Survival of the Fullest: Restaurants fear capacity constraints will kill them

Expected decrease in sales will hamper their ability to pay rent

TRD NATIONAL /
May.May 29, 2020 08:45 AM
Capacity constraints may cause agony for restaurateurs and their landlords (iStock, Getty)

Capacity constraints may cause agony for restaurateurs and their landlords (iStock, Getty)

As restaurants move to open, owners are agonizing over capacity constraints and social distancing guidelines, which are expected to result in a decline in sales. In turn, their landlords are sure to suffer from heartburn wondering whether the rent checks are coming.

Of the 30 states that have allowed restaurants statewide to resume serving customers indoors, 15 have limited capacity to 25 percent or 50 percent, according to market-research firm Gordon Haskett. Restaurant executives expect the limits to last at least through the summer, traditionally one of the busiest seasons.

Although New York City has yet to set restaurant guidelines, a 75-seat sit-down restaurant would allow for just 20 diners after accounting for employees, under a 50 percent capacity limit, according to James Mallios, a New York City restaurateur and attorney told the Wall Street Journal. The number drops to around five diners at a 25 percent capacity limit.

“It’s like selling tickets just for the bleachers at Yankee Stadium,” said Mr. Mallios, whose restaurants include Amali and Calissa.

Some restaurateurs fear that if they can’t fill seats, they won’t be able to make rent, by far their largest fixed cost. Bars and entertainment venues have expressed similar concerns. Mayor Bill de Blasio has attempted to assist restaurants by signing a package of Covid-19 relief bills, including one that temporarily bars landlords from going after restaurant and store owners’ personal assets.

Co-owner of Texas-based M Crowd Restaurant Group Inc. Ray Washburne, opened most of his 25 Mi Cocina locations earlier this month at 25 percent capacity in accordance with Texas’s initial restrictions. He said other restaurateurs have since asked him if his company wants to take over their leases because they can’t make money at reduced capacity.

Sunil Dharod, owner of 75 Applebee’s restaurants in Texas and California, similarly said he has asked landlords for rent breaks and is considering closing 10 percent of his restaurants if steep sales declines persist.

“We will continue to lose millions of dollars. That will become very, very challenging,” he said. [WSJ] — Sasha Jones


Related Articles

arrow_forward_ios
Antonio Sersale and Nadim Ashi, with Le Sirenuse at the Surf Club (Credit: Google Maps and Jacopo Raule/Getty Images)

Arrivederci: Le Sirenuse at The Surf Club shutters permanently due to coronavirus

Arrivederci: Le Sirenuse at The Surf Club shutters permanently due to coronavirus
27359 South Dixie Highway and Longpoint Realty Managing and Founding Partner Dwight Angelini (Google Maps)

Longpoint buys Fresco Y Mas-anchored center in Naranja

Longpoint buys Fresco Y Mas-anchored center in Naranja
Miami-Dade County Mayor Carlos Gimenez (Getty)

Miami-Dade approves $35M aid package for restaurants, employees

Miami-Dade approves $35M aid package for restaurants, employees
Bottom row: Nick Sharp, Felix Bendersky and Jaime Sturgis; top row: Mayor Dale Holness and Mayor Carlos Gimenez (Instagram/threefoldcafe, F&B, Linkedin, Office of the Mayor, Twitter)

Restaurateurs to protest restrictions in Miami-Dade. In Broward, it’s a different story

Restaurateurs to protest restrictions in Miami-Dade. In Broward, it’s a different story
Hard Rock Cafe at Bayside Marketplace (Hard Rock)

Bayside Marketplace sues to evict Bubba Gump, Hard Rock Cafe and three other tenants

Bayside Marketplace sues to evict Bubba Gump, Hard Rock Cafe and three other tenants
Photo illustration of Mayor Carlos Gimenez (Getty, iStock)

Restaurants, gyms to close again in Miami-Dade

Restaurants, gyms to close again in Miami-Dade
Scott Sandelin, Ben Potts, Michelle Bernstein, Felix Bendersky and Aaron Butler (Beaker & Gray, Twitter, F&B, Linkedin)

Restaurants, bars in a “scary situation” as restrictions ramp up

Restaurants, bars in a “scary situation” as restrictions ramp up
Commissioner Ricky Arriola and an aerial of Sunset Harbour in Miami Beach (Compass)

Miami Beach moves toward banning chain restaurants and stores in Sunset Harbour

Miami Beach moves toward banning chain restaurants and stores in Sunset Harbour
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...