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What you need to know:Tracking the Reopening of New York
City
City
NYC Reopens
‘We Might Not Make It’: The Math Simply Doesn’t Work for NYC
Restaurants
Restaurants
Even New York City’s most successful restaurateurs are
struggling with the harsh economic realities wrought by the pandemic.
struggling with the harsh economic realities wrought by the pandemic.
By Kate Krader
September 30, 2020, 1:00 PM GMT+1
A sign notifies customers to keep a mask on while returning
to tables at Crown Shy in downtown Manhattan. New York City will allow indoor
dining at 25% capacity from Sept. 30.
to tables at Crown Shy in downtown Manhattan. New York City will allow indoor
dining at 25% capacity from Sept. 30.
A sign notifies customers to keep a mask on while returning
to tables at Crown Shy in downtown Manhattan. New York City will allow indoor
dining at 25% capacity from Sept. 30. Photographer: David Dee Delgado/Bloomberg
to tables at Crown Shy in downtown Manhattan. New York City will allow indoor
dining at 25% capacity from Sept. 30. Photographer: David Dee Delgado/Bloomberg
For more and more New York City restaurants, the math isn’t
working.
working.
Even as they prepare to reopen indoor dining on Sept. 30
after a six-month, pandemic-induced shutdown, many restaurateurs worry they
will struggle merely to get by. A
mandated cap on capacity will guarantee that three out of four tables stay
empty. And as fall turns to winter, outdoor dining will become even less
attractive. Everyone agrees more establishments will close for good.
after a six-month, pandemic-induced shutdown, many restaurateurs worry they
will struggle merely to get by. A
mandated cap on capacity will guarantee that three out of four tables stay
empty. And as fall turns to winter, outdoor dining will become even less
attractive. Everyone agrees more establishments will close for good.
Here’s a look at how four restaurants are coping as indoor
dining resumes.
dining resumes.
THE DUTCH, SoHo
25% indoor capacity: 30 seats
Sept. revenue: roughly $175,000
Same month a year ago: about $500,000
Labor costs as percentage of sales: over 60%
Pre-pandemic: under 40%
Rent: $45,000 a month
Last paid: March
“For most
restaurants, it’s not month to month,
it’s week to week,” says Luke Ostrom, managing partner at NoHo Hospitality
Group, which owns The Dutch and nine other New York establishments, seven of
which are open. “They’re not sitting on piles of cash for a rainy day.”
restaurants, it’s not month to month,
it’s week to week,” says Luke Ostrom, managing partner at NoHo Hospitality
Group, which owns The Dutch and nine other New York establishments, seven of
which are open. “They’re not sitting on piles of cash for a rainy day.”
“If the landlord says, ‘You owe me every penny since
March,’ almost no restaurant will have the ability to pay it all back.”
March,’ almost no restaurant will have the ability to pay it all back.”
Ostrom says his group is in the process of renegotiating a
lease that would give its landlord a percentage of the profits, a structure
employed by many food halls and hotel restaurants. At the start of the
pandemic, Ostrom’s group laid off 98% of its staff; a little over 30% have been
hired back, he says.
lease that would give its landlord a percentage of the profits, a structure
employed by many food halls and hotel restaurants. At the start of the
pandemic, Ostrom’s group laid off 98% of its staff; a little over 30% have been
hired back, he says.
A lot of the difficulties of running a New York City
restaurant during the pandemic stem from the fixed costs. At The Dutch, Ostrom has to employ the same number of
line cooks — five — at 25% indoor capacity as he would if seating went up to
75%. The price of perishable goods has also crept up, accounting for a third
of monthly revenue. Meanwhile, his restaurants also had to absorb the
cost of protective equipment, from gloves to masks and filters, which has
run in the “thousands and thousands of dollars,” Ostrom estimates.
restaurant during the pandemic stem from the fixed costs. At The Dutch, Ostrom has to employ the same number of
line cooks — five — at 25% indoor capacity as he would if seating went up to
75%. The price of perishable goods has also crept up, accounting for a third
of monthly revenue. Meanwhile, his restaurants also had to absorb the
cost of protective equipment, from gloves to masks and filters, which has
run in the “thousands and thousands of dollars,” Ostrom estimates.
While the Paycheck Protection Program helped Ostrom relaunch
his restaurants, the PPP loans for The Dutch expire on Oct. 1. After that, the
restaurant has to rely on its own cash reserves — at a time when plummeting
temperatures may crimp demand for outdoor dining. Congress may vote on a $120
billion restaurant bailout as early as next week, providing much-needed support
to the ailing industry. But for now, Ostrom is hoping his restaurants can soon
restart hosting private events,
which will help offset the drop-off in revenue.
his restaurants, the PPP loans for The Dutch expire on Oct. 1. After that, the
restaurant has to rely on its own cash reserves — at a time when plummeting
temperatures may crimp demand for outdoor dining. Congress may vote on a $120
billion restaurant bailout as early as next week, providing much-needed support
to the ailing industry. But for now, Ostrom is hoping his restaurants can soon
restart hosting private events,
which will help offset the drop-off in revenue.
“Places that are only doing 35% of previous sales, without
an influx of cash or forgiveness of debt, they’ll close,” he predicts. “50%
capacity is the baseline threshold for restaurants surviving.”
an influx of cash or forgiveness of debt, they’ll close,” he predicts. “50%
capacity is the baseline threshold for restaurants surviving.”
CROWN SHY, Financial District
A New York Restaurant Prepares For The Return Of Indoor
Dining
Dining
25% indoor capacity: 62 seats
Estimated loss in Oct., including outdoor dining: over
$80,000
$80,000
Oct. ’19 revenue: $1 million
Rent: usually 10% of each month’s revenue
Last paid: March
Jeff Katz, owner of the modern American restaurant Crown
Shy, agrees that without private events, his business may be doomed. “Even with
a good landlord, a good first year, good head winds, we might not make it,”
says Katz, who opened Crown Shy just last year and is also general manager at
the Italian restaurant Del Posto. “For many restaurants, December and the
holiday season can bring in more than one-third of the entire year’s profits,”
he observes.
Shy, agrees that without private events, his business may be doomed. “Even with
a good landlord, a good first year, good head winds, we might not make it,”
says Katz, who opened Crown Shy just last year and is also general manager at
the Italian restaurant Del Posto. “For many restaurants, December and the
holiday season can bring in more than one-third of the entire year’s profits,”
he observes.
Katz says Crown Shy’s revenue last October was a little over
$1 million. This year, at 25% occupancy and even with outdoor dining, he
estimates the restaurant will lose over $80,000 after all the expenses, including
rent, labor and food, are paid. For November, he estimates he might be able to
clear $9,000 — what he calls “breaking even” — assuming the capacity cap
doubles to 50% by then. “Nothing is more important than getting to 50, then 75,
then 100% occupancy,” he says.
$1 million. This year, at 25% occupancy and even with outdoor dining, he
estimates the restaurant will lose over $80,000 after all the expenses, including
rent, labor and food, are paid. For November, he estimates he might be able to
clear $9,000 — what he calls “breaking even” — assuming the capacity cap
doubles to 50% by then. “Nothing is more important than getting to 50, then 75,
then 100% occupancy,” he says.
PETER LUGER STEAK HOUSE, Williamsburg
relates to ‘We Might Not Make It’: The Math Simply Doesn’t
Work for NYC Restaurants
Work for NYC Restaurants
Socially distanced dining tables at Peter LugerCourtesy:
Peter Luger Steak House
Peter Luger Steak House
25% indoor capacity: 90 seats
Estimated decline in Sept. revenue versus ’19: roughly 75%
Labor costs as percentage of revenue: “definitely higher
than last year”
than last year”
Food costs: 50%
Rent: none
David Berson, co-owner of the venerable steakhouse, says
he’s one of the lucky ones. He doesn’t have to worry about rent — Luger owns
its property. He’s brought back over 90% of its staff, including more than 40
servers. And he intends to keep the establishment’s roughly 60 outdoor seats
and add electric heaters, in addition to the 90 inside the restaurant.
he’s one of the lucky ones. He doesn’t have to worry about rent — Luger owns
its property. He’s brought back over 90% of its staff, including more than 40
servers. And he intends to keep the establishment’s roughly 60 outdoor seats
and add electric heaters, in addition to the 90 inside the restaurant.
“It will be almost a server per table,” Berson says, half
jokingly. But even he’s worried. “My fear is that we get stuck at 25% indoors
when it’s too cold for comfortable outdoor dining.”
jokingly. But even he’s worried. “My fear is that we get stuck at 25% indoors
when it’s too cold for comfortable outdoor dining.”
While having outdoor dining has helped, he says the average
check per table is lower than what he would expect for indoor tables because
patrons inside tend to stay longer and drink more.
check per table is lower than what he would expect for indoor tables because
patrons inside tend to stay longer and drink more.
relates to ‘We Might Not Make It’: The Math Simply Doesn’t
Work for NYC Restaurants
Work for NYC Restaurants
Tocqueville’s pre-pandemic seating arrangement Courtesy:
Tocqueville
Tocqueville
25% indoor capacity: 25 seats
Projected decline in full-year revenue versus ’19: over 65%
Estimated labor costs as percentage of revenue in Oct.: 75%
Food costs: 40%
Rent and utilities: 25%
Because of the impact from the virus, Marco Moreira says
he’s combining the two restaurants he owns, French restaurant Tocqueville and
sushi destination 15 East, which are just steps apart in Union Square, into one
space with a combined menu. Moreira estimates he’s already spent around
$150,000 to “keep the lights on during Covid,” for everything from insurance to
utility bills and a minimal staff. He says it will cost an additional $100,000
to reopen, which includes an outdoor patio that he bought essentially at cost
for $35,000 and a filtration system upgrade for about $15,000.
he’s combining the two restaurants he owns, French restaurant Tocqueville and
sushi destination 15 East, which are just steps apart in Union Square, into one
space with a combined menu. Moreira estimates he’s already spent around
$150,000 to “keep the lights on during Covid,” for everything from insurance to
utility bills and a minimal staff. He says it will cost an additional $100,000
to reopen, which includes an outdoor patio that he bought essentially at cost
for $35,000 and a filtration system upgrade for about $15,000.
At the existing Tocqueville location, he negotiated with the
landlord to pay rent based on percentage of sales. In September alone, labor
costs exceeded revenue by 25% and he expects to lose money again in October.
Moreira doesn’t anticipate any profit this year.
landlord to pay rent based on percentage of sales. In September alone, labor
costs exceeded revenue by 25% and he expects to lose money again in October.
Moreira doesn’t anticipate any profit this year.
“If I break even,” he says, “I’m lucky.”
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