By Alex Israel
Industry leaders are working hard to determine how Upper West Side restaurants and small businesses might be able to survive the fallout from the coronavirus. But uncertainty about the future is making it difficult to plan too far ahead.
Since March 22, restaurants and bars in New York City have been restricted from providing service beyond delivery and takeout. Other businesses deemed ‘non-essential’, like salons and gyms, were ordered to close indefinitely. While Governor Andrew Cuomo has stated that he will allow some “low-risk” businesses to reopen after May 15, businesses in the city will likely not be included.
During a webinar hosted by the Business and Consumer Issues Committee (BCI) of Community Board 7 (CB7) this week, several figures with expertise in the hospitality, real estate, and retail industries came together to discuss the future of small businesses. One clear takeaway: Landlords and tenants will need to work together to get through this.
“The landlord and tenant relationship has always been symbiotic,” said director at RIPCO Real Estate and CB7 second vice-chair Doug Kleiman, who has represented retail tenants and landlords in the community for more than two decades. Kleiman said many of his landlord clients were “being thoughtful and reasonable” at this time, but noted the volatility of the market even before pandemic struck. “A lot of businesses were already at the edge of failure. And this will push them over the edge.”
Larry Haber, the managing partner of the commercial real estate department of the law firm Abrams Garfinkel Margolis Bergson, LLP, believes opening a line of communication is the key to success between landlords and tenants. “I’m imploring both sides to not ignore one another,” he said, adding that many landlords on the Upper West Side are “mom and pops” who “have their own tale of woe.”
The panel’s call for collaboration wasn’t limited to landlords and tenants. They also discussed the need for quick action on policy at the federal, state, and city levels. “We need the government to be a collaborative partner,” said Haber.
Stephanie O’Rourk, a CPA and partner leading the hospitality industry practice at CohnReznick, agreed, describing the dilemma many of her clients across are facing due to the current restrictions within the federal government’s Paycheck Protection Program (PPP), which offers loans to small businesses.
Part of the PPP’s mandate is that at least 75 percent of the funds must be used for payroll—which is a major issue when businesses are not able (or allowed) to fully open, or when owners aren’t able to draw back employees who are content making more money on unemployment, O’Rourk said. “Until the government provides better guidelines” regarding these relief programs, “[the funds] will be hard to spend,” she said, adding that for many operators, specifically smaller ones, Small Business Interruption Loans provided for under the CARES Act might provide a more manageable and flexible solution.
“We have an unprecedented situation at hand, and we need to have big, bold policies to help support our city as a whole,” said CB7 first vice-chair Andrew Rigie, who is the executive director of the New York City Hospitality Alliance, the chair of NYC’s Office of Nightlife Advisory Board, and a recently appointed member of Governor Andrew Cuomo’s New York Forward Re-Opening Advisory Board.
At the city level, Rigie highlighted three policy proposals that would help support bars, restaurants, and other small businesses across the city.
One such policy involves capping third party delivery fees at 10 percent. While platforms like Seamless help to increase restaurants’ exposure, Rigie said, their charges can cut deeply into restaurant profit margins.
Another suggests waiving sidewalk café licensing fees, which Rigie said would help ease the financial burden for restaurants currently unable to operate with their existing licenses, and encourage new restaurants to utilize outside space once it is safe to reopen.
The last would suspend the personal liability provision in leases for the duration of pandemic-related matters, ensuring that business owners won’t have to sacrifice their own personal assets while being forced to shut down by the state, Rigie said.
But even with these policies enacted, the big question remains: when the government deems it safe, are people going to want to patronize bars, restaurants, and other small businesses again with the same vigor as before?
Rigie thinks so. While he listed some safety strategies business owners are considering—including implementing contactless and cash-free payment, disposable menus, and plexiglass dividers—he didn’t have any singular prediction for the future.
“It’s a little premature to tell,” he said, noting that the restrictions and requirements set forth by the governor will ultimately determine how and when businesses can operate.
“It’s going to be tough,” he added. “But at some point when it’s safe, people are going to crave being back together… and when we are back together, we will be in our restaurants and bars.”