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Restaurant Renewal

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Restaurant Renewal

Eating out—New York’s favorite pastime—will return; it will just look different. May 11, 2020
Covid-19
New York
Economy, finance, and budgets

The Covid-19 lockdown gravely threatens New York City’s vast and indispensable restaurant industry. But while some of our 26,000 eateries won’t return, and some owners face economic ruin, it by no means follows that we’ll be left with nowhere to eat—or that new places will be inferior to old ones.

No other business is as tightly woven into the urban fabric as restaurants. Forced closures cost 370,000 workers their livelihoods, the city tax revenue of $750 million, and residents a defining pleasure of New York life. Unlike sports or live entertainment, restaurant meals can’t be experienced in diminished form on TV or on YouTube. Restaurants have nourished our social and business lives since the Swiss-born Delmonico brothers brought New York City its first full-fledged oyster and chop house in 1837. New York’s restaurant scene prior to March 20, 2020, was more diverse, creative, and festive than it had ever been.

But kiss the fun goodbye, claim revered master chefs David Chang and Tom Colicchio. Colicchio believes that 70 percent of New York restaurants won’t reopen. The federal Paycheck Protection Program bill—meant to aid “small” businesses through forgivable loans—didn’t help many small or midsize restaurants. Ambiguous application rules ended up favoring large chains with thousands of employees such as Shake Shack and Ruth’s Chris (which were since shamed into returning the money). To small owners’ further chagrin, the loans had to cover payroll for eight weeks following approval— impossible for places that were entirely closed for the foreseeable future, unlike for larger companies with functioning back offices.

There’s no minimizing what damage the pandemic will do before it’s contained. While the financially strong empires of Danny Meyer, Daniel Boulud, and Stephen Starr will come through this, smaller operators who lost their businesses through no fault of their own face possible ruin. Among them is Gabriel Stulman, proprietor of downtown gastropub Joseph Leonard and other popular, previously profitable spots, whose landlords are threatening to hold him personally liable for full payment of leases with years left to run.

Even if owners can scramble up fresh capital to take the reopening plunge, government decree might reduce seating to 50 percent of capacity, or less. That would be a death sentence for a business with paper-thin, 10 percent profit margins, which even slight intrusions—like a scaffold erected over the entrance—can easily erode. Owners of the 60-seat Mermaid Inn on Tenth Avenue and the 350-seat Bond 45 in the theater district are strategizing and sweating alike. Fewer seats mean much less revenue, with no corresponding reduction in rent. Le Bernardin chef and co-owner Eric Ripert says that his three-Michelin-star seafood temple could survive for only a few months with 50 rather than 150 seats.

The Covid-19 undertow will surely sink some popular places. Most at risk are jumbos, where the nightly mob scene is part of the draw. They include the Tao Group’s 350-plus-seaters, like Tao and Cathedrale, and One Group’s STK steakhouses. Shrinking their seating while still making money will be a challenge, especially since many customers go there precisely for the dubious thrill of jam-packed human bodies. Yet owners of only slightly smaller establishments such as Carmine’s and Bond 45 are already formulating with chefs, lawyers, accountants, and architects how to downsize and stay afloat.

A hint of what could be in store comes from Shanghai. A manager of high-end restaurants at that city’s Three on the Bund complex, including one by the renowned chef Jean-Georges Vongerichten, describes an austere, almost clinical environment since a cautious reopening in February. Guests get their temperatures taken at the door. A government snooping app charts where they’ve been in recent weeks; those whose movements raise alarms are barred. Patrons can remove their masks at tables—now 50 percent fewer than before—but must put them back on for restroom runs. Customers scan menus via iPhone apps.

Business was a mere 5 percent to 10 percent of the previous norm at first but has slowly climbed upward, to 40 percent. It will surely rise over time. The example might be inapplicable at New York restaurants, which will emphasize safety but without a martial atmosphere. Worst-case scenarios ignore the human factor of pent-up demand. People are already ignoring social-distancing rules to mingle on beaches and in parks. Cruise ship bookings are reportedly strong for 2021 despite shipboard coronavirus outbreaks. For how long might New Yorkers shun their favorite places to eat?

A more plausible threat lies in the loss of private-room dining business, which accounts for up to 40 percent of profit at some larger venues. Will families and businesses again spend big on celebrations amid a recession, and so soon after horrendous loss of life?

So many perils and unknowns in combination might seem unsurmountable. But previous crises were regarded as mortal blows, too. The aftermath of 9/11, the 2008 financial crash, and even the 2002 smoking ban were all cited as restaurant-industry killers. Every closure of a bagel shop gets blamed on the recent statewide minimum-wage increase. And of course, the city’s high rents are always poised to wipe out middle-market and mom-and-pop eateries entirely. Yet, somehow, more restaurants operate than ever, as is evident to any New Yorker out for a stroll.

A toned-down dining scene to supplant its overheated predecessor might be a welcome course change. Many New Yorkers were fed up with raucous, uncomfortable, and overcrowded restaurants, but they had little choice. Our dining rooms are louder and more densely packed than in Los Angeles, London, or Tel Aviv, all great eating towns but without half the tumult to which New Yorkers are inured. Many of us won’t miss restaurant bars, where no-reservations policies generated a sardine-can crush of patrons waiting for tables.

The new dining age will dawn tremulously. There will be failures. It will change and grow unpredictably over time. But landlords desperate to fill vacant storefronts will offer lower rents to restaurateurs and retailers. Owners will return, and so will sidelined chefs, who right now wish they’d chosen different careers. New venues will replace the old. And New Yorkers’ insatiable desire to eat, drink, and make merry outside cramped apartments will carry the day.

Photo: zxvisual/iStock

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