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Photo of the still open Gray's Papaya by Wallyg
Crain’s takes notes of a sharp spike in restaurant closings, with real estate brokers reporting many more closures than usual and a surge in restaurant auctions; the city's leading restaurant auctioneer tells Crain’s he’s been handling “20 liquidations a month for the past year, twice as many as the year before.”
Especially telling is that many of the auctions involve seasoned operators rather than neophytes who miscalculated their ability, the strength of the market or both. An example is Frank's, a chophouse in the meatpacking district that has been owned by three generations of the Molinari family. It closed two weeks ago, along with its adjacent butcher shop.
Co-owner and executive chef Christopher Molinari blames the closure on – no surprise – the exorbitant rent at Frank's location in the Chelsea Market. According to the Sun, rents for retail space in Manhattan have increased by double-digit percentages for the last several years, causing many new restaurateurs in the highly competitive business to find additional revenue by adding bars, merchandise and, in some cases, utilizing underused basement space, which one broker insists we “now call a concourse.” We’re also seeing more wine and tapas joints because the overhead is low and “small plates can quickly add up to large bills.”
Crain’s also hears from a theater district restaurateur who says recession-wary diners are getting more tightfisted, splitting entrees, getting the prix fixe or just coming in for a glass of wine. And with Wall Street in a tailspin, it looks like the restaurant industry can count on continued suffering along with everyone else, especially in Manhattan where, as the COO of real estate firm Cushman & Wakefield puts it, “the retail market is an anomaly.”
Has the anomaly swallowed up your favorite restaurant yet?
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In the case of Frank's -- it should also be noted that the food, once they moved to the inside-the-Market digs, totally sucked ass. You could tell they were in trouble when they started selling slices of pizza and deli sandwiches during lunch.
Same can be said about Agata & Valentina's cafe. Bad food, bad service, bad attitude.
The landlords aren't totally to blame on this, and I hate defending them. But some of these restaurants just sucked, and should be thankful they made it as long as they did.
They got my Jones Diner on Great Jones and Lafayette years ago. That was the beginning of it -- it was just about when they started putting pressure on the Jones Diner that all the other diners began disappearing. Jones held out for a while, while the diners on Union Square vanished, and my old Canal Diner too. This has all been a long time coming, and is simply accelerating now.
A weakening economy may lead to a weakening commercial real estate market and hence to reduced rent pressure.
Is it me or is that the most retarded sounding title yet?
I don't think hard times on Wall Street will hurt restaurants. It seems like those assholes get paid obscene amounts of money even when they lose billions of dollars.
@coolmidwestguy, I completely agree. That headline is truly unforgivable.
Zen palate in Union Square had to drop the lease on the space they had because their rent went up an enormous amount. That was one of my favorite spots, I had been eating there for ages.
Manhattan is dead.
They didn't go out of business, but Gray's Papaya on 72nd Street raised the price on their "Recession Special" from $2.75 to $3.50. That's cost me at least $16.50 since last year.
how to kill a neighborhood- start by making it almost impossible for locally owned and operated businesses to survive more than 1 lease cycle.
And don't forget to offer only the shortest-term leases possible, so that by the time they establish themselves and have a loyal following, their lease is up for renewal and the increase is more than they can afford if they want to provide the same quality of goods and services as before.
Heinous.
Whoa... false alarm. I thought Gray's Papaya was closed from the title and the picture. 1 dollar concession specials... jeez.. old school. I hope they don't kill off all the diners in midtown. They're such a part of NYC.
I discovered that Zen Palate in Union Square was gone this past Saturday night. Figured the rent was what killed them. Although they haven't done themselves any favors by dumbing down the menu over the past few years. Lack of a liquor license sure didn't help their bottom line either.
I discovered that Zen Palate in Union Square was gone this past Saturday night. Figured the rent was what killed them. Although they haven't done themselves any favors by dumbing down the menu over the past few years. Lack of a liquor license sure didn't help their bottom line either.
Greedy landlords are killing this city. Only advertising execs, athletes, old money families and their trust fund babies, movie stars, oil sheiks, lawyers and finance assholes will be able to afford to live here, and every business will be a franchise or a celebrity owned lounge serving "small plates."
Yay capitalism!
The Free Market will self adjust itself out. no worries.
just a minor blip, the market is self regulating.
no outside intervention is needed, just ride it out and it would all be OK.
Jerry's diner on Prince st. gone now too with a fricken michael kors boutique taking its place...jerry's was always decent for brunch or a burger...how long fanelli got I wonder...?
@Jazlow: It was rent for a fact that killed Zen Palate, I spoke to the owners about it. It wasn't just a tiny increase, they had it basically double to where it became unaffordable. The upshot is they opened Zen Burger in Midtown which is pretty tasty actually, and really inexpensive. The lines at lunch time are pretty horrendous however.
Jerry's was a great place. It was about the only place left in SoHo you could get a decent breakfast without dipping into your 401K.
What 401k? ha.
Amazing that a place like Zen Palate that serves $13 plates of vegetables at a 750% markup could go out of business. That must have been some rent hike.
My favorite Manhattan diner at the corner of 97th and Columbus went out of business last year and now they're building a new complex with a Whole Foods there. On Columbus between 95th and 96th there's a brand new Subway -- oh, the joy. And I hear from a local grocery store owner that a new Dunkin Donuts is also being built on that block. Meanwhile, there's a Subway and at least two Dunkin Donuts already on Broadway two blocks away.
Just like I said, luxury boutique businesses, or franchises. I'm really sad about what's happening on the UWS. I live in that nabe too. We really don't need more DD's and Subways. I had no idea about the Wholefoods either.
The Whole Foods I believe is going to be part of the big construction site at 97th on the west side of Columbus. I have no idea what's being built at the OTHER big construction site directly across the street -- or one block over at the OTHER big construction site on Amsterdam. But I wouldn't be shocked to see any of these projects crap out before completion due to the credit market collapse and possible pending recession.
I'm not opposed to Whole Foods per se, and yeah, I'll probably wind up going there sometimes. But it's going to hurt the local grocery stores and cause price inflation throughout the neighborhood. And just about anything at Whole Foods can be had at locally owned and locally managed Fairway for less money.
Agreed, Wholefoods is a rip off.
A lot of these big box stores are gonna find out its not so easy to do business here. What might end up happening is the nyc divisions shut down, and the little guys take hold again. Its sad that these chain stores are moving in, but I don't think nyc will be all chains. I think the city should maybe fiddle with the zoning so neighborhoods don't lose their uniqueness.... at least in the short term.
If you talk about the UWS, what could happen is that the chain stores will push rents down a bit (or slow their growth) since the neighborhood loses cachet. Then neightborhood stores might be able to get back into that area. Or West Harlem will turn into the 'new' UWS complete with hipster yups. Neighborhoods change people.