KITCHEN’S CLOSED
Hard times hit owners of eateries
New York City’s higher-end restaurant scene is now experiencing what some national dining chains have been going through for the past year or so — closing the kitchen.
Le Cirque, the tony French restaurant on East 58th Street, has just filed for bankruptcy; the Michelinstarred Public, a 14-year-old Nolita restaurant, will close in the next month or so; and Nick & Toni’s Cafe at Lincoln Center — an offshoot of the famed Hamptons eatery — shuttered earlier this year after 23 years.
“The cost of doing business in the city no longer allows us to operate our business,’’ Nick and Toni’s managing partner Mark Smith told the Web site Eater.
In an industry challenged by changing eating habits, rising labor costs and oversupply, the latest declines locally are also another stark sign of how the average American consumer is tapped out, according to analysts.
Patrons are staying home, or are switching over to fastfood joints, which offer cheaper alternatives and special deals, data shows. And that’s not a good omen for the economy.
Across the nation, more than a dozen restaurant chains with thousands of workers in hundreds of locations have collapsed or filed for bankruptcy in the past year.
Bold-faced names include Bob Evans, Ruby Tuesday’s and Logan’s Road House.
“It is a harbinger of a decline in the economy,” David Rosendorf, a restaurant bankruptcy attorney and food blogger, told The Post.
“The restaurant industry is getting hard hit just like the retail sector, where consumers are pulling in their discretionary spending,” added Rosendorf, a partner at Kozyak Tropin & Throckmorton in Miami. “It’s a leading indicator of a pending recession.”
While analysts are divided on some of the biggest negatives hurting restaurants — from over-saturation to shifting consumer tastes — none dispute that sales have plunged.
Millennials, many working in the low-wage labor economy, are among the clientele staying home more often. Cowen analyst Andrew Charles, joining a chorus that sees an industry shakeout, with closures and consolidations lasting as long as a decade, says consumer spending pressures are an industry headwind.
“Customers are not coming out in the same numbers,” Rosendorf said. “These restaurant businesses are lucky if they are operating on a 5 percent profit margin.”
Those margins take a lot of work. The industry employs about 14 million Americans, and racks up $710 million in annual sales, about 4 percent of US gross domestic product.
But thousands in the business could see pink slips in the months ahead. In the past 12 months, the total number of US restaurants declined by 2 percent, according to the NPD Group.
And in a bleak admission, it only sees customer growth happening in the fast-food sector this year. Nomura analyst Mark Kalinowski has his only buy rating on McDonald’s.
“To manage growing costs, some full-service restaurants are consolidating jobs, using new technology to analyze and streamline the operations of their businesses, while cutting costs and trying not to reduce the quality of food and service,” said Andrew Riggie, executive director of the NYC Hospitality Alliance.
Unfortunately, added Riggie, “there’s no magic recipe for success” in the restaurant industry.