Retail chains and restaurants have abandoned an “unsustainable” New York City over the past few months due to the coronavirus pandemic, according to a report by The New York Times -- but officials say thet will not know the full extent of losses until the fall.
New York Gov. Andrew Cuomo pushed to reduce the geographic footprint of travelers as a major centerpiece of his pandemic containment policy, limiting travel within the tri-state area so that New Yorkers were discouraged from traveling even to neighboring states. Cuomo’s policy, in combination with a statewide lockdown, managed to flatten the curve when New York City was the national hot spot of the virus in the United States.
However, the reduction in foot traffic from a lack of tourism and increased telecommuting has produced a market environment that cannot sustain the same level of revenue for businesses of seemingly any size. More than 420 companies -- including Hertz, Lord & Taylor, J Crew and more -- have already filed for bankruptcy protection in 2020, with more to follow as things stand.
Due to pandemic containment policies, some businesses have seen as much as an 85% reduction in revenue, according to The New York Times. The Bryant Park Grill & Cafe has been forced to reduce from a 1,000-seat indoor capacity to only patio service, dropping revenue to around $12,000 a day – a fraction of its regular business.
“There’s no reason to do business in New York,” Michael Weinstein, chief executive of Ark Restaurants – the parent company for Bryant Park Grill & Café – told The Times. “I can do the same volume in Florida in the same square feet as I would have in New York, with my expenses being much less.”
As a result of such aggressive reductions, national chains -- including J.C. Penney, Kate Spade, Subway and Le Pain Quotidien -- have permanently shut down branches. High-profile locations have shuttered while continuing business in other states, largely due to the rent requirements in the city.
“We have two hours at lunch and 2½ hours at dinner to make our money,” said Jay Gentile, chief operating officer for Veggie Grill. “We’re still paying very high rent. It’s unsustainable.”
New York City Mayor Bill de Blasio seems aware of the situation, having taken steps to try and help businesses recover.
“In response to COVID-19, we’ve activated resources to stand up new supply lines and work with businesses to produce materials we never have before and provided our small businesses with aid and technical assistance,” City Hall Spokesperson Julia Arredondo said in a statement to FOX Business. “New York City businesses are strong, creative, innovative, resilient, and they are doubling down on building their future here.”
Arredondo pointed to recent successes, such as Facebook signing a lease a 730,000-square-foot space in Midtown Manhattan or a commitment by Steiner Studios to build a 500,000-square-foot production studio as part of the city’s Made in New York campus.
Big businesses are more capable of handling the tightening faucet of income, Greater New York Chamber of Commerce President Mark Jaffe told FOX Business. He claimed that many small businesses are struggling and have closed permanently as a result of the reduction in business, with more to close in the near future.
“For a lot of small businesses, this situation is breaking them,” Jaffe said. “Politicians urged people to stay home, not replacing their income, and actually paid them more to stay home. By our calculations, anybody earning under $50,000 a year was better off with the unemployment relief.”
Jaffe said that the total amount of dropped business is “significant,” though the Chamber of Commerce does not have a final statistic to refer to just yet.
“People are still making up their minds,” Jaffe explained. “We can’t even get the school unions to decide if they’re going to open schools.”
“They say ‘we only have three weeks to open schools.’ For a small business, three weeks is a lifetime," he pointed out.
Jaffe said the Chamber will conduct a survey in September to get a full sense of just how much damage the closures and travel restrictions have inflicted on the city’s economy.
The New York State Department of Labor similarly told FOX Business that it did not have data for business outflow over the past few months, though it will have information after the next quarterly report.
On the department website, data for the state’s employment and wages only measures through the end of 2019, meaning it is possible that the full picture at a state level -- in terms of revenue lost at both a city and state level -- will not be clear until 2021.
Gov. Cuomo's office did not return requests for comment.