Is New York Really Having a Restaurant-Closing Crisis?

The announcement of Union Square Café losing its lease and a few other restaurant closings led people to panic about rising rents in New York. We spoke with seasoned restaurateurs about their take on this so-called crisis
Does Union Square Closing signal the end of a NYC restaurant era?

Very few restaurants can actually be called New York institutions, but Danny Meyer’s first establishment, Union Square Café, could certainly claim that prestigious title after 30 years of New York culinary fame. That probably explains the collective gasp across the five boroughs when it was announced that Union Square Café will be losing its lease at the end of 2015 and will most likely have to move. In the firestorm that followed, a bevy of opinions were published on blogs and in newspapers, including Steve Cuozzo’s piece in the New York Post declaring the restaurant crisis “baloney,” and Danny Meyer’s own op-ed published in The New York Times today, which lamented the loss of many landmark restaurants due to booming real estate, including Union Square Café, Bobby Flay’s Mesa Grill, and Wylie Dufresne’s wd~50.

"It's not a done deal that we're closing Union Square," Danny Meyer told The Daily Meal. "We're still talking with the landlord. It would be our druthers if the landlord would say 'I'll give you 15 or 20 years with same escalations we've had.' We would say 'Awesome!' and we'd close the place and make the needed renovations and then reopen. That would absolutely by my top choice."

The Daily Meal also spoke with three seasoned New York restaurant alums: Alan Rosen, the owner of Junior’s Restaurant in Brooklyn; Marc Murphy, owner of Benchmarc Restaurants, including Land Marc and Ditch Plains; and John Meadow, founder of LDV Hospitality Group, who have mostly agreed that exorbitant rising rent in New York is nothing new, but it is getting increasingly difficult for restaurants to keep up.

“This has been the story of New York forever,” said John Meadow. “The markets go up and down, and the reality is, the market is what someone is willing to pay. But right now, restaurants are getting priced out. They can’t compete with other industries.”

Meadow predicts that we will soon start seeing second-floor restaurants, and restaurants in smaller spaces in more obscure neighborhoods, as well as the continued boom of food trucks (which don’t have to pay rent, of course). He said that although LDV has opened 10 restaurants in New York, the company is looking elsewhere in Atlanta and Miami because “the price the New York market will bear is not suitable for a responsible restaurant operator.”

Restaurants take more of a financial hit when it comes to salaries, food supplies, and health and safety costs, than a big-box store like Duane Reade or a bank. So for most chefs, opening a restaurant in New York usually isn’t cost-effective, said Meadow. But it really isn’t the landlords’ fault, argues chef Marc Murphy, who owns a half a dozen restaurants in New York.

“You can’t blame the landlords for wanting to charge market price,” said Murphy. “Yes, a restaurant has been there for 30 years, but it’s a lot more complicated than pointing fingers. If I want to go into a neighborhood and stay forever, I should have bought the building.”

In Danny Meyer’s op-ed in July 3rd's edition of The New York Times, he argues that yes, he had hoped to stay in Union Square for a long time (if not, forever) as one of the culinary pioneers of New York’s big comeback in the 1980s.

“In the past year, all kinds of pioneering restaurants that helped set the table for their respective neighborhoods have each lost out to untenable rent escalations,” wrote Meyer. “My hunch is that they won’t be replaced by restaurants that will become similar pillars of their neighborhood.”

Alan Rosen argues that good and great restaurants will always be a part of the fabric of New York. Rosen is no stranger to this issue, because he has been considering selling the original Junior’s building for awhile.

“When well-established restaurants close we all have to take the hit, but if there’s someone else willing to pay that rent that’s not a restaurant, then so be it. Everything comes up and goes down, you’ll see.”

Whereas Meyer suggests a few solutions like London’s rent assessment panel which puts a cap on out-of-control rents, Rosen believes that the cycle of the free market will come back around, and LDV’s John Meadow agrees. But many chefs and restaurateurs feel that something should be done. 

“The government has to decide what this city is going to look like,” said Murphy. “There are still restaurants opening, but it’s not without huge risk. It’s expensive to eat out because restaurants have to pay our health insurance. Believe me, even if Bobby Flay or Danny Meyer isn’t successful within six months, it will take a lot to keep them open.”

For the latest happenings in the food and drink world, visit our Food News page.

Joanna Fantozzi is an Associate Editor with The Daily Meal. Follow her on Twitter@JoannaFantozzi

 

RATE IT
Be the first to rate this!

Be a Part of the Conversation

Join the Daily Meal's Community and Share your Thoughts

The Daily Meal Editors and Community Say...