- According to New York Hospitality Alliance's August Rent Report, 87% of respondents could not pay their full rent for the month. Respondents include 457 restaurants, bars, nightclubs and event venues, and responses were collected from Aug. 25 to Sept. 11. Of those businesses, more than 34% said they expected to pay no rent at all for the month, while 48% planned to pay partial rent.
- For 60% of those businesses, landlords have not waived any rent in relation to COVID-19, while 40% have. For landlords that did waive rent, 43% waived rent 50%, while 28.5% have waived more than 50%. Further, about 39% of landlords have deferred rent, while 61% have not.
- In recent weeks, the city has reopened dining rooms at 25% capacity and has passed a 10% COVID-19 surcharge ordinance to help restaurants, but these measures may not be enough to cover the cost of rent if landlords aren't willing to negotiate. Total occupancy costs typically make up about 8% to 10% of a restaurant's gross sales, but that could be higher in New York, where rent, food and labor costs tend to be more than cities like Los Angeles and San Francisco.
The report also shows that a majority — over 57% of businesses — have not renegotiated their lease in relation to COVID-19, while about 15% have and 28% are in good faith negotiations.
There has only been a 4% increase in renegotiated leases between June and August, according to the report, even though the percentage of businesses that can't pay their full rent for the month is up from 80% in June and 83% in July.
The picture is already dire. New York City, which had the most restaurants, coffee shops and specialty-food stores per capita prior to the pandemic, has already experienced close to 1,000 restaurant closures, according to Yelp data reported by the New York Times. With months of unpaid rent piling up, that number will no doubt climb higher without a major lifeline. Indeed, the New York State Restaurant Association has warned that as many as two-thirds of the entire state's restaurants could permanent close by the end of the year without additional government aid.
To be sure, rent isn't the only factor pressuring restaurants right now. Labor costs typically run about 20% to 30% of gross revenue, and revenues will be challenged so long as the tourism industry is down, office spaces sit empty and dine-in capacity is only 25%.
Without its typical foot traffic, even major retail chains are fleeing the city. Michael Weinstein, CEO of Ark Restaurants, told the New York Times he won't open another restaurant in the city, as he can do the same volume in Florida with lower expenses and outdoor dining without seasonal restrictions.