Cheap Meat or Luxury Rentals? Within the Fight at Western Beefiness

A son's plan to upscale the grocery's real-manor empire is reined in by his male parent.

The newly reopened Western Beef in Queens. Photograph: Peter Castellana, Jr.

The newly reopened Western Beef in Queens. Photograph: Peter Castellana, Jr.

The crown jewel in the Castellana family unit real-estate empire is a 20,000-foursquare-human foot Queens warehouse wedged between a Home Depot and a row of mom-and-pop apparatus stores. For v decades information technology was a busy grocery store that offered cheap staples as well every bit specialty ingredients for the neighborhood'south Asian and Latino residents: dumplings, seaweed, chayote. As the flagship store of Western Beef, its once-orange exterior and its smile mascot, Charlie the cactus, made it one of the well-nigh conspicuous businesses on Higher Point Boulevard. But in August 2018 it abruptly closed.

When I visited the edifice final summer, spray paint covered the windows, and the orangish outside had been covered in white. The only evidence of commerce was a man in a blackness ski mask hawking $xv watermelons on the edge of the building'south empty parking lot. Inside, though, it was loud and brilliant, as a brigade of construction workers installed copper pipes and rows of refrigerators, part of a programme to bring the grocery store dorsum to life.

Over the final half-century, this indigestible building has transferred hands between three men named Peter Castellana. Peter Sr., the patriarch, who died in 2020 from COVID-19, used information technology as the headquarters for his mobbed-upward wholesale meat business organization, which was accused by the authorities of food-postage fraud and securities violations. His son, Peter Jr., who took total command of the visitor in 1996, converted the meat business into Western Beefiness and built dozens of outlets in New York's food deserts, and then expanded to New Jersey and Florida. All forth, he has tried to distance the company from his father's criminal associations. Now, at 61, he's cleaning up after some other Peter — his son, Peter 3, who replaced him as CEO of the parent visitor, Cactus Holdings, in 2013. Six years afterward, Peter 3 was forced to cede the company back to his father, who came out of retirement to reverse what his son had done. Before his father'south render, the youngest Peter had begun shifting the visitor toward upscale existent-estate evolution. The 40-yr-erstwhile scion saw a meliorate future in the dozens of properties that Cactus Holdings had amassed across the five boroughs at low prices and now were worth millions more.

With the grand reopening of the Queens grocery in December, it's clear that the father has won, at least for now. Peter Jr. and Peter III are both tan, short, and stocky, with jet-black hair and thick New York accents. Both have warm smiles and habiliment gold chains. The son's necklace, passed down from his male parent, features a crucifix pendant blessed past Pope John Paul I. They still meet regularly; on Sundays, the Castellana clan ordinarily gets together for Catholic mass or dinner, and sometimes both.

The two seem to accept sworn an omertà-style code of silence over how exactly their disagreements played out in the boardroom. Only Peter Jr. is determined that Western Beefiness stay in the grocery business concern for the low-income customers it has e'er catered to. "You tin't be everything to everyone," he explained as we walked along a row of empty white shelves in the Queens warehouse. "Permit someone else cater to the Whole Foods, to the upper income. I'll stick to the low income. That's what I know; that's what I practice."

Western Beefiness supermarket in the Foxhurst section of the Bronx on Tuesday March 17, 2020. Photo: G. Ronald Lopez/ZUMA Wire/Alamy Live News

The ascent of Western Beef mirrors New York's transformation from a city dominated by mob cartels to an in a higher place-board mecca of cutthroat capitalism. It begins with a son trying to shed his father'south reputation equally a tough guy for the Gambino crime family. In the 1950s, Peter Sr. was convicted of selling adulterated meat. In 1961, his wholesale company, Ranbar Packing, was found guilty of "defrauding the authorities of $200,000 to $500,000 in a scheme involving stolen food stamps." During the 1960s, he served four years in prison for bankruptcy fraud. In the 1970s, he lied to the Securities and Commutation Commission about the full scope and growing fiscal struggles of his concern. And in 1981, he was charged with extortion afterwards his employees threatened to break the legs of two pocket-size-time meat suppliers over an outstanding debt.

Like other mobsters of his generation, Peter Sr. sought to move beyond this history with generous donations and gifts to those in need. He gave to his church and dropped off turkeys to homeless shelters on Thanksgiving. A former law-enforcement official remembers Gambino boss John Gotti calling upon the Castellanas to provide free food for his annual July four blowouts in Ozone Park. "[Gotti] would call Western Beef to send over, you lot know, ane,000 pounds of hot dogs, and all the works," he said.

His son, Peter Jr., began unloading meat trucks for his father at age 12. He intended to go legit and began the Western Beef grocery chain in 1976. His first store operated out of his father'south Flushing warehouse, which meant costless space and cheap meat, simply also risked linking him to his mobster father. In the mid-'90s, equally Mayor Rudy Giuliani made information technology his mission to suspension the mob's grip on nutrient distribution, Peter Jr. cut his father out of the business, hired former FBI and NYPD officers to work security positions, and contracted with an auditing firm that employed Bart Schwartz, ane of Giuliani's former U.S. Attorneys. In 1997, the firm announced that it "did not find whatsoever testify of organized crime influence or suspicious corporate affiliations or activities" at Western Beef.

Peter Jr. swears he never witnessed his father'southward unsavory practices, but found that New York (and its major lending institutions) deemed him a tough guy all the same. "I understood information technology's gonna take my lifetime to mayhap articulate upwards a name for the side by side generation," he said.

He operated just in poor neighborhoods in Brooklyn, Queens, and the Bronx. National grocery chains were so afraid to bear upon these Goose egg Codes, and in that location was no competition. "The pockets nosotros were going into didn't take supermarkets," explained Santino Montalbano, Western Beef'southward onetime real-estate director. He said that they didn't accept the luxury of Google Earth dorsum then, and would instead bound in the car and drive "street by street, block by block." The company frequently fix upwards shop about customers in public-housing projects. To salvage money, they'd scoop up lots but off major thoroughfares, and made ambitious offers for parcels they liked, even if they weren't on the market place.

From left: Some of the properties owned by Cactus Holdings include empty lots like 994 Myrtle Artery. Photo: Google Maps Another property endemic past Cactus on Metropolitan Avenue. Photo: Google Maps

From left: Some of the properties endemic by Cactus Holdings include empty lots like 994 Myrtle Avenue. Photo: Google Maps Another property endemic by Cact... From left: Some of the properties owned by Cactus Holdings include empty lots like 994 Myrtle Avenue. Photo: Google Maps Some other belongings endemic by Cactus on Metropolitan Avenue. Photograph: Google Maps

This strategy, born out of necessity, made Western Beef into a $300 million chain with turn a profit margins that were well above industry norms, and today it operates xx stores in the New York area alone. By the early 1990s, Charlie'south face up had popped up in more than a dozen nutrient deserts in the city. Where the visitor saved money was in the stores themselves, where lower-quality products and poor weather condition prevailed. Shortly subsequently Peter Jr. took over Western Beefiness, the company was failing 60 percent of its sanitary inspections, compared to a high of twoscore percent at other supermarkets.

The company'southward sprawling 140,000-foursquare-foot headquarters in Queens, which features offices, a wholesale wing, and a store, has an impressive view of the Manhattan skyline and is at present worth more than $sixteen meg, according to the city'due south belongings-cess database. The family has also scooped up many smaller properties across the v boroughs, from empty lots to modest residential and commercial spaces that bring in passive rental income. One is a three-story edifice located just under the Brooklyn-Queens Expressway in Carroll Gardens. At present worth virtually $3 1000000, it has 1,560 square feet of residential infinite on the first floor, plus ii brightly renovated flat units above it. To this 24-hour interval, Peter Jr. notwithstanding drives around neglected neighborhoods, making offers on cheap parcels of country or buildings, even if he's unsure exactly how he'll utilize them. Cactus Holdings, the property arm of Western Beef, now claims to own more than ii million square feet of real estate in the urban center.

A 1986 ad for Western Beefiness.

Unlike his father, Peter III never really wanted to bring together the family business concern. He was drawn first to tech, then real estate. He ran a computer-bit business while attending NYU, and later used the profits from that venture to provide loans and investment to hard-upwards real-estate developers subsequently the 2008 fiscal crash. While Wall Street firms once sneered at Western Beef, Peter III snagged a higher internship at Morgan Stanley. Only he always knew that the family expected him, as the oldest son, to stride upwardly and run the business. When, in 2009, his begetter invited him inside the company, he believed that he could bring the business out of the old globe. "I can't help myself," he told me. "I see something that could be improved, and I improve it."

For Peter Three, the gentrification remaking New York Metropolis's poor neighborhoods was a threat to Western Beef's depression-income customer base, but also an opportunity to test a new business model. He believed that the company was worth far more than as a real-estate portfolio than every bit a grocery chain. Some of those unassuming apartment buildings, modest shopping centers, and warehouses — non to mention the grocery stores themselves — are attached to air rights more than valuable than the belongings'due south initial buy price.

Before he was appointed CEO in 2013, his begetter sent him to Florida to turn around an underperforming shop in Boca Raton. When the store succeeded, his begetter handed him the keys to the company, and then semi-retired to the Sunshine State.

Once in charge, Peter III put his real-estate-start strategy into action right away. He shuttered 7 Western Beef stores, nearly all of which he tried to convert into upscale residential developments. At a store in Long Island Metropolis, he found a residential developer to lease the property. They tore down the shop and erected the Astor, a glistening apartment complex with rooftop views of the Queensboro Bridge. He as well purchased a property in the Bronx, partnered with a developer, and hired an architectural firm to plan a ix-story, 159-mixed-unit of measurement development, which would have been one of the biggest projects in the borough.

Subsequently he emptied out the Queens flagship in 2018, Peter III pushed for 1 of the store'due south two commercial lots to be rezoned for residential use, hoping to put up a 100,000-square-foot apartment building. (He envisioned that the second lot could host a national outlet or a major Chinese grocer, perhaps with more apartments on top.) "I had a business plan, all the numbers worked out," he told me. "I had some of the all-time economical minds available to me."

He also, curiously, started a at present-shuttered security firm. Called ISF Security and co-founded in 2016 with veterans of the Israel Defense Forces, the coiffure seemed to operate mostly inside Western Beefiness stores. A 2018 YouTube video shows a beefy ISF guard roughing up a Black customer who'd evidently stolen some bread. "It's for my baby," the man says before beingness roundhouse-kicked in the face. Similar stories of violence and intimidation have plagued Western Beef'south internal security staff, which is run by law-enforcement veterans. (In a 2011 lawsuit that was later on dismissed, a customer alleged that a guard knocked him unconscious simply for whistling in a shop to observe his children.)

This new direction didn't line up with his father's, who remained lath chairman and often popped into visitor headquarters. Mike Harkins, a former FBI agent and Western Beef's recently retired security manager, told me that Peter III'south short-lived security house was indicative of a broader strategy that "didn't make a lot of sense." Santino Montalbano, Western Beef'south former existent-estate director, said he didn't desire to "get into the politics of the family," but added that, under Peter Iii, the company "was haemorrhage."

Peter Jr., for his function, felt his son was neglecting Western Beefiness, the family'due south staff of life and butter, while rushing into loftier-toll, high-risk ventures. Peter Jr. told me he'd always known his son was passionate nearly real estate, but said that this aspect of the business could but exist expanded with profits from the grocery business concern. He also said he close down ISF Security, but declined to explain why. "That's another whole story," he said. "You'll demand another 2 days."

When Peter Jr. took back control of Western Beefiness, he halted the high-finish residential projects that his son was planning. At the site of a recently reopened Western Beef outlet most the Marcy Projects in Bed-Stuy, developers had "offered us big, big money for the existent estate," Peter Jr. said. "They wanted to put huge condominiums over there, similar they're doing in the whole surface area." Just he rejected their offering, and similarly backed out of his son's Bronx residential projection.

Peter III denied that the business had declined under his tenure, and said that he left the company to focus on real estate and exist his own boss. "I can practice it on my own," he said. "I am doing it on my ain." A year after his father's return, he started a real-estate business firm, Cactus Asset Management, with his brother, Andrew. They manage more than 25 mixed-use developments and Western Beef properties where he is a part- or full-time owner (he is still a major shareholder in Western Beef). He expects his visitor will go along to develop residential projects that are anchored past Western Beefiness grocery stores and other retail businesses in "ripening" areas similar Carroll Gardens and the Bronx. Most of all, he's relieved at his newfound autonomy. "At that place's something about going home on a Sunday and having dinner with my family and not talking about business that is pleasant," he said.

He'southward also open to retaking his former title at some point down the road. However, equally we toured one of his commercial backdrop in Prospect Heights, success as a developer still seemed to be out of reach. The 3-unit space had just ane tenant, Shining Smiles Daycare, though he said he'd before long announce others, as well every bit more than ambitious projects with more foursquare feet. "Existent estate is a time business," he explained.

The pandemic-fueled grocery-store smash has made Western Beef extremely profitable over the past two years, and Peter Jr. wants to keep growing. Recently, he paid $xx million to buy a defunct gym in the Bronx to develop into some other grocery store, which will largely serve nearby residents of Department 8 housing.

Only in a metropolis of increasingly upscale-grocery and specialty-food stores, not everyone is in favor of that ethos. In December 2020, a Western Beef shop on the Upper West Side that largely served residents of the Amsterdam Houses projects lost its lease. Local assemblymember Linda Rosenthal tried to relieve it, arguing that "the community desperately needs a full-service supermarket with lower price points to ensure that low-income New Yorkers tin can go along to afford food in the neighborhoods they alive in and helped build." Just the landowner, Brodsky Holdings, replaced it with Brooklyn Fare, a gourmet grocer that agreed to pay far more rent.

"When you meet a shop like Western Beef replaced by Whole Foods, the household costs to a poor family become up significantly, which can push them somewhere new," said Matthew Kwatinetz, a professor of real estate at NYU and director of the school'southward Urban Lab. Moreover, when an ballast store like Western Beef shutters, it also sends signals to nearby property owners to either jack up rents or flip their buildings. He believes that the family'south deep and expanding roots in the city are, on the whole, positive.

"Who would call back that a in one case-mobbed-up family would stop powerful market forces and, quite often, be for the people?" Kwatinetz asked me. "It'southward confusing, but it kind of makes sense." The Castellanas' healthy skepticism of outsiders has kept their massive portfolio out of the hands of developers. One could well-nigh say that Western Beef provides a bulwark confronting gentrification in the low-income areas where information technology has gear up store.

Like his father, Peter Jr. insists that this is all office of the family's mission to feed the poor and support the community. Simply for customers of Western Beef, that rhetoric does not always mean fresh nutrient. For decades, customers accept complained almost mislabeled seafood, rotten meat, and unsanitary store conditions. The company has been accused of tax tricks, wage theft, fifty-fifty intimidation. Despite Western Beef's troubled history, the city selected it in 2011 as the countdown partner in the Food Retail Expansion to Support Health (FRESH) plan, which aimed at establishing more grocery stores in nutrient deserts. While the program'southward runway record in achieving its goals was less than stellar, co-ordinate to The City, Cactus Holdings' aggressive lobbying of Eric Adams, then Brooklyn borough president, seemed to aid the company get some other round of FRESH subsidies in 2018. On a recent trip to the company's Prospect Avenue store in the Bronx, I saw rotten produce, expired yogurt, and smelly, questionable meat. Peter Jr. argued that quality is always improving. "If we encounter a problem, nosotros make clean it up, we fix it," he said.

Last year, more than 100 local customers petitioned Peter Jr. to do amend. "Give usa a choice," the petition reads, "or leave our neighborhood!" When the Flushing location airtight, in 2018, some residents lamented its loss, but one posted on Facebook, "I'd rather eat a city rat [than] that garbage low-quality beef." "Sometimes I've had to bring [the meat] back because it'south no adept," ane elderly customer told me. Food activist Marilyn Moore, who organized and submitted the Bronx petition, accused Western Beef of "food apartheid." Simply she also noticed that the company had listened to some of her demands. The Bronx outlet was freshly stocked with organic options, including various oats and flours from Bob's Cerise Factory. "I am and so happy they take this as an oatmeal option," Moore said enthusiastically. "This is what joy looks similar."

In late Dec, Peter Jr. was buoyant as he walked the aisles of his Flushing flagship on its grand reopening on a dank Saturday. As Christmas music was piped in over the store's intercom system, customers, most of them Asian and Latino, perused shelves of fruit, vegetables, beefiness (of class), and, for the first time, live seafood in h2o tanks.

Peter Jr. told me he'd invested roughly $one.2 million to become this store back in shape, a tribute, of sorts, to his late father. It was the building that his dad had bought and first developed, the identify where Peter Jr. learned the family business, then launched his own venture while sleeping on a weathered couch in the building'southward back role. (Every bit he'd overseen the finishing details of the relaunched grocery shop, Peter Jr. oftentimes wore ane of his father's favorite jackets.)

He told me that family members planned to drib by for the opening, including his son, who'd shut down the shop four years ago. He reiterated that Peter Three has a "skilful mind for the real estate and developing," but as well that his concern strategy had been "premature." He further fabricated articulate that he has no plans of relinquishing visitor command any time soon. "I just desire to get our business back," he explained. "This is my baby. This is what I live for."

Western Beef'southward Time to come: Inexpensive Meat or Luxury Rentals?