New York City restaurant owners who were optimistic the holidays would mean a return to their money-making season had their hopes dashed at the last minute as the omicron variant spread quickly, impacting businesses and staff. The disruption compounded the industry's struggle of balancing thin margins with shifting efforts to reduce the spread of COVID-19.

A new report released this week by the New York State Comptroller’s office details the effect that struggle has had on New York City’s service economy. According to its findings, which looks at November 2019 to November 2021, restaurants in the five boroughs still employ 30% percent fewer people than they did right before the pandemic. Together with the retail and recreation sectors, Comptroller Tom DiNapoli said the job losses across the three sectors make up about 9% percent of total jobs lost across the U.S. since the beginning of the pandemic.

“New York City was hit first, hit hardest, and we are slower to recover than other parts of the country,” DiNapoli said. “And because we had such outsized losses, it is a significant part of the national drop in employment.”

While there have been some small gains since the beginning of the pandemic, the comptroller’s report found that overall, New York City’s restaurants, retail, and recreation industries have lost about 169,700 jobs — about 41% of total private sector jobs lost in the five boroughs since November 2019. Of the three, restaurants saw the largest loss, now employing 30% fewer people than before the pandemic, and while many restaurants are actively hiring, the report suggests the sluggish recovery could also be in part due to people leaving the industry for good due to burnout and the higher risk of contracting COVID-19.

This past holiday season they were hoping not to make money, but at least earn some money to pay off some debt.

Andrew Rigie, executive director of the New York City Hospitality Alliance

Julian Brizzi co-owns several bars and restaurants in Brooklyn, including Grand Army, Nicky’s Unisex, and Rucola. He had been hoping for a return to a more normal winter, especially with vaccines and booster shots widely available.

“Prior to the week before Christmas, it was night and day better. We had events booked. We had people coming out. My tiny bar in Williamsburg had its best Saturday night ever, followed by its absolute worst Saturday night ever when we went down 90% from our high water mark,” Brizzi said.

At what was supposed to be the busiest time of the year, Brizzi was forced to temporarily close all of his restaurants due to the rapid spread of the omicron variant. At one point, he said 10 of the 13 people on staff at Grand Army tested positive for the virus during a 48-hour period. Over in Queens, Dudley Stewart had a similar experience with his Jackson Heights restaurant, The Queensboro, which saw a packed holiday season dwindle away in just a few days.

“We had a lot of private parties lined up, we had several catering gigs lined up, and all of those got canceled. The minute the infection rate started going up, that's when all of that got canceled and our dine-in business also dropped tremendously,” said Stewart.

The restaurant industry has faced this particular precarity throughout the pandemic: an industry that operates on razor-thin margins in the best of times, New York City restaurants struggled amid efforts to reduce COVID-19 transmission during the first year of the pandemic, including indoor dining shutdowns and capacity restrictions. The executive director of the New York City Hospitality Alliance, Andrew Rigie, has been calling for more financial aid for months, and called this latest surge “another gut punch” to the industry.

“Historically the holiday season is when so many restaurants and bars actually make their profit for the year. This past holiday season they were hoping not to make money, but at least earn some money to pay off some debt. And now they're just collecting even more debt,” Rigie said.

Rigie has suggested several measures, including Congress replenishing the Restaurant Revitalization Fund and the city rolling back its recent ban on the use of propane heaters for outdoor dining. Another one of his suggestions, allowing bars and restaurants to sell alcoholic drinks to-go, was given a boost on Wednesday by Governor Kathy Hochul, who proposed making that permanent during her State of the State address.

Even with New Year’s Day fading already into the mists, many restaurants are still waiting to see what the fallout from the omicron surge will be, especially for Chinese restaurants that rely on annual Lunar New Year celebrations for their annual profits. Dian Song Yu, the executive director of the Flushing Business Improvement District in Queens, said the last few weeks have hit restaurants in the neighborhood’s iconic food courts hard, and large banquet halls are bracing for the financial impact if the current surge does not peak in time for the holiday on February 1st.

“Many of the food establishments in downtown Flushing stock up on expensive food ingredients to keep themselves ready for the Lunar New Year celebration,” said Yu. “Now if all those parties and celebrations are canceled, then the restaurants will start to fear the hurt, because this is the third year in a row that the restaurants couldn't generate a significant portion of their annual revenue during Lunar New Year.”