What Will Become of NYC’s Restaurant Scene

Rent is too damn high, and not just for Jimmy McMillan. Danny Meyer and Bobby Flay have noticed, too. Last week, 225 attendees at Bisnow's NYC Restaurant Development Summit in New World Stages' Avenue Q theater heard panelists debate how to thrive in a business of thin profit margins.

This year’s closing of Danny’s Union Square Cafe and last year’s shuttering of Bobby’s Mesa Grill in Flatiron raise questions about the tsunami of costs restaurateurs face, says Crown Design and Consulting principal and American Institute of Wine and Food chair Anthony Milano. And Jessica Schupak, head of business development for Chef Michael White's Altamarea Group (above), has some ideas in response: Restaurateurs have to scrub their P&Ls, she says. Change your service if you’re throwing out loads of bread and condiments, and maximize competitive purchasing options.

Jessica (snapped with Anthony) advises those just starting out to be progressive about choosing space. A spot hiding behind temporary construction, for instance, will likely rent for cheaper.

New restaurants need to be realistic about their location possibilities, says Suzuki Capital’s Colby Swartz (flanked by Lee & Associates’ Peter Braus and SKH Realty’s Shane Davis). You’re not building your dream house, he says. Likewise, Peter recommends flexibility. 4am liquor licenses on Orchard Street in the East Village are rare, he says, but they're available in Midtown. Colby also sees chefs taking smaller footprints to deal with rents. Shane advises against too much back-and-forth negotiating: If there’s not an initial understanding that a landlord wants a restaurant in a given space, “it’s never going to happen.” He’s fond of Downtown Brooklyn, especially the BAM Cultural District, one of the few neighborhoods where resi development beat restaurants and amenities to the scene.

EMM Group’s Mark Birnbaum (with New York City Hospitality Alliance executive director Andrew Rigie) launched his first nightclub, TenJune, on the Meatpacking’s Little West 12th Street. It was 2006, when people were spending plenty of dough and Meatpacking was about to take off. He and Eugene Remm opened below STK with the idea that nightclub/restaurant combo space doesn’t work, but the two sharing the same building with separate entrances allows them to feed business to each other. Their big lesson: Sunday, Monday, and Tuesday business is just as important as the rowdier Thursday, Friday, and Saturday nights.

Midmor Hospitality’s Will Malnati (whom we snapped with Maharlika and Jeepney owner Nicole Ponseca) started with Willow Road, serving market-fresh, seasonal ingredients all the way on Tenth Avenue in Chelsea. Then came his Spanish tapas spot, Toro, at the same address, for which he didn’t even put a sign up for the first nine months. Location wasn’t Will’s priority. Rather, you’ve got to have a concept, and you’ve got to be better than the next guy, he says. Nicole got the idea to open a Filipino eatery back when she was an ad exec entertaining clients with her expense account. They’d ask for Filipino food, but she had nowhere to take them. She then did pop-ups to test where she’d have the most success and how owns two East Village spots.

Former opera singer and Cafe Beulah owner Alexander Smalls (snapped with Betony GM Eamon Rockey) opened The Cecil and Minton’s Harlem on West 118th Street at the site of the former Minton’s Playhouse jazz club. The location fits the new-Minton’s supper club concept (a throwback that values the food as much as the music), but they’re tucked in a residential area. Still, both restaurants are destinations, drawing more than 90% of their business from reservations. Eamon has opened four restaurants in the past five years, including Asca in Williamsburg and Atera in Tribeca. Now, he’s opened Betony on 57th. There’s been such a push outward and downward for so long that he senses a comeback for the restaurant scene in Midtown, the UES, and the UWS that also will stretch into Harlem.

We also snapped New York State Restaurant Association’s James Versocki and Helbraun Levey’s Joseph Levey. When James, our moderator, asked the restaurateurs what keeps them up at night, three of the five went with plumbing.

Fox Rothschild attorney Carolyn Richmond co-chairs the firms labor and employment and its hospitality practice groups. She says that of the 18 suits filed in Downtown’s US District Court the morning of Bisnow’s event, 12 involved the Americans with Disabilities Act and two focused on wage and hour issues; almost all were against restaurants. The biggest misconception about the ADA, she says, is the typical owner’s belief that his or her property is grandfathered in because it’s old.

Austin Publicover (with NYC Small Business Services’ Amna Malik) left Danny Meyer’s Union Square Hospitality Group in November to start Bulletproof! Restaurant Compliance. He cites one client who assumed a space it took was ADA compliant because it had met standards five years ago. Nope. The client had to undergo a $35k renovation. Amna recommends using her agency’s offer of health and building inspectors, who can consult on what a restaurant owner needs to do before opening—and thus before ADA or other penalties kick in.

Pesetsky & Bookman’s Rob Bookman (left, with Helios Hospitality Group’s Paul Seres) railed against the 500-foot law, which precludes a liquor license within 500 feet of three existing ones unless it’s in the public interest. That state law may make sense elsewhere, but density in NYC makes it illogical here, Rob says. That’s especially true, adds Paul (who also sits on Community Board 4, which covers Hell’s Kitchen and Chelsea), considering not only the city’s 8 million population but also the more than 50 million annual visitors. The problem, Rob says, is that no one, including the real estate industry, spoke up about the constraints when the law passed in 2010.