New York City’s Iconic Restaurant Industry Struggles to Survive the Pandemic

Eater New York writer Tanay Warekar says restaurants in Manhattan’s Chintatown are “not just contending with the virus, it’s also prejudice and racism.” (Courthouse News photo/Josh Russell)

MANHATTAN (CN) — As New York City prepares to gradually reopen its economy after a devastating monthslong wave of Covid-19 that killed at least 21,000 New Yorkers, the city’s restaurants and cooped-up residents alike must wait until July at the earliest to enjoy a return to dining-in at the city’s iconic cornucopia of diverse eateries.

New York Governor Andrew Cuomo announced Friday that the New York City region, the state’s final holdout and epicenter of the coronavirus, will enter Phase 1 of reopening on Monday, June 8th.

With the phased reopenings occurring in two week periods, July 8th would be the earliest for the Phase 3 reopenings of the city’s bars and restaurants, which have been closed from on-premises dining since the state mandated a shutdown on March 16th due to the outbreak.

“It’s hard to imagine when things will go back to normal or if they will go back to normal,” Eater New York writer Tanay Warerkar told Courthouse News in an interview.

“This is definitely a life-altering situation for the restaurant industry in New York and I don’t think things will probably ever go back to the way they were, even though things may normalize to some extent,” he said. “It’s definitely devastating.”

Citing an absence of any guidelines from city and state leadership in terms of what to expect the dining situation to look like when New York City restaurants begin to reopen, Warerkar says it remains unclear what restrictions will be in place when Phase 3 happens or how proposals like outdoor seating will be regulated and implemented.

“There’s been a lot of hope recently, especially with so many restaurants that had initially closed once the pandemic hit that have now reopened to do delivery and pickup,” he said on Friday.

“And restaurants seeing other restaurants reopen have been encouraged to reopen themselves and that’s definitely a positive sign, but then on the flipside, we see so many neighborhood spots, places that have been open for decades, closing permanently,” Warerkar added.

Earlier this week during a virtual hearing, Mayor Bill De Blasio signed into a law package of relief bills introduced by the city council instating a 20% cap on fees by third-party delivery services like GrubHub and UberEats, temporarily eliminating sidewalk cafe fees so that businesses can maintain social distancing and setting asset liability protections for small business owners.

The relief bills that De Blasio signed into law will remain in effect for 90 days following the conclusion of the state of emergency.

Ivan Spence, owner of Brooklyn Public House in Fort Greene, Brooklyn, said he has been “treading water” as his neighborhood Irish pub attempts to transition into a profitable delivery restaurant during the pandemic and shutdown.

“I’m not a Chinese restaurant, I’m not a Thai restaurant where a big portion of their business is delivery and takeout,” the pub owner said. “Pizza places, they’re already scaled up for all this, but your regular bars and restaurants are really having a nightmare.”

Brooklyn Public House, a neighborhood pub in Fort Greene Brooklyn. Owner Ivan Spence says “The only way I think we’ll be able to make profit again is when the virus is gone…and hopefully I can tread water that long, hopefully I’m still floating.” (Courthouse News photo/Josh Russell)

While city leaders recently passed legislation to cap total fees charged by third-party delivery apps, Spence says it’s more helpful to independent restaurants to skip the apps altogether and order directly from the proprietor if there’s an option.

“If the public is educated and understands what it means for me to have 100% of the ticket versus 65 or 75% of the ticket, it’s difference between life or death for me,” Spence said. “Everybody in my boat, every restaurant in the city, especially ones that come from a bar background, we’re treading water.”

“It’s a competition to see who can tread water the longest,” he said, adding that he’s secured the loans from CARES ACT, the Paycheck Protection Program, which he hopes will sustain the bar through the next 12-18 months.

“Even with social distancing, if people are allowed to actually come in on-premise into the store and sit and have a beer and have food, within the parameters of social distancing, I don’t think that’s going to bring us to a profitable scenario either,” Spence said. “The only way I think we’ll be able to make profit again is when the virus is gone and hopefully I can tread water that long, hopefully I’m still floating.”

“If anybody wants a reality check on what Covid is doing to America, ask them to take a drive through Manhattan and it’ll stir the life out of you,” said Spence, who also owns two bars in now-deserted parts of midtown Manhattan. “If you go into Manhattan, it’s like Armageddon, it’s post-apocalyptic. There’s nobody on the streets.”

Spence contrasts that depiction with the scene of relative normalcy around his Brooklyn Public House Bar just up the street from Fort Greene Park: “If everybody in Fort Greene or Clinton Hill or those residential neighborhoods in Brooklyn, if all the people on the street took off their face masks, it would almost be normal.”

Spence said he’s fortunate to have an understanding landlord from a bar background who has cut his rent in half.

“There’s no way we’re making a profit, but we’re able to pay some bills,” he said.

Brooklyn Public House bar owner Ivan Spence told Courthouse News “with the help of the PPP loans, we’re going to grit it out” on delivery and takeout orders until New York City bars and restaurants are allowed to reopen. (Courthouse News Service photo/Josh Russell)

New York-based food and travel writer Jackie Gebel said she expects diners’ tastes to pivot toward the familiar as New York City’s restaurants begin reopen from the shutdown.

“People aren’t going out to try new places now, they’re going to what they know and love and trust,” she said. “As an optimist, I would love to see restaurants be saved and be able to work through this and survive, but as a realist, the stories I’ve heard, I think restaurants are going to be, like, totally gone,” she said.

“It’s really going to be scary because any restaurant that has been closed for these three months is not going to be able to able to stay open,” Gebel added, painting a dark forecast for the already hobbled industry.

Gebel, who also works as a social media consultant for new restaurants in the city, said the life cycle of New York’s dining industry has always had accelerated changeover because “rents are high and hype dies down quickly.”

“Unfortunately I think there’s going to be very few restaurants that survive this unless there’s some type of massive bailout,” she said.

Recognized as a 2017 “Foodie of the Year” by Zagat, Gebel’s No Leftovers page has more 371,000 followers.

According to polling of her followers earlier this week, Gebel said the food items that quarantined diners have been missing the most are foods they can’t easily make at home: Japanese sushi, soup dumplings found at Chinese dim sum restaurants and donuts.

While many New York City restaurants shuttered completely due to the novel coronavirus, others were able to stay open for takeout and delivery orders. (Courthouse News Service photo/Josh Russell)

“They definitely want the restaurant experience back, but from what I understand is it’s the kind of thing where it’s kind of unfeasible,” she said. “Seems to be that the majority of people are cooking just because it’s just easier that way.”

Gebel said so-called “ghost kitchens,” off-site commercial kitchens that only do delivery, “are going to crush it now.”

Since stepping down from Uber’s board of directors last December, ousted CEO Travis Kalanick invested $300 million in one such ghost kitchen startup, CloudKitchens, which bets on fully furnished rental commercial kitchens becoming a backbone of the rapidly growing food delivery market, through apps like UberEasts, Doordash and Caviar.

The startup has since raised $400 million from Saudi Arabia’s sovereign-wealth fund.

While in-person dining will not be part of the first phase of the city’s reopening, Speaker of the New York City Council Corey Johnson has repeatedly announced the city was looking into a plan to safely reopen the city’s restaurants with an outdoors “European cafe sensibility” by closing public sidewalks, streets and plazas for the creation of al fresco dining spaces.

In a joint op-ed published in Crain’s New York earlier this month, Johnson and NYC Hospitality Alliance executive director Andrew Rigie said that both groups had begun reaching out to restaurant owners, business improvement districts and neighborhood community boards to “identify criteria and potential areas” where the city could assess possible outdoor dining options.

“Many of the things we love most about the city’s restaurant scene—it’s coziness and the camaraderie among strangers in close quarters—will make any safe reopening in the foreseeable future a challenge,” they wrote in the article, which pointed to the existing example of blocks of outdoor dining along Stone Street in Manhattan’s Financial District.

On Thursday, Johnson announced legislation requiring the city open up spaces for outdoor dining amid the Covid-19 pandemic. The proposal calls on the city to identify open spaces – including sidewalks, streets and plazas – where restaurants and bars can safely serve customers outside.

“As New Yorkers we have so much to brag about, but our city’s amazing and diverse restaurants are really at the top of everyone’s list, which is why we must do everything we can to help this iconic, diverse and now struggling industry get through this incredibly painful and difficult time,” Johnson said at a digital press conference Thursday.

Julie Horowitz, co-owner of the East Village restaurant Ducks Eatery said that while she appreciates the city considering opening streets to dining, Ducks had already spent tens of thousands on a few square feet of sidewalk cafe space over the years, “which always seemed exorbitant, but especially a waste now,” she said, noting that the proposals bring more questions and assumed added costs, with the obvious variable of weather.

Many of New York City’s Chinese restaurants already had existing infrastructure for high-volume delivery orders prior to the Covid-19 pandemic and emergency shutdown orders. (Courthouse News Service photo/Josh Russell)

“We are also on 12th Street which I believe is considered an artery to the nearby hospitals, and our sidewalk is very narrow – so unclear how that would all work,” she said. “Would we have to add to our insurance policy? A special DOH permit?”

Horowitz said Ducks closed on March 18th and they have not yet found a way to work out a reopening.

“Our menu is very prep heavy and all of our staff would need to take public transport to get to us, which still feels riskier than necessary,” she said. “We considered opening as a general store at a certain point, but nothing really seemed viable.”

Horowitz’s brother Will, the restaurant’s executive chef and co-owner, tested positive for the virus about three weeks after the city shut down in mid-March.

Since several of staff on Ducks’ small kitchen team were also believed to have had the virus around the same time, Horowitz said that reopening in the weeks that followed was “pretty unrealistic.”

She says the restaurant has received a small PPP loan but have decided not to touch it until they reconfigure how they’re able to spend it and what the forgiveness component looks like.

“While the proportions may make sense for small businesses outside of NYC, the 75/25 required spending essentially leaves us with only one month’s rent after payroll, which is unrealistic,” she said.

U.S. House lawmakers passed legislation Thursday that grants small businesses extra flexibility under the Paycheck Protection Program. The legislation now goes to the Senate, where it is unclear if it will pass. Under the House bill, small business borrowers would be required to spend only 60% of their PPP loans on payroll, down from 75%, as well as allow businesses to spend the money within six months rather than two.

Gebel said she understands the appeal of the City Council’s outdoor seating proposal but is unconvinced that it could be executed with New York’s skyrocketing rents and dearth of restaurant space.

“If New York turned into more of a walking-streets city only, that would be kind of a dream the way Lincoln Avenue is in Miami, those types of walking-streets that are just all tables on the sidewalks,” she said. “But that’s not how New York City was built and it would take a lot of effort from the officials to make it happen.”

“New York is such an interesting restaurant scene because tables are close together, and not many restaurants have outdoor dining or patios or extra space,” Gebel said. “There’s not parking lots where you can expand into. It’s cramped quarters that they’re squeezing as many people as physically possible into them and that’s also part of the vibe and experience.

The city’s five boroughs remain the last region in the state to begin a phased reopening, still falling short on indicators for availability of hospital beds and contact tracing — the measure that employs professional investigators to help monitor and control the spread of the virus.

De Blasio has repeatedly said he expects the city to enter Phase 1 in the first or second week of June but maintains that the region’s numbers alone will direct the exact start date.

Construction, agriculture, retail with curbside pickup, manufacturing, wholesale and limited retail are the first industries permitted to reopen, with safety restrictions, during Phase 1 of the state’s reopening process.

The governor announced on Friday that five other regions in the state—Central New York, Finger Lakes, Mohawk Valley, North Country and Southern Tier— could now begin Phase 2 of reopening, which allows office-based workers, real estate services, in-store retail shopping and some barbershop services to resume.

Cuomo issued an order Thursday that would allow shops and stores — including restaurants — the right to deny customers entry if they don’t wear masks or face coverings.

As of Friday, the virus has sickened 199,038 and killed an estimated 21,477 in New York City, according to city numbers.

Statewide, 368,284 have tested positive for Covid-19 and 23,780 have died. The state does not count “probable” Covid-19 deaths, while the city does, so the state’s fatality numbers are likely low.

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