When Wylie Dufresne closed his vaunted molecular gastronomy restaurant wd~50 in 2014 and the more relaxed Alder the following year, diners were hungry to see what the award-winning chef would do next.
Originally, Dufresne, who declined to comment for this article, was set to open in the AKA Wall Street hotel, but the deal fell through. Instead, the 46-year-old, who helped launch the careers of prominent younger chefs such as Empellon’s Alex Stupak and Milk Bar’s Christina Tosi, has been consulting on a West Village Indian fast-casual restaurant, Soho Tiffin Junction. And, in the coming months, Dufresne will pop up in another unexpected place: a donut shop in a Williamsburg hotel.
Running a restaurant in the city has always been tough, but now, for both pioneering older chefs and promising young ones, it’s starting to seem impossible. Rising rents; a higher minimum wage; city hall bureaucracy and increasingly fickle, Instagram-obsessed customers are causing many of the city’s most talented chefs to throw in the dish towel, and New York’s once vibrant dining scene is turning bland.
According to Zagat, 119 “important” restaurants opened in 2015, compared to 160 in 2014. Both years saw dozens of closings — 53 in 2015 and 82 in 2014 — but those in the industry say 2016 is shaping up to be especially dire. Carolyn D. Richmond, a Midtown attorney who’s been practicing hospitality law for 22 years, says in the past six months, she’s done the paperwork for at least six restaurant closings, more than she’s ever done in such a period previously.
“It’s getting harder and harder every single day to run a successful restaurant,” says Andrew Rigie, the executive director of the New York City Hospitality Alliance.
“The creativity is leaving Manhattan because it can’t afford to be here. It’s going to Los Angeles,” says Richard Coraine, chief development officer of Danny Meyer’s Union Square Hospitality Group. The group has a dozen popular Manhattan restaurants, including Union Square Cafe, which closed in December after 30 years on 16th Street due to a rent increase. In November, the cafe will reopen on 19th Street and Park Avenue South.
“I love New York,” Coraine says. “ I just think LA is the best food city in America [right now].”
Chef David Santos loves New York too, but he’s also suffered at the hand of rising rents. In June of 2015, he was forced to close his 2 ¹/₂-year-old West Village restaurant Louro when his landlord tried to raise his rent from $18,000 to $30,000 a month. The restaurant did steady business and Santos’ creative, Portuguese-influenced food had been well-reviewed, but it was impossible to continue with such a rent increase.
“You literally can’t survive. You’d have to do $3 million in sales a year,” Santos tells The Post. His actual sales, he says, were around $1.82 million in the 65-seat restaurant’s first year and $1.6 million in the second.
“It wasn’t gangbusters or anything, but we were operating in the black. Our profit margins were at 4 percent.”
“[The rising costs] make people play it safe. Everybody’s got to put the burger on the menu . . . everybody’s gotta have a f–kin’ kale salad.”
Santos, an alum of Bouley and Per Se, is now consulting on a fast-casual soup concept, Good Stock, which is opening this week in the Urbanspace Vanderbilt food hall, and looking to do a quick-service restaurant and a small fine-dining spot of his own.
“The only way to survive this era right now is either doing a very small tasting menu, fine dining or, the complete opposite, fast-casual,” he says. Mid-priced restaurants just aren’t profitable enough, he says.
Faith Hope Consolo, chairman of the Retail Group at Douglas Elliman, says she has seen property prices going down in recent months. But for some, it’s too late.
David Waltuck, 61, a James Beard Award-winning chef, closed his two-year-old, well-reviewed Flatiron restaurant, Élan, in February. The rent on the 50-seat space was over $30,000 a month, and the economics just didn’t work. The location has since sat empty and the landlord is now seeking only $27,750.
“We should have a club of former chefs,” says Waltuck, who pioneered the Downtown restaurant scene when he opened Chanterelle in Tribeca in 1979. The restaurant lasted for 30 years before closing in 2009 in the wake of the financial crash. “The margins for a restaurant, which were already very, very thin continue to get thinner,” he continues. “Lots of little things can just tip the balance to the point where there’s no way to pay the rent.”
Some of those “things” include rising food prices, higher property taxes, greater insurance costs and an increased number of Americans with Disabilities act claims.
But one of the biggest issues, most restaurants say, is the dramatic increase in the minimum wage for tipped workers in the hospitality industry that went into effect at the end of last year.
Servers’ wages increased from $5 to $7.50 and they’re set to rise to $10 by the end of 2018. Wages for non-tipped workers, such as cooks and dishwashers, also increased, though far less drastically, from $8.75 to $9 an hour. Most restaurateurs say they’re all for compensating employees fairly, but many have been scrambling to make it work.
“It took hundreds of thousands of dollars of profitability away from us; there was no way to replace it,” says Ed Schoenfeld, the owner/operator of the popular Red Farm Chinese restaurants on the Upper West Side and in the West Village. “We can’t raise our prices much more; they’re already on the high side for what we are.”
“I’m all for raising the minimum wage,” says Anita Lo, chef-owner of Annisa, a high-end Asian restaurant that has been in the West Village for more than a dozen years. “It’s just going too fast . . . A 50 percent increase at once closed a bunch of restaurants that were beloved . . . What makes the city great is going to suffer.”
She declines to get into specifics about how she is coping with the changes, but says, “I don’t know if I will still be able to survive. It’s difficult. We’re not having the greatest year. And certainly things are getting tighter.”
In response to the industry’s struggles, the city formed the NYC Food & Beverage Hospitality Council in September.
Its first orders of business are creating a new Web site that will help restaurant owners navigate regulations more easily, as well as a subsidized culinary apprenticeship program.
It is also exploring the possibility of allowing restaurants to add an administrative fee, as high as 20 percent, to bills, to offset rising costs, though just how such a fee would be implemented, if allowed, is still being decided.
‘I worry it’s too little, too late’
“[The fee] will allow operators to contend with these cost headwinds by having something that goes the opposite way,” says Ahmass Fakahany, the CEO of the Altamarea Group, which includes Marea and Osteria Morini, and one of more than 30 restaurateurs on the council. “But I think it has to have the right dialogue and transparency to it.”
While restaurateurs appreciate the city attempting to help, some wonder if it will be enough.
“I worry it’s too little, too late,” says Lo, who is also on the council.
Another council member, Amanda Cohen, the chef and owner of vegetarian hot spot Dirt Candy, is more optimistic.
“It’s the first time in my career in the city, where I actually feel like everybody is working together,” she says. But she says times are indeed “crazy.”
“[It used to be] a 10 percent margin [meant] you were doing well,” she says. “Now everybody has shifted that. You’re like, ‘2 percent, 3 percent, I’m doing great.’ ”
As restaurateurs struggle to make a profit, customers may find themselves struggling to find interesting, exciting food in a city known for its dynamic dining.
“[The rising costs] make people play it safe,” says Santos. “Everybody’s got to put the burger on the menu . . . everybody’s gotta have a f–kin’ kale salad.”
Menu prices are also likely to go up.
“The $40 entree is going to be a thing,” says Bill Telepan, who closed his beloved Upper West Side eatery Telepan this past May and recently took a job as the executive chef at the Midtown behemoth Oceana. “People are just going to have to get used to it.”
Diners will also have to get used to smaller portions; fewer menu options to save on food waste and labor; fewer servers on the floor; no hosts to answer the phone or greet you at the door; and more restaurants in hotels and food halls, which have cheaper start-up and real estate costs.
Operators are also making smaller, more stealth changes to save pennies, hoping customers won’t notice.
“It’s a chess game,” says Union Square Hospitality’s Coraine. He notes how restaurateurs are saving money by doing away with staff uniforms and different wine glasses for reds and whites.
David Santos just hopes the talented chefs will be able to keep playing.
“There’s a funny scene in ‘Demolition Man’ where all restaurants are Taco Bell because Taco Bell won the restaurant war,” he says. “Is that where we’re headed for? I hope not.”