El Farolito's bid to open in North Beach sparks debate over formula retail rules

El Farolito's bid to open in North Beach sparks debate over formula retail rules
Photo: Danny Sauter
By Jay Barmann - Published on September 29, 2021.

Beloved Mission taqueria El Farolito (2779 Mission St.) may have a bit of an uphill climb in its already announced expansion move to North Beach. Apparently after an anonymous complaint reached the Planning Department, department officials sent a letter to El Farolito's owners last week telling them that they're in violation of the city's ban on formula retail establishments in most neighborhoods. And now this has spawned a petition in support of El Farolito and either loosening the formula retail rules or making an exception — as well as a potentially a wider debate about whether the rules as written are doing what they were meant to do.

As SFist reported in August, El Farolito's ownership has inked a deal to take over the space at 1230 Grant Avenue that was formerly home to The House restaurant, after it closed last year. The popular burrito spot already has three locations in San Francisco, and eight other locations outside the city — though two of these in the North Bay are called Taqueria El Favorito, and one is called Mi Farolito. (See all the Bay Area locations here.)

The Planning Department sent the note to the owners last week, telling them that with more than 10 locations, El Farolito is considered formula retail, and therefore would not be allowed to open in North Beach. If the company were to make "sufficient changes" to several of these locations, or to the new one in question, they would then be able to open the North Beach location. 

Siblings Irene and Santiago Lopez, who own the taqueria chain founded by their father, the late Salvador “Don Chava” Lopez, in 1983, have not commented extensively on their plans for moving ahead. The Chronicle reports that several supervisors — including District 6 Sup. Matt Haney, who tweeted "Let's change this law" last week — are in support of modifying the chain retail rules, but since they're now part of the planning code, this could get tricky. Supervisor Aaron Peskin, in whose district North Beach sits, is holding firm to the idea that the chain ban must stand as is, banning businesses with 11 or more locations.


Chains are still permitted in multiple parts of the city, including the Marina, Fillmore Street, Union Square, West Portal, and SoMa. It's just specific retail districts that are perceived as vulnerable, or where the small-time retail character is meant to be preserved through the law.

One local advocate for small businesses, Sharky Laguana, the president of the Small Business Commission, thinks the rules ought to change so that businesses like El Farolito can expand within reason, beyond 10 locations — especially at a time of rampant retail vacancy all over town.

"We need to be more encouraging and welcoming to businesses that want to fill these vacant storefronts,” Laguana tells the Chronicle. “We want to get folks in there so that we can restore these commercial quarters."

Laguana's proposal, which Haney and other supervisors are likely to support, is to put a new city charter amendment on the ballot that would turn the 2007 amendment — which voters approved, expanding the formula retail ban across the city — back into a city ordinance. As an ordinance, supervisors would be able to make changes to it, like changing the definition of "formula retail" to more than 20 locations, for instance.

"Despite its noble intentions, the laws have never really done what they set out to do," says commercial realtor Pam Mendelsohn, speaking to the Chronicle. "In some cases it’s kept out big chains, yes, but it’s also pushed out small local businesses simply because they have more than 11 locations. That’s not right." Mendelsohn has previously commented on the formula retail ban saying the city needs to relax the rules if it doesn't want so many empty storefronts.