I have mixed feelings on this one. Full disclosure I am actively engaged in moving into Riverside. I love all of the shops, bars and restaurants. I can also see the need to manage the needs of different parties.
I'm with you on this. Putting aside the comments of the potential owners of this place said, "RAP would rather this sit abandoned" (sounds like playground BS), I'm also not of the opinion that just because it's a commercial building it's okay to be a restaurant/bar opened until 2AM. To Stephen's point earlier, this building was built next to residences because it was a day use-type place (and was historically). Now, many retail spaces aren't being used today for their historic use (most of Park and King is that way).
The current zoning plan is a little vague. For example, from a zoning perspective Orsay and Mellow Mushroom are very similar, but in reality they are very different places (and no, I don't now or ever believe that Mellow Mushroom was going to bring the apocalypse). To be clear, I'm not referring to price point, as that shouldn't matter whatsoever.
The one thing I thing is a horrible idea is outdoor seating there for dinner - no good can come from that in my opinion. Breakfast and lunch are fine by me. The other thing that seems odd is the 150 seats (don't know how I feel about that - would need to know the square footage). Obviously they're going for 150 for the SRX license (I'm 99% sure the JBill to move the requirement to 100 wouldn't apply there as the area isn't a commercial character area).
This is a tough one.