Dive Brief:
- Ninety-two percent of over 400 restaurant operators surveyed by the NYC Hospitality Alliance said they couldn't afford to pay December rent, according to a press release. Only 8.4% paid all of rent, 46.4% paid some rent and 45.2% paid no rent, according to the survey.
- The number of restaurants unable to afford rent has steadily increased over the past six months, growing from 80% of restaurants unable to pay for rent in June to 88% in October.
- New York City restaurants were allowed to resume indoor dining at 25% capacity on Friday after it was banned in October following a rise in COVID-19 cases. Outdoor dining, takeout and delivery have been allowed since October.
Dive Insight:
Thousands of eating and drinking businesses have permanently closed and more than 140,000 industry jobs were lost last year in New York City, according to the NYC Hospitality Alliance, and this recent data suggest that these numbers may continue to climb. While 40% of these businesses said their landlords reduced rent and 36% said their landlords allowed tenants to defer rent, only 14% were able to renegotiate leases with their landlords and 24% are in "good faith" negotiations.
"While the reopening of highly regulated indoor dining is welcome news, we need to safely increase occupancy to 50% as soon as possible, and we urgently need robust and comprehensive financial relief from the federal government," Andrew Rigie, executive director of the NYC Hospitality Alliance, said in the press release.
The city's Open Streets program, which closed streets to provide restaurants with more room for outdoor dining, helped save almost 100,000 jobs with participation from 10,000 restaurants, Mayor Bill de Blasio said earlier this year. The program became permanent and year-round last fall, but the survey shows that outdoor dining and off-premise channels haven't been enough to recoup lost sales, especially during winter.
The cold weather months haven't been easy — the city endured 17.2 inches of snow in early February, marking it one of the worst storms since 2016. Harsh winter weather could complicate restaurant industry recovery efforts, especially if federal funding remains elusive. Gov. Andrew Cuomo allocated $50 million of the state's 2021-2022 budget proposal to help restaurants rehire employees, but these tax credits won't help restaurants pay for rent, an expense that puts operators at greater risk of closure.
According to a September report from the New York City Comptroller, estimates of total closures of bars and restaurants varied for the subsequent six months to a year, with one-third (8,000) to half (12,000) of businesses at risk of closure.
