Photo: Courtesy Photo Photo: Paul Chinn / The Chronicle 2014 Buy this photo Photo: Paul Chinn / The Chronicle 2014 Photo: Courtesy Harpo Studios Photo: Lance Iversen, The Chronicle Photo: Bloomberg Photo By Noah Berger Photo: Jeremy Woodhouse/Getty Images Photo: Bloomberg Photo By Yuriko Nakao Photo: Lea Suzuki, The Chronicle Buy this photo Photo: Lea Suzuki, The Chronicle Photo: Lance Iversen, San Francisco Chronicle Photo: Stephanie Wright Hession, Special To The Chronicle

Ike's Place, the little sandwich shop born and raised in San Francisco, has grown up and no longer feels welcome at home, its owner says.

Ike Shehadeh, the man who founded Ike's Place in the Castro in 2007, closed his flagship store in the Castro after the lease expired two years ago. But now, he says he's given up looking for a new location in the city and is moving on to greener pastures.

In all, Shehadeh now has a total of 50 Ike's Place sandwich shops — including outlets in Arizona, Nevada and Texas — and says he's opened three more in recent weeks. But in San Francisco, there's only one remaining at Polk and O'Farrell.

So why is his sandwich shop doing so well outside of the city?

Shehadeh told SFGATE that high commercial rent combined with permitting gridlock with the city have made the cost of entry into San Francisco too expensive for small business owners. He said most small businesses can't endure a year of paying rent while waiting for permits before actually being allowed to start making money.

Another problem for Shehadeh is that by San Francisco standards, Ike's Place is now considered "formula retail" — a chain store with 11 or more locations. This designation triggers additional red tape such as a 30-day community comment period or outright prohibition in certain neighborhoods. He said opening his second store on Polk Street — now his only SF outlet — was a unique uphill battle.

"It took me two years to open and I'm not a dilettante — I know what I'm doing," Shehadeh said. "If it wasn't for the city, I could have opened it in 60 days. I know because we opened a shop in Oakland, and they fast tracked the permits and we opened in 60 days."

Shehadeh contends that the system is set up so only established formula retail brands like Starbucks or McDonald's can withstand a year of rent without generating revenue, and that's not what city officials want.

"In other states, they're having an issue with vacancies, so they are making it easier with costs to open a business," he said. "San Francisco is doing the opposite."

But Mayor London Breed has taken up the issue, and on Monday, the city announced a new initiative spearheaded by Breed to streamline the permitting process for small businesses.

"This initiative we are working on will allow businesses to get permits over the counter," said Gloria Chan with the city's Office of Economic and Workforce Development. "Time is money and money is time. When you're caught up in this permit process, you just can't pay for it, and that is an issue."

Numerous permits exist depending on the type of business, Chan said, and permits for places like art galleries are different from those shops that sell food, as are ones for formula retail outlets.

"We understand it can be very challenging and complex," she said.

City permits and the San Francisco planning code have not been kind to Shehadeh over the years. He was evicted from his original hole-in-the-wall location on 16th Street after receiving complaints for cooking without required permits, and later unsuccessfully tried to relocate to the nearby Sweet Inspirations Bakery on Market Street, before being cited by the city in 2016 for not having a conditional use permit for formula retail.