This week’s column looks at whether the problems that have beset popular sandwich shop Ike’s Place in San Francisco are signs of a larger issue. Has the city turned into a bunch of crabby NIMBY neighbors? Is the city unfriendly to new brick and mortar businesses? (After the restaurant became popular, neighbors complained and the building’s landlord is trying to evict Ike’s.)

In today’s story, shop owner Ike Shehadeh talks about the Facebook campaign to get him to open an eatery in the Lower Haight, and whether his growing empire will have its corporate headquarters in San Francisco.

So it’s especially timely to get some thoughts on the controversy from Jennifer Matz, who takes over as Director of the San Francisco’s Office of Economic and Workforce Development on October 1. If Ike’s closes in the Castro, 47 jobs will disappear in a very tough economy.

Q. Why do you think there’s such a public fascination over the fate of Ike’s Place sandwich shop? Is there a larger story being told here about San Francisco?

Jennifer Matz: Ike himself is a terrific guy, and the meteoric success of Ike's Place is representative of a story line we often see in San Francisco.  Ike's started as a simple sandwich shop with an incredible product. We're a cit of eaters that has its ear to the ground for the next up and coming establishment, and word about good food travels fast. His staff is personable and welcoming. His sandwiches are fantastic. All of these factors combine to create the situation we're in now, where people are content to wait on line for upwards of an hour because the totality of the Ike's experience is so terrific. I think the fascination comes from two places – both because the experience and the food are so good, and because the property owner seems oblivious to all of this.

Q. It would seem that a success story like Ike’s is what the city would want, but the restaurant’s popularity has led to a backlash and efforts to put it out of business. In the meantime, other communities have recruited Ike’s to open shops in their cities and towns. Why is it so much more difficult to open a brick and mortar business in San Francisco than other places?

Jennifer Matz: It is not just other cities and towns that have been recruiting Ike's Place! San Francisco commercial corridors have been trying to lure Ike's to their neighborhoods ever since this controversy broke. The Lower Haight has an active campaign of merchants and neighbors trying to recruit Ike's. Our office is trying to convince them to open a locale on Central Market Street. We even have financial incentives to help them relocate.

I think you need to distinguish between a grumpy building owner and antagonistic community. A city cannot possibly stop a disgruntled property owner from serving an eviction notice on a tenant. However, we can help a business transition, which is something we are actively trying to do.

Now, that doesn't mean it is easy for a brick and mortar food service business to open in San Francisco, and there are much larger forces at play beyond Ike's and his building ownership.  We have some of the most worker friendly local labor laws in the country – and our office is exceedingly proud to support and promote those laws – but the costs of these laws hit the food service industry especially hard. We have one of the most dynamic and innovative food scenes in the world, but it is vulnerable to market forces, just like every other business. City policy makers are not currently interested in having an honest conversation about how much we ask of our restaurateurs and just how thin are their margins. Far too often small food businesses in San Francisco are treated like oranges ready to be squeezed rather than seeds that need to be nourished.

Q. Terry Connelly, Dean of the Ageno School of Business at Golden Gate University, says the bigger picture with the Ike’s Place case is that, “In San Francisco, a business is guilty until proven innocent.” Ouch. Your reaction?

Jennifer Matz: Again, I think you are conflating two issues: Ike's is in trouble because of a very localized dispute – most San Francisco neighborhoods would kill to have Ike's and many are actively recruiting them.

The larger story is a subtle one – it is about the local food industry shifting from seated dining to counter service in order to continue to provide stunning food without heavy labor costs. Part of the issue we've seen play out in the Ike's debacle is that building owners, neighbors, and yes, the City, must make adjustments to accommodate this shift to a more casual food experience. Great events like Off the Grid and La Cocina's Street Food Festival are successfully harnessing this energy.

It is critical that the City not only accommodates, but also supports and develops, both our well established, traditional format restaurants as well as these new dining avenues.  Our food industry is not just a large revenue draw, attracting patrons from far and wide to San Francisco, it is in many ways the primary ingredient that makes this city a phenomenal place to live.