “in hard times you have to cut back, and I didn’t do it fast enough,” Katz said.

DISH spoke with Barry Katz this morning and he had this to say.

"I am sorry to hear about the financial difficulties with the current location in Austin.  I hope my Dad finds another location or gets his rent lowered.  I am glad he is determined to keep the Austin Katz's from Klosing, this is an Austin institution.    This has no impact on my Houston or Woodlands area locations, we have run our businesses separately for about 8 years."