Restaurants that once pushed small plates are now pushing small spaces.
Big-name restaurateurs are opening smaller eateries, particularly downtown.
“New Yorkers seem to be falling back in love with smaller restaurants,” said Clark Wolf, president of Clark Wolf Co., a Manhattan-based food, restaurant and hospitality consulting firm.
Diners are tired of Manhattan’s “oversized, over-intense, over-designed, large places,” Wolf said.
In the West Village there is the newly opened 50-seat Morandi, an Italian restaurant by Keith McNally at 211 Waverly Place at Charles Street.
McNally brought larger places such as Balthazar, Pastis and Schiller’s Liquor Bar to the Manhattan dining universe, but he has started aiming small.
He’s got close company, too.
McNally’s ex-wife Lynn Wagenknecht is part-owner of another small eatery in the West Village, the 60-seat Caf Cluny at 284 West 12th Street, at the corner of West 4th Street. She was also behind the scenes at Cafe Luxembourg and Odeon. Caf Cluny serves French-American bistro food with a menu created by Odeon chef Vincent Nargi.
A third modestly sized West Village newcomer is the 30-seat Little Owl at 90 Bedford Street, on the corner of Grove Street. Co-owner Joey Campanaro, former executive chef at the Harrison and Pace, opened the Mediterranean-influenced restaurant last May.
Though small restaurant spaces have come in and out of fashion, this is the first time the trend seems to have stuck since the 1970s, Wolf said. However, he said the new breed of small-but-tony restaurants should not be confused with “neighborhood” restaurants, an appellation that covers everything from decades-old diners to enduring but everyday kitchens.
The rise in cozy Manhattan eateries is partly caused by a lack of inventory for 8,000- to 12,000-square-foot spaces, which are vanishing as banks open more storefront branches, said Benjamin Fox, president of Winick Realty Group.
Some great artists simply work better on a smaller stage. Large restaurants are not for everyone. They are just too expensive for many chefs, said chef Don Pintabona.
After working as executive chef at Tribeca Grill, Pintabona wanted to open his own restaurant. He preferred to stay down where he was well established and have a small eatery.
He found a space in Soho at 333 Hudson Street with a modest rent in the mid-$30 per square foot range, and in January 2006 opened Dani, a 90-seat Italian restaurant. He hopes to get a cafeacute; license this month that will allow him to have 30 outdoor seats.
Regardless of price, Pintabona said he was looking for “cozier surroundings” than at a place like Tribeca Grill, where he prepared 600 dinners a night.
Small places may be in vogue, but restaurants that are too small can be risky business propositions because of limits to profit.
A small restaurant may struggle, Pintabona said.
On the flip side, large restaurants can thrive because of greater profit margins, though labor costs, rising construction costs and rent affect the bottom line.
But whether the space is big or small, the food and beverage business is tough.
“Most restaurants just get by and make very little profit,” said Bruce Sinder, principal of the downtown Manhattan commercial brokerage firm Sinvin Realty Corp. But, he said, restaurants appear to be staying in business longer now “because the barrier for entry has gotten higher in the last few years.” Sinvin has negotiated space for downtown restaurants including Balthazar and En Japanese Brasserie.
In the five boroughs, there are around 25,000 food-related operations, according to the New York State Restaurant Association.
Industry insiders say that more restaurants go belly-up within the first year than at any other time, making the first months of business crucial.
Roger Eulau, a senior director at the Lansco Corp., said that rents are comparable for retailers and restaurateurs. He is brokering deals where restaurants are paying $100 per square foot and up. Last year, he co-brokered space on West 13th Street for Fig & Olive at $100 per square foot, and for Buddha Bar, which is on Little West 12th Street, also at $100 per square foot.
Some real estate pros say restaurant space changes hands less than it used to.
“It doesn’t seem that there is as much turnover as there once was,” said Robert Futterman, founder and CEO of Robert K. Futterman & Associates. In the last couple of years Futterman has brokered deals for Mr. Chow at 121 Hudson Street, P.J. Clarke’s at the Empire Hotel in Lincoln Center and Sarabeth’s, adjacent to Central Park.
Winick’s Fox said, “While not necessarily a statistic, there appear to be far fewer restaurants going out of business than in past years. The restaurant sector continues to thrive.
“I don’t have a lot of people leaving. I think it is because the restaurants are indeed making money,” Fox said.
The restaurant industry as a whole is reporting increased earnings, showing business is doing well.
New York State’s restaurants are expected to exceed $27 billion in sales this year, 5.6 percent more than last year, according to the National Restaurant Association’s 2007 restaurant industry forecast.
That figure accounts for an oversized slice of the country’s 935,000 restaurants, which are projected to reach as much as $537 billion in sales this year, the association found.
James Famularo, senior vice president and director of the food and beverage division at New York Commercial Realty Services, said, “If you’re not really a pro, you’re going to lose your shirt.”
Famularo, who focuses on brokering spaces for nightclubs, lounges and restaurants, recently brokered a deal for an Upper East Side Southern-themed eatery for owner Justin Timberlake, the pop singer.
Some restaurateurs are complaining that rents are “becoming quite onerous,” said Louis Kleiman, a sales associate at Citywide Properties, who primarily handles restaurant deals.
“I think there are more people that are just waiting till the prices come down,” Kleiman said. He does not see that happening in the near future.