New York City is allowing indoor dining to reopen at 25% capacity, but experts say it isn’t enough to save restaurants

New York Restaurants reopening outdoor dining pandemic 2
Experts say that indoor dining at 25% won't be enough to ensure New York City's restaurants survive the pandemic.
  • New York is allowing indoor dining to reopen at 25% capacity, but experts say it won't be enough to save restaurants.
  • Most restaurants operate on razor-thin margins, and barely eke out a profit even at 100% capacity, Andrew Rigie, the executive director of the New York Hospitality Alliance, told Business Insider.
  • Experts and analysts say that sit-down restaurants won't be able to generate pre-pandemic levels of sales until a vaccine arrives.
  • Meanwhile, many independent restaurant owners say they need financial aid from the government in order to survive.
  • "It literally makes no sense to put my life at risk and my staff members at risk for 12 people to come and dine," said Amanda Cohen, the owner of Dirt Candy restaurant in New York City, told Business Insider.
  • Visit Business Insider's homepage for more stories.

New York City restaurants are finally going to be allowed to reopen dining rooms. But experts and insiders say that the new measure is not enough to save the industry from a looming apocalypse. 

On Wednesday, New York Governor Andrew Cuomo announced the state would allow indoor dining to resume at 25% capacity in New York City starting September 30. Restaurants will have to comply with rules such as checking patron temperatures, banning bar service and service after midnight, requiring one person in every party to provide contact info, and enhancing air ventilation and filtration. 

Cuomo's announcement came after 300 restaurateurs filed a class-action lawsuit against Governor Cuomo and Mayor De Blasio, seeking $2 billion in damages and demanding that restaurants be allowed to reopen dining rooms.

However, experts say that indoor dining at 25% won't be enough to ensure New York City's restaurants survive the pandemic. The vast majority of restaurants operate on razor-thin margins, meaning that most do not turn a profit unless the dining room is full or almost full. 

Amanda Cohen, the owner of Dirt Candy, a restaurant in New York's Lower East Side, told Business Insider that she's skeptical of the benefits of reopening dining rooms at 25% capacity. For her 75-person restaurant, a 25% capacity limit would mean she'd only be able to serve 12 guests at a time, when accounting for about six staff members.

"It literally makes no sense to put my life at risk and my staff members at risk for 12 people to come and dine at Dirt Candy," Cohen said. "I'm going to have increased costs and I'm not going to be able to make that much more money." 

"Getting 25% indoor occupancy with a blueprint to get to 50% is important, but it's not going to save restaurants," Andrew Rigie, the executive director of the New York City Hospitality Alliance, told Business Insider. "Even with 100% occupancy before the pandemic, it was already very difficult to survive as a restaurant in New York City."

Reopening dining rooms also brings new costs, as restaurants hire more workers and install new safety features. Most restaurants will still have to pay 100% of their bills, such as rent. With the preexisting and added costs, industry expert John Gordon told Business Insider that some restaurants could ultimately lose money if they reopen dining rooms at a limited capacity.

"We're still being hung out to dry," Cohen said, adding that restaurants need federal aid to make it through the pandemic.

Many independent restaurant owners, including Cohen, are urging Congress to pass the RESTAURANTS Act, which would provide restaurants with $120 billion in recovery funds. Rigie is also a supporter of the RESTAURANTS Act, and argues that restaurants ultimately need financial intervention from the government in order to stay afloat.

In the meantime, Cohen asks for sympathy from her customers. "Every single one of us is struggling. We all want to serve our customers, but we also have to serve our staff, and this has put us in a really hard place."

The only thing that will really fix the restaurant industry is the elimination of COVID. As Gordon Haskett analyst Jeff Farmer said in a research note in August, only news of a vaccine could actually allow sit-down restaurants' sales to approach pre-pandemic levels. 

Experts say that while outdoor dining has helped boost sales at some sit-down restaurants seeking ways to safely serve customers, colder weather is set to add new additional complications.

"Winter is coming,"  said Robert Rattet, an attorney who specializes in bankruptcies. "Without a vaccine, you'll have more closures."

 

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