87% of NY eateries can’t pay their rent
NYC’s restaurants fear 25% indoor cap means ‘Armageddon’
Nearly 90 percent of New York City bar and restaurant owners couldn’t pay their rent in August, heightening the continued crush the coronavirus shutdown has inflicted on Gotham’s economy.
Eighty-seven percent of bars, restaurants, nightclubs and event spaces in the five boroughs could not pay their full August rent, according to data from 457 businesses surveyed between Aug. 25 and Sept. 11 in a new study released Monday by the nonprofit NYC Hospitality Alliance.
It’s a 7-point increase from June and a 4-point jump from July, darkening the already-dire picture for eateries desperately seeking relief following six months of partial — and in some cases total — closure.
Some 34 percent of this group said they could not pay rent at all last month. Only 12.9 percent were able to meet full payments.
“Restaurants, bars and nightlife venues have been financially devastated by the COVID-19 pandemic,” said NYC Hospitality Alliance Executive Director Andrew Rigie.
“Even before the pandemic, when operating at 100 percent occupancy, these small businesses were struggling to stay open,” he said.
“Now we’re seeing widespread closures, approximately 150,000 industry workers are still out of their jobs, and the overwhelming majority of these remaining small businesses cannot afford to pay rent.
“The hospitality industry is essential to New York’s economic and social fabric, and to ensure the survival of these vital small businesses and jobs, we urgently need rent relief, an indefinite extension of outdoor dining, a roadmap for expanded indoor dining, covered business-interruption insurance and immediate passage of the Restaurants Act by Congress,” he added.
When asked if landlords were waiving rent in relation to COVID-19 hardships, just 40 percent of businesses responded in the affirmative — 28.5 percent said less than 50 percent of their rental obligations were waived in August, 43 percent said 50 percent and 28.5 percent said they were given a break on more than 50 percent.
Meanwhile, 90 percent reported they’d been trying to renegotiate their leases but landlords wouldn’t budge.
The study comes ahead of the longawaited partial reopening of New York City’s indoor dining, slated for Sept. 30 at 25 percent capacity.
“As we head into the winter, even with indoor dining on the horizon, I don’t think that 25 percent indoor will exceed what exists already outside,” said David Rosen, owner of several eateries, including Williamsburg’s The Breakers. “This ‘inability to pay rent’ trend will continue, if not worsen.”
BIG Apple restaurateurs fought tooth and nail for indoor dining, and now that they’ve got their wish — sort of — they’re not so sure it’s going to help them survive.
Starting on Sept. 30, New York City eateries, from cafes to buffets, will be permitted to start serving food indoors again after a sixmonth ban. But industry insiders say the 25 percent cap on patrons instituted to protect people from the coronavirus isn’t enough for owners to pay their workers without government aid, especially when the city’s expanded outdoordining program ends next month.
“If outdoor dining ends and we are only able to offer indoor dining at 25 percent, we will end up going out of business. This is Armageddon for the restaurant industry,” said Nahid Ahmed, co-owner of Luthun, a small, tasting-menu-only restaurant in the East Village.
“We cannot get through the winter with only 25 percent unless there is some sort of government assistance.”
These are not the cries of Chicken Little, said restaurant consultant Don Evans, who broke the crisis down by the numbers.
High-end restaurants, he said, spend most of their money on payroll, around 33 percent. Food and beverage takes another 33 percent. The rest of the expenses might include 10 percent on rent; 10 percent on insurance and utilities; and 14 percent on “other” expenses, including linens, garbage, sanitation and paying outside apps like OpenTable.
“Some of the costs can be controlled, but not all, like insurance, ConEd and garbage pick up,” Evans explained. “If you’re only operating at 25 percent capacity, then your payroll costs shoot up by at least 50 to 60 percent. You are losing money no matter what. If you have to bring in your chef for $120,000, your manager at $80,000 and two sous chefs at $60,000 each, the numbers just don’t work. They don’t even come close.”
Restaurants with massive indoor spaces are expected to manage the costs better, such as The Milling Room on the Upper West Side, which has 225 seats inside and plans to open at 25 percent capacity.
“We’re also doing around 60 covers a night outside, which has been quite successful,” said Evans, who consults for The Milling Room. “The question, however, is what happens when it gets too cold for people to sit outside?”
Indeed, most restaurateurs say they will open for indoor dining at the end of the month only if they already have outdoor dining, which together with forgivable loans from the feds has helped them sustain operations thus far. Restaurants without outdoor dining — or located in once-bustling commerce and tourist centers, like Times Square — will remain closed.
Italian eatery Carmine’s, for example, will add indoor dining to its restaurant on the Upper West Side, where it already has a bustling outdoor dining scene. But its sister location in Times Square will remain shut.
“Carmine’s Times Square will not be reopening on Sept. 30. We will wait until things get better in the area. It is too cost-prohibitive to open at 25 percent,” said Jeffrey Bank, CEO of Alicart Restaurant Group. “It makes some sense to reopen Carmine’s uptown because there is a neighborhood and lots of takeout. In Times Square, there is no theater, no tourists and no one in the office. Basically, there are no customers. Times Square needs its own Marshall Plan. Indoor dining at 25 to 50 percent capacity is not going to cut it.”
Michelin-starred chef John Fraser, meanwhile, plans to delay opening his new restaurant in an office building at 1740 Broadway near Carnegie Hall until it can operate at 50 percent capacity, a source said. Fraser didn’t return calls by press time.
In an effort to survive the pandemic, the industry is pushing hard for another federal aid package in the form of the Restaurant Act — a $120 billion grant fund to cover expenses between 2019 and 2020, projected revenue for payroll, rent and other expenses.
The pain is real. Even with outdoor dining and government funds, 83 percent of all New York City restaurants, bars and nightlife venues didn’t pay their full rent in July — and 37 percent paid no rent at all, according to a survey of 500 restaurants, bars and nightlife-venue operators conducted by the New York City Hospitality Alliance. Those numbers are expected to get worse as money from the feds’ Payroll Protection Program runs out next month.
“It’s not about making money. It’s about survival,” said Andrew Rigie, head of the Hospitality Alliance. “We need support from the federal government — and all levels of government — to try to keep us open until we can get back to 100 percent occupancy and when consumer behavior and spending gets back to prepandemic level.”
Natalie Camerino says she will start serving food indoors at her Korean eatery in Soho, Umma by Noodlelove, as soon as she can — but acknowledges that she’s able to do so only because she’s received a rent break from her landlord to allow her to continue operating.
“We are fortunate and lucky to have a wonderful landlord who is accommodating and understanding of our situation and believes in us,” Camerino said. “Not everyone is as fortunate. That’s how we were able to work through this.”
We are fortunate and lucky to have a wonderful landlord who is accommodating . . . Not everyone is as fortunate.
— Natalie Camerino