Restaurant Slump Yet to Bite New York Rents
Dining out may be down, but not enough to take a big bite out of sky-high New York rents, according to restaurateur Drew Nieporent.
"The real problem right now is that for us to survive, the rent has to be at a level that's somewhere in the neighborhood of 6 or 7 percent of gross sales, and right now, people have been paying 10 percent in some cases, and just mathematically, it doesn't work," says Nieporent, founder of Myriad Restaurant Group.
He expects the high rents as well as the uncertain climate and high cost of capital to put a damper on new restaurant development for now.
Nieporent, whose New York restaurants include Nobu, Tribeca Grill and Corton, said he remains optimistic.
Looking across the industry, he sees some markets performing better than others. Florida, Las Vegas, California and Arizona continue to be hurt by the economic slump, he says.
For example, his Nobu restaurant in New York is seeing flat sales, while sales at its Las Vegas location are down about 15 percent. However, the Nobu restaurant in London is "strong," he says.
His Tribeca Grill restaurant in New York has been hurt by the end of the "big-deal lunch," he says.
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