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The Return Of Indoor Dining Will Not Save NYC's Restaurant Industry

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Ben Yakas

Published Sep 11, 2020

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Erin Brunner/Fox Lifestyle Hospitality Group

By

Ben Yakas

Published Sep 11, 2020

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On Wednesday, Governor Andrew Cuomo announced that indoor dining would be allowed to resume in New York City for the first time since the start of the pandemic. Starting September 30th, city restaurants (but not bars) can reopen indoors with new safety guidelines in place, including only 25% capacity, temperature checks, mandatory mask wearing when not eating, and upgraded filtration systems. Some restaurant owners are relieved that after months of barely scraping by with outdoor dining and other temporary measures, the state has finally heeded their calls. But others think these measures may be too little too late for an industry that is on the verge of collapse without major federal aid.

"While it's certainly a positive step forward, it's really by no means a savior for our industry," David Schneider, founder and owner of Oaxaca Taqueria, told Gothamist.

"Twenty five percent is way too little and way too late, it's not going to save the number of restaurants that are already in great financial difficulty," said Mark Fox, founder of Fox Lifestyle Hospitality Group (which includes White Oak Tavern, The Ragtrader, and Street Taco). He added that he has been bringing in around 20% of last year's revenue at his three restaurants since the start of outdoor dining.

Even in the best of circumstances, restaurants in the city survive on razor thin margins. Spring and summer are generally the most lucrative seasons, and they provide restaurants with the chance to make enough money to get through winters. While restaurants in the rest of the state have been able to have indoor dining at 50% capacity for a few months now, city restaurants have not.

Smaller restaurants in particular will have the hardest time because they have so much less room to spread out fewer tables. For a 75 person restaurant, a 25% capacity limit means a restaurant would only be able to serve 10-15 guests at a time (while accounting for staff).

"It's simple economics, single digit profits plus 25% occupancy is not enough," Fox said. "There is no way I can come close to breaking even in October, no way, and that's going to mean layoffs and closures."

Andrew Rigie, executive director of the NYC Hospitality Alliance which represents thousands of businesses, has been lobbying for indoor dining to return ever since it was put on ice by Cuomo at the start of July, just a few days before it was first supposed to return with the rest of Phase 4.

He said it's "critically important that we get indoor dining open safely, and now we have a date to reopen and a blueprint to increase occupancy to 50%," which Cuomo will decide by November 1st. "Both are very important, but this is part of a long and uncertain recovery for the industry. Pre-pandemic, it was difficult enough to survive with 100% occupancy, restaurants were struggling or closing all the time. But every step forward is better than standing still and leaping backwards."

Salil Mehta, chef and owner of Laut and Laut Singapura, didn't think indoor dining would even return until 2021, so this was a welcome surprise. "I wish it was higher than 25%, but looking at it from a societal perspective, I think it was the right move to be made at this time. Because it will coincide with flu season, there may be an uptick, so slow and steady wins the race. We just don't want to go back to square one, to that position where we were in March and April just doing takeout and delivery."

Inside Golden Diner

Scott Lynch / Gothamist

Beyond the capacity limits, other aspects of the new guidelines make some restaurateurs nervous. "The air handling thing is a big issue if they make that very hard, or require such dramatic changes that there aren't enough HVAC technicians to do it in the two and a half weeks we have," said Peter Madonia, who owns Madonia Brothers Bakery in The Bronx’s Little Italy and is chairman of the Belmont BID. "Then you really can't open. What does it actually mean, what does it require, and how achievable is it in a city with over 20,000 restaurants?"

"Any time you're dealing with an HVAC system it's expensive, because it's not cut and dry—it's construction and labor and things of that nature," said Tren’ness Woods-Black of the historic Sylvia's Restaurant in Harlem. "So do we do that, or do we focus on putting more dollars into additional delivery partners and expanding delivery perimeter? When you're already dealing with a small budget and reserves are already low, operating from a deficit is really hard. Now I need to spend additional money so I'm in compliance with 25% occupancy."

Then there's the question of whether diners are actually ready to return to restaurants. A recent poll by the Siena College Research Institute found that 65 percent of city residents, and 58 percent of all New Yorkers, said they were still not comfortable with dining indoors in a restaurant. Epidemiologists are "deeply conflicted" over whether they'd eat indoors. Even the mayor doesn't seem fully convinced that the economic upside justifies the risk.

"I haven't eaten indoors in a restaurant in NYC since this started, and I don't really think that many people will be in a rush to get back in, I think it's going to take people awhile to decide to feel comfortable," said Schneider, who in addition to owning Oaxaca Taqueria is also managing director of food and beverage at the McCarren Hotel and Talk Story Rooftop. "I've gone out to dinner in the Catskills, but it's different: places are bigger, they have windows that are open, you feel they're able to do this. Here, I don't know. The curbside dining and all that is geared toward people who want to drink. They're buying food because they have to."

Some think there's a pent up demand among diners, especially among younger people itching to get out and be social again. "There's going to be some people who don't ever want to go inside until there's a vaccine, but this is a big region," said Madonia. "There's enough people regionally who will be comfortable going inside, that I don't doubt."

"Our guests are very loyal—not only are they loyal, they've been asking, 'when will be able to sit inside?'" Woods-Black said of Sylvia's clientele. "We have guests that are accustomed to eating with us every single day who still come for takeout or sit outside, so I don't think it's going to be difficult to reach the 25%."

It's estimated that NYC lost around 200,000 restaurant industry jobs during the first months of the pandemic, and the city has touted that nearly 100,000 jobs came back over the course of the summer thanks to outdoor dining and other programs. But it's unclear whether indoor dining will add any more back: several of the restaurateurs Gothamist spoke to said they hoped to bring back some more employees if they opted into indoor dining, but most acknowledged that there would not be enough profits initially to bring back more than a handful of laid off or furloughed staffers. And that's assuming they even feel comfortable in that environment.

"Initially they weren't comfortable coming in, people were scared, but I think we're kind of getting used to it by now," said Mehta, whose two restaurants are both located in the Gramercy area. "A lot of us are young immigrants who have to work, we don't have the ability to sit at home. We have to make that choice for our families."

Some restaurateurs have done the math and decided indoor dining is just not worth it.

"We are not opening our indoor space until it feels right for employees and the community, and I just believe deep in my heart that now is not the time—with so much uncertainty and seeing what's happening at other places across the country, it doesn't feel right to us," said Claire Sprouse, owner and bartender of Hunky Dory in Crown Heights. "We have a fair amount of privilege to make that decision, because we have a large patio space and some flexibility within our own programming where we can try to make it work for as long as we can without indoor dining."

"It doesn't make sense for us as a business. But that's the kind of individual decision that every restaurant is going to have to make for themselves."

For businesses taking the wait-and-see approach with indoor dining and sticking with the Open Restaurants program for now, there's only so much time left. That program is supposed to end on October 31st; Mayor Bill de Blasio has promised that it will come back next spring, but it's unclear if it will be extended through the winter.

Rigie of the NYC Hospitality Alliance said his group is pushing the city to do so: "We need to continue it past October, and we should make the program permanent," he said. For that to happen, the city would have to allow propane heaters to be allowed for outdoor spaces, which would be more accessible and affordable for businesses. "Currently, you can only use hard line natural gas," Rigie said. "And you have to go through a long permitting process, with expenses involved, so it's just not practical for the vast majority of restaurants to do."

Outdoor diners in Williamsburg

Gretchen Robinette/Gothamist

And even if everything goes well, if there is no spike of the virus and the state allows indoor dining to increase to 50% in November, restaurants are still working at a deficit from their summer losses, and they still have to pay rent. A recent report from the New York State Restaurant Association [NYSRA] found that two-thirds of New York restaurants said they are likely to close by the end of the year without a comprehensive relief package specifically for restaurants, with half of those restaurants saying they're likely to close by November.

Some owners believe more needs to be done on a local level to help with rent relief; even those whose landlords have cut their rent during the first months of the pandemic are feeling the pressure six months in. "Landlords are not going to be patient much longer," said Schneider. "There needs to be relief for landlords too so they're not relying on us."

"There's no way these small business owners will be able to pay back multiple months of missed rents, or pay 100% of pre-pandemic rents moving forward, especially when they're operating at reduced occupancy," Rigie added. "If I'm operating at 25% reduced occupancy and my landlord is demanding 100% of the rent, the math does not work."

The most major part of the equation, the thing that actually could save the industry, is federal intervention. To that end, Fox, who manages three restaurants in Lower Manhattan, has organized a rally at City Hall on Monday—joined by over 40 other restaurant groups, owners and workers including Bobby Van's Restaurant Group, Smith & Wollensky’s, Stout Group, Lillie’s Group, and Mulberry Street Restaurants. His goal is to call on local leaders to fight for to provide funding to the industry, and to specifically advocate for the RESTAURANTS Act, a bipartisan federal bill that would create a $120 billion fund to aid small and locally-owned restaurants, and cover the difference between revenues from 2019 and estimated revenues through the rest of the year.

"Without a relief bill within the next 45 days, the restaurant industry in New York is going to change for the worse and it's going to take years to recover," Fox said. "I'm talking to colleagues on a daily basis, and the result will be catastrophic unemployment."

Just this week, the French government announced that it will continue paying up to 84% of salaries for furloughed workers "until next summer" due to the pandemic. Similarly, Fox believes that politicians have a moral obligation to take care of the restaurant industry before it craters.

"If there were another spike, or the administration came back and showed us signs that it was just not viable in NYC, we as citizens have an obligation to fall in line," he said. "Then they in turn have a moral obligation to provide financial relief so we don't lose our livelihoods and all our employees don't starve."

With additional reporting by Danny Lewis.

Tagged

COVID-19

coronavirus

indoor dining

restaurants

outdoor dining

Ben Yakas

Ben Yakas is a former Gothamist reporter.

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Gothamist is funded by sponsors and member donations

Gothamist is funded by sponsors and member donations

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