clock menu more-arrow no yes mobile

Filed under:

Economic Impact of New Coronavirus Could Mimic Major Natural Disasters, Big Restaurateurs Say

“At some point, the epidemic will be over. What will be the point if people don’t have businesses and restaurants and cultural activities to return to?”

An overheard shot of New York City’s 5th Avenue intersection, with yellow cabs driving by.
Fifth Avenue
Stephan Guarch/Shutterstock

The bulk of the new coronavirus’s economic impact in restaurants so far is in the events and corporate catering sphere, but with so much uncertainty of when the public health crisis will end, some of the city’s biggest restaurateurs are now comparing potential financial effects to what happens with other major disasters — like hurricanes, major recessions, or terrorism.

On Tuesday night, Danny Meyer of Union Square Hospitality Group posted a video about the new coronavirus where he mentions past difficult times, including 9/11, the Gulf War, and “deep financial recessions.” The owner of 15 restaurants and bars including Death & Co, Ravi DeRossi, likened it to the 2008 crash and power blackouts in an interview with Eater this week. Tom Colicchio — whose restaurants are seeing deep declines due to event cancellations — told Eater on Monday he’s “never seen anything happen this quickly, even 9/11,” in regards to financial impact.

“There was a funk hanging over the city, but there was encouragement to be dining out,” Colicchio said this week of 9/11. “Now, it’s just not happening. I don’t know what you can do right now.”

Indeed, when other major disasters like Hurricane Sandy or 9/11 have happened, the local community has rallied behind small businesses after the dust settled.

But many officials across the country have suggested “social distancing” in order to curb the current novel coronavirus pandemic in order to protect the most vulnerable — making New Yorkers more cautious about group events, from Broadway shows to dining out.

And guidance in New York has involved suggestions for vulnerable populations — such as the elderly or people with compromised immune systems — to avoid large gatherings, and that everybody not go on crowded subway trains, in addition to practicing regular hygiene such as diligent hand washing.

However, on Wednesday afternoon, Mayor Bill de Blasio emphasized that New Yorkers who feel healthy should “not avoid restaurants.” “If you’re not sick, you should be going about your life,” he said.

Cautious behavior, though, has already led to closures in Brooklyn’s Chinatown of Sunset Park, where four of the biggest dim sum parlors and banquet halls have shut down with unclear reopening timelines. Jing Fong, a large Manhattan Chinatown dim sum restaurant, has limited hours to Friday, Saturday, and Sunday.

“Our business is going to be impacted,” Meyer said in the video. “People are not feeling comfortable about going out right now.”

The city has already announced no-interest small business loans, up to $75,000 for businesses with fewer than 100 employees who can prove 25 percent declines, but there’s little clarity yet around how long it will take for restaurants to go through those application processes and access that money. The financial impact could also potentially be worse because restaurants can’t get insurance money for “business interruption” for a public health crisis, whereas they could for hurricanes or floods.

Some are suggesting other potential fixes, though these are also still hypotheticals as the news changes by the minute. Landlords will likely need to be involved, restaurateurs and experts say. Providing rent relief over the next two to three months would be more impactful in the immediate term, says Keith Durst, a prominent hospitality consultant who works with a variety of restaurant groups and real estate developers in the city.

“A good partner, they want to see you succeed,” Durst says. “Landlords can renegotiate rents. If you’re just focused on the bottom line and making rent now, then you’ll see some problems.”

Colicchio also said that tax breaks might end up being necessary for restaurants, which operate month-to-month and pay quarterly taxes. The government could, for example, stop collecting sales tax or reduce the collection to ease the burden, he says.

And some said the government can also look to what other countries are doing: John Choe of the Greater Flushing Chamber of Commerce pointed to Taiwan, which spent $2 billion on economic assistance that included loans and vouchers to encourage people to spend money at night markets. Durst mentioned Italy’s mortgage relief negotiations.

Still, there are many unknowns, and it’s not clear how long this will continue. On Wednesday, the World Health Organization officially declared COVID-19 a pandemic; it’s now in 114 countries and caused more than 4,000 deaths. Most of the cases are in four countries — including China and Italy — and as of Wednesday morning, New York City had 48 cases, while New York state had more than 200, many of them in Westchester’s New Rochelle.

Many schools are closing out of extra caution, and major events like the St. Patrick’s Day parade have been canceled.

“You don’t want to shut down society because that’s massively disruptive to the economy, but your main concern here is the public health crisis,” Cuomo at a press conference on Wednesday. “It’s balancing the two.”

Some say the support has not been enough considering what’s happening on-the-ground, particularly in New York’s Chinatowns. Choe argues that government agencies need to start taking this more seriously from an economic stand-point. For weeks, businesses have seen significant drops in clientele, he says, and he doesn’t think resources are being prioritized appropriately, the way they would be with a hurricane.

“At some point, the epidemic will be over,” he says. “What will be the point if people don’t have businesses and restaurants and cultural activities to return to?”

Additional reporting by Erika Adams

This story has been updated with new information from the mayor’s office and on the St. Patrick’s Day parade.