NYC Restaurants Cooking Up a Comeback, but Simmering Problems Remain

Gage & Tollner, the famed downtown Brooklyn landmark that reopened in April after 17 years of being shuttered, is now serving dinner five nights a week and is looking to add brunch, lunch and special events in the coming months.

The restaurant at the NoMo SoHo hotel is completely booked on weekends and will soon start serving brunch daily. The hotel is doing well, too, with 83% occupancy in June.

Business is also picking up at Honeybrains, a fast-casual eatery with four outlets in Manhattan that features a menu influenced by neuroscience.

“I think people want to be out and about and live life and meet up with people,” said owner Marisa Seifan, who stayed open throughout the pandemic and even added two outlets. “I see it in our restaurants.”

With economic activity picking up in an increasingly vaccinated city and some tourists returning, the restaurant and hospitality industry — the sector most devastated by the pandemic recession — is finally showing signs of a sustained recovery. 

Data released Thursday by the New York State Labor Department indicates leisure and hospitality jobs increased 18,000 in June, helping fuel a 64,000 jump in the first six months of the year. The key: a 55,000 surge in new positions at restaurants.

Overall, the city added 36,000 jobs in June and the unemployment rate dipped to 10.6% from 10.9% in May. Over the first half of the year, the city recovered 87,000 jobs with gains every month since January. However, employment remains 490,000 jobs below the pre-pandemic record of 4.7 million, with only San Francisco and Los Angeles showing weaker rebounds among major U.S. cities.

Many hurdles — and unknowns — remain for the hospitality industry. Virtually every restaurateur complains that they can’t find enough staff to keep up with demand. Many are counting on a return of workers to their offices after Labor Day to boost business at lunch. 

Most frustrating, only a third of the New York State restaurants that applied for money from the $28.6 billion federal restaurant revitalization fund received any help and many are still uncertain how they can cover the enormous debts they have incurred in the pandemic.

“It’s a dire situation for too many, so the federal government must replenish the restaurant revitalization fund,” said Andrew Rigie, executive director of the New York Hospitality Alliance. “The optics of busy restaurants must not be confused with a restaurant industry recovery.”

Hope for Holiday Hires

Nevertheless, restaurants that survived haven’t been this optimistic since the pandemic shutdown the city’s economy in March 2020 — and it shows in their recent hiring and their plans for the coming months.

Gage & Tollner has built a staff of 40 people and wants to double that number. The famed Junior’s Cheesecake chain is back up to 650 workers, hopes to add another 175 as soon as possible and expects to hit its pre-pandemic peak of 850 by Christmas.

The NoMo has added 12 people to the restaurant staff in recent months and is looking for more. It has recalled 80% of the hotel staff without difficulty because unionized workers stayed on the sidelines during their layoff, keeping the faith that they’d return to their jobs, which pay well by industry standards.

For now, much of the demand is coming relatively locally. NoMo’s tables are being filled by people who live in Lower Manhattan. Its rooms are being occupied primarily by people who live in nearby states and are taking advantage of low room rates to visit the city.

Hotels in the city reached 65% occupancy in early July, up dramatically from a dismal 41% for the same week in 2020, according to data from STR, which compiles industry statistics. In the record year of 2019, occupancy that week hit 89% — a figure that includes some 20,000 hotel rooms later shuttered during the pandemic.

Just under two million hotel rooms were occupied in June, according to NYC & Company, the city’s tourism arm. That’s the most since the pandemic and nearly two-thirds of three million booked that month in 2019.

“The weekends are very strong,” said NYC & Co. CEO Fred Dixon. “This is primarily domestic tourists and Spanish-speaking visitors from Latin America.”

Seifan has taken note of the lines that form every day outside the Harry Potter store in the Flatiron District, at least of few of whom visit her nearby Honeybrains.

Among the Potter crowd Thursday was native New Yorker Tynisha Cruz who drove back to her hometown from Charlotte, N.C., with her daughter, son and mother-in-law.

“My daughter loves Harry Potter. This was a great chance to give her the experience of going to the store,” said Cruz, who works in a call center.

‘Not Making Any Money’ 

Gage & Tollner illustrates both the gains restaurants have made and why they aren’t sufficient.

The restaurant was supposed to officially reopen on March 15, 2020 — just as shutdown orders went into effect. It finally turned on the lights this past April, then began indoor dining and is currently fully booked weeks in advance. 

But that isn’t enough to survive.

“We can’t complain but we are not making any money,” said owner St. John Frizell. “Our business model relies on daytime service and special events so we have only half our product.”

Adding dinner a sixth night and special events depends on his ability to find more workers. Offering lunch requires both more staff and a return of office workers to downtown Brooklyn, he said.

The labor shortage is particularly painful for Junior’s, which has opened only one of its two Times Square locations because it can’t find enough staff, said co-owner Alan Rosen.

Restaurateurs give three major reasons for their hiring woes. They argue enhanced unemployment benefits that add $300 a week to the payout play a role, although economists have not seen an increase in the labor force in states that have ended the benefits. The owners believe that many of the people who held jobs in restaurants left the city and have  yet to return. And they concede that restaurant jobs are hard and many people decided to explore different careers.

Many workers say that the pandemic, when legions of restaurant employees risked their health to help keep New Yorkers fed, underscored systemic poor working conditions and low wages endured by a workforce with a historically high share of immigrants.

Higher pay hasn’t been a sufficient incentive yet. Gage & Tollner expected to offer entry level workers in its kitchen the $15 minimum wage. Instead, it is paying $17 an hour. Junior’s is offering $250 hiring and referral bonuses.

‘I Keep Trying’

Nevertheless, some restaurants and food businesses remain in serious trouble.

Alexandra Morris’ 20-year-old, high-end, catering and restaurant business Tastings Inc. saw revenues plunge from $5 million annually to $1 million last year. Despite two Paycheck Protection Plan (PPP)  loans, she is behind on payments to her most important vendors and hasn’t kept up with the mortgage payments on the building housing her offices, kitchen and the restaurant Payard.

She was counting on more than $1 million from the federal restaurant fund but didn’t get a dime and is now hoping that Sen. Chuck Schumer (D-New York) will deliver on his promise to get Congress to pump more money into the fund.

“If I don’t get the money, I will keep trying to keep going,” she said. “But this is the money that would pay my bills from before.”

Gage & Tollner received $400,000 from the fund and intends to use it to pay off the pre-opening expenses it ran  up while getting ready for the restaurant’s aborted launch.

Almost 28,000 New York restaurants applied for $9.6 billion in grants from the fund, according to data released by the Small Business Administration. As of June 30, some 9,775 businesses were given a total of $3.7 billion.

Despite the risks of a new wave of the coronavirus or a disappointing return in the fall, business owners are plugging ahead.

“Christmas will be back to normal,” Dixon predicted. “We have so many new hotels that are opening and some of the hotels that have been closed will reopen.

This article was originally posted on NYC Restaurants Cooking Up a Comeback, but Simmering Problems Remain

Leave a Reply

Your email address will not be published. Required fields are marked *