Restaurants in Manhattan are hiring, and for a very good reason: they’ve gotten major concessions on their rents.
As reported by the New York Post, several New York City eateries managed to negotiate great rent deals with their landlords, which means profitable times ahead.
“In late April, real estate owners who had charged hundreds of thousands of dollars up front for last summer’s season were forced to settle for severely discounted leases as low as $20,000 a month to make sure their spaces weren’t vacant this summer,” the Post reported, citing sources.
The Post piece quoted Don Evans, one of the movers and shakers behind Dan’s Taste of Two Forks in the Hamptons, as saying that “Every deal is a little different, but it all happened within two weeks. The restaurateurs were hiring staff and working on the assumption that something would break, and it did. These are all very favorable rents.”
Opening a restaurant, especially in Manhattan, is a pricey proposition to begin with. The median cost to open an independent restaurant was $375,500, according to RestaurantOwner.com. “The 25th percentile for Total Cost to Open was $175,500, meaning 25% of respondents spent less than this value. The 75th percentile for Total Cost to open was $750,500, indicating that 25% of respondents spent more than this value to open.”
The improved rent situation couldn’t have come at a better time for Manhattan restaurants. “It’s been a common complaint for restaurants struggling against pricey rent hikes and other factors that lead to closings, like ever-increasing construction and labor costs, a tighter regulatory environment, and a simple lack of customers due to changing tastes,” Eater New York wrote only weeks ago. “Tons of restaurants managed to ink new leases last year, but for many others, long-term leases expired — which ultimately meant the expiration of their businesses as a whole.
“The reality, restaurateurs and industry experts say, is that a lot of the full-service restaurants whose leases were up last year simply couldn’t keep up with the surrounding real estate market, with new market-rate rents quoted thousands of dollars above what they were paying,” the Eater piece continued. “Some were forced to change their concepts, while others paused their expansion plans. Restaurateurs across the city say calculating a viable rent is key to surviving in today’s climate, and most stick to a simple yet proven equation. But it’s not always enough to keep businesses alive — leading to an environment where it’s easier for monied fast-casual chains to thrive.
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