NYC could lose nearly 12,000 restaurants to the pandemic
This level of closures could lead to almost 159,000 job losses, state officials report.
On the list of amenities that make New York City special, the large and diverse collection of restaurants ranks high. Not only do they provide an unmatched array of ethnic cuisines to both residents and tourists, but they also enrich the city’s coffers. The restaurant industry provided NYC with approximately 15% of its total taxable sales across the city in 2019.
More specifically, Gotham’s restaurant industry had 23,650 establishments in 2019, provided 317,800 jobs, paid $10.7 billion in total wages citywide, and made nearly $27 billion in taxable sales.
But New York City appears poised to lose a good portion of that largeness. Estimates suggest that one-third to one-half of bars and restaurants that were open pre-pandemic will close in six months to a year, according to a report by New York State Comptroller Thomas P. DiNapoli.
At best, that seismic shift could mean a permanent loss of nearly 8,000 establishments and 106,000 jobs and, at worst, 12,000 of the city’s restaurants and bars and nearly 159,000 industry jobs.
Unfortunately, for most businesses, their business interruption policies do not cover pandemic-related losses. While some restaurants have already pursued legal action to recover losses, judges have mostly ruled in favor of the insurer.
Overwhelming revenue losses, employment cuts
In February, over 315,000 people were working in New York’s restaurant industry. By March, that number of employees had cratered to 91,000 as New York City became the nation’s COVID-19 epicenter, and severe restrictions were imposed on businesses. As of August, restaurant employment fell by 81% year-over-year.
Bars across the city experienced even steeper losses, with revenues falling by 94% in late March and again by 94% in late April. Taxable sales for the industry, according to the New York State Department of Taxation and Finance, fell by 71% during March, April, and May compared to 2019.
Restaurants that remained open during stay-at-home orders experienced massive revenue declines. Womply, a software services company that tracks credit card transactions, estimates that average daily revenues at these eateries began to decline on March 10 and reached their steepest drop on March 22 when they fell by 81% year-over-year. Revenues at the city’s bars had even bigger declines, falling by 94% on March 22 and again on April 26.
Nearly 9 in 10 NYC restaurants can’t pay rent
Reduced revenues are putting pressure on restaurants already struggling to pay their bills. The NYC Hospitality Alliance reported that 87% of the city’s restaurants wouldn’t be able to pay some, or all, of their August rents.
Meanwhile, New York State’s moratorium on commercial foreclosures and evictions is due to end October 20. Tenants and borrowers will face accumulated obligations, likely worsening closures.
However, DiNapoli made some suggestions in the report for turning the industry around. “New York City should continue to leverage innovative programs to support new or developing operating models where possible, including outdoor dining, commercial lease assistance, and support for takeout and delivery operations.
In addition, the availability of loan and grant funds, both directly from the city and through the facilitation of state and federal grants, should support bridging the economic-activity gap faced by establishments.”
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