Retail chains hit exit button on Manhattan leases, say it’s unsustainable
Some national retail and restaurant chains are bailing out New York City, closing branches that may once have been among their top performers, but are now struggling more than in other parts of the country.
Once the areas hardest hit by the pandemic, New York has drastically reduced its number of new Covid-19 cases through lockdowns, social distancing and travel restrictions.
Five months after the start of the pandemic, the economic damage in New York has been far worse than elsewhere in the country in many cases, New York Times reported.
The virus may be under control, but businesses are suffering as so few people go to work, hardly any visitors, and many residents reluctant to go out for fear for their health.
The once-full city sidewalks are almost empty, former office workers are working from home, and many well-off residents have moved to second homes.
Before the pandemic, Bryant Park Grill & Cafe in Midtown Manhattan was one of the nation’s top-grossing restaurants, the star of Ark Restaurants’ 20-US restaurant portfolio. Now the the tourists are gone, the office towers are largely empty and the dining room is closed. Dinner is prepared and served on the patio, and the restaurant has seen an 85% drop in revenue, making about $ 12,000 a day, according to CEO Michael Weinstein.
In Manhattan, national chains like Le Pain Quotidien, Subway, Kate Spade and JC Penney have closed branches permanently. Many other big brands, including Gap and Victoria’s Secret, have not reopened in Manhattan while they have reopened in other states.
The city has contained the virus but “there are worrying signs that some national brands are starting to abandon New York,” The New York Times reported. “The city is home to many top-tier flagship stores, chains and restaurants that tolerated astronomical rents and other costs due to New York’s global cachet and the reliable attack from tourists and commuters.”
Shake Shack, which is from New York, reported a 40% drop in revenue in the second quarter. Its stores in major cities like New York “have been the most affected by the Covid-19 epidemic,” he reported. Chipotle also reported that its New York stores were performing worse than others, investment analysts said.
“Everyone in the restaurant business is really hurting right now,” said Vin McCann, a restaurant consultant at Heyer Performance in Lower Manhattan. “I think this is true in all the boroughs.”
Travel restrictions in New York are among the most extensive, affecting more travelers than other states. If you are going to New York from most of the states there is a good luck you must quarantine for 14 days. You must also complete a mandatory travel health form or face a possible fine of $ 2,000.
New York City landlords have started suing commercial tenants for non-payment of rent, accusing some national brands of trying to profit from the crisis, The New York Times reported.
“More and more space in commercial real estate will be occupied by non-luxury,” said Naveen Jaggi, chairman of the retail advisory team at commercial real estate services company JLL, in a statement. CNBC interview. “Take Fifth Avenue. You see a Vans, a Five below and a Timberland. These are the types of brands that take up space. That’s all you need to know about the direction of Fifth Avenue. “
Veggie Grill, a California chain with 35 restaurants, opened its first New York branch in the Flatiron district in December with plans to open three more branches in the city. Sales have fallen 80% since before the pandemic, said Jay Gentile, the company’s chief operating officer.
By comparison, West Coast Veggie Grill establishments have been doing as much business lately as they did a year ago, Gentile said.
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Three months after its opening, Gentile had to lay off the 70 employees in New York. In May, the company hired 24 workers who expected business to pick up. Now the staff is down to 16 with two full-time employees.
“We have two hours at lunch and two and a half hours at dinner to make our money,” Gentile told The New York Times. “We always pay a very high rent. It is unbearable. “
Still, Gentile said he was determined to keep the doors open. “If we shut down New York,” he said, “then we’ll have to shut it down for good.”