Indoor dining resumed in New York City yesterday for the first time since the start of the pandemic, one of several measures that New York has taken to try to help offset the damage COVID has wrought on small business owners. But a new state audit shows just how grim the future seems for NYC's restaurant industry despite those measures.
The new audit, released by state Comptroller Thomas DiNapoli, suggests that well over a hundred thousand jobs may be lost in the next six months, as well as a third or half of NYC's restaurants and bars.
"Estimates of the potential permanent closures of City restaurants and bars over the next six months to a year have generally ranged from one-third to one-half of all establishments that existed before the pandemic," the audit states. "At the high end, that could result in a permanent loss of nearly 12,000 of the City’s restaurants and bars, and nearly 159,000 industry jobs, although the opening of new restaurants would mitigate some of these losses. It is unclear what impact the recent government actions will have."
The report states that New York City's restaurant industry had 23,650 restaurants and bars in 2019, provided 317,800 jobs, paid $10.7 billion in total wages citywide and delivered nearly $27 billion in taxable sales. In April, restaurant employment in NYC dropped to 91,000 jobs as COVID safety restrictions were imposed. Taxable sales for the industry also fell by 71 percent during March, April and May compared to a year earlier.
Several measures have been taken in recent months to try to help the industry, including the outdoor dining program, which has now been made permanent and year-round; bringing back indoor dining initially at 25% capacity; allowing restaurants to add a temporary COVID-19 recovery charge of up to 10 percent of a patron’s bill; and extending liability protections for restaurant owners into 2021.
There has been some impact as a result of those measures, but also signs that further recovery will be harder to come by. At the start of September, restaurant employment was up to 174,000, just over half of the amount of pre-pandemic jobs.
"The industry is challenging under the best of circumstances and many eateries operate on tight margins. Now they face an unprecedented upheaval that may cause many establishments to close forever,” DiNapoli said. He praised the city and state for extending the outdoor dining program and resuming indoor dining: “It’s important that the state and city continue to be creative and bolster the industry."
The audit relies on data from Womply, a software services company which tracks credit card transactions from hundreds of millions of cardholders. They estimate that the average daily revenues at these establishments reached their steepest drop on March 22nd, when they fell by 81 percent compared to a year ago. There is no exact accounting of how many restaurants and bars have closed since the start of the pandemic, but the company estimates that as of September 23rd, about one-third of the city’s restaurants and more than one-half of its bars have closed compared to those operating pre-pandemic.
Those figures align with similar studies by the NYC Hospitality Alliance, who recently found that the number of businesses who couldn't pay rent had risen over the last three months, despite the addition of outdoor dining and other measures, and the New York State Restaurant Association, who did a survey which found that 90% of New York’s restaurant owners say that it will be very or somewhat unlikely that their establishment will be profitable in the next six months.
"New York City’s restaurant industry is vital to our economy and Comptroller DiNapoli’s shocking new report confirms with data the economic devastation that COVID-19 has inflicted on these vital small businesses," said Andrew Rigie, executive director of the NYC Hospitality Alliance. "While we are appreciative of the government actions taken so far to support our restaurant community and the hundreds of thousands of people it employs, many more polices must be enacted by all levels of government to help save these small businesses and our economy.”
A few other interesting takeaways from the audit: 43% of restaurants and bars citywide have received outdoor seating permits as of the first week of September, including half of Manhattan establishments, over 40% of places in Brooklyn and Queens, 30% in the Bronx and 20% in Staten Island. The individual neighborhood with the highest percentage of restaurants taking part in outdoor dining is Astoria/Long Island City (over 66% involved). The neighborhoods with the highest sheer number of places doing outdoor dining are Battery Park City/Greenwich Village/Soho (1,089) and Chelsea/Clinton/Midtown Business District (1,047).
And in terms of industry workers impacted by the pandemic, there is no question that immigrants and people of color have been hit hardest. More than 60% of residents working in the restaurant industry citywide were immigrants in 2018, compared to 45 percent among all occupations. Hispanics currently make up the largest share of restaurant workers (44 percent), and people of color make up over 75% of the restaurant industry in total.
It is also worth noting that the majority of city establishments (80 percent) have fewer than 20 employees.
As for next steps, DiNapoli recommends that safety guidance needs to be clearer for restaurants to be able to follow, and should shift in tandem with public health conditions.
He adds, "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, particularly in the City’s hardest hit areas. Outreach targeted to smaller businesses, including the restaurant industry, has improved loan receipt according to PPP data on the timing of loan distribution."
Restaurant industry advocates have continued to urge Congress to pass the RESTAURANTS Act, a bipartisan bill that would create a $120 billion fund to aid small and locally-owned restaurants, and cover the difference between revenues from 2019 and estimated revenues through the rest of the year. It was introduced in the House of Representatives in June, and was folded into a new version of the $2.2 trillion relief bill that House Speaker Nancy Pelosi currently pushing amid sputtering negotiations with Treasury Secretary Steve Mnuchin.
