The number has continued to creep up over the past few months.

By Mike Pomranz
September 22, 2020
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Even if you’ve never been to New York, you probably know at least a few things about the city: Times Square is for tourists. The pizza is incredible. And the rents are too damn high. That final factoid makes running a restaurant difficult even when times are good, but during a pandemic, making sure the landlord gets paid is proving to be nearly impossible. A new report from the NYC Hospitality Alliance suggests that nearly nine out of ten restaurants in the city failed to pay their rent in full last month.

The nonprofit trade organization surveyed 457 restaurants, bars, nightclubs, and event venues in the city from August 25 to September 11, 2020. A striking 87 percent of respondents said they were unable to pay their August rent in full in large part because 60 percent of landlords were unwilling to waive or reduce rent. About 34 percent of restaurants said they were unable to pay any rent at all last month. Additionally, the number of establishments saying they couldn’t pay full rent has continued to creep higher: In June, the number was 80 percent, followed by 83 percent in July.

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“New York City restaurants have been financially devastated, and it's unfortunate but not unsurprising that month after month, more restaurants that we survey have been unable to pay their full rent,” NYC Hospitality Alliance Executive Director Andrew Rigie told Gothamist. “There's no way small business owners are going to be able to pay back multiple months of missed rent, nor will they be able to pay 100 percent of pre-pandemic rents anytime soon… In perspective, it was difficult enough for New York City restaurants to survive pre-pandemic when they had 100 percent occupancy.”

Restaurants will hopefully receive some additional revenue starting next Wednesday. On September 30, indoor dining will finally be able to resume at 25 percent capacity, with 50 percent capacity slated to kick in by November 1 if everything goes well. Still, the restauranteurs we spoke with earlier in the month didn’t expect this latest step to fix anything. “There are three key cost structures,” Roni Mazumdar, who owns three restaurants in the city, told us. “Payroll, rent, and food costs. Payroll is somewhat variable… the rent structure, that's a fixed cost… It doesn't matter what capacity you're operating at.” That cost is especially fixed when, as the NYC Hospitality Alliance found, only about 15 percent of respondents said they were able to formally renegotiate their lease in relation to COVID-19.

However, restaurants that occupy spaces aren’t the only ones dealing with tough issues. Landlords are business people—and literal people—too, meaning they also have financial obligations and strains. And just as independent restaurants may be struggling to weather the pandemic more than large chains, certain types of property owners may also be under more pressure than larger real estate groups. As Caroline Hatchett explained, writing for The Counter, “Landlords who took on a lot of debt to acquire their properties often can’t amend leases, even in the face of prolonged vacancies, because the lenders that hold their mortgages won’t agree.”

As a result, the solution may go beyond simply helping out struggling restaurants, but providing relief to some landlords in some cases as well. “Landlords are not going to be patient much longer,” David Schneider, owner of Oaxaca Taqueria, told Gothamist. “There needs to be relief for landlords too so they're not relying on us.”