NYC restaurants navigating government red tape amid pandemic

New York City restaurants and bars reopened for outdoor dining in June, hoping that it would help keep their businesses above water until the coronavirus pandemic passes. But restaurant owners and industry insiders are now saying that onerous regulations and endless red tape are needlessly hampering their ability to operate.

The hospitality industry in New York City has been hammered by the coronavirus, as it has in the rest of the world. According to a June survey by the New York Hospitality Alliance, a third of NYC restaurants couldn’t pay their rent in June, and 80 percent could only pay part of their rent.

Outdoor dining reopened on June 22 and offered a lifeline to the struggling businesses, but confusion and conflicting information from the city and state governments slowed the rollout.

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Andrew Rigie, the executive director of the New York Hospitality Alliance, said more than 9,000 of the city's roughly 25,000 restaurants are now using outdoor dining, which was supposed to have a seamless, no-cost permit process.

"The challenge was - a few days after the program launched, they retroactively changed some of the requirements concerning the roadside seating for safety purposes," Rigie said. "And that created a lot of concern because many restaurants had already built out their outdoor dining areas, and had to retroactively refit it. It cost money they didn't have, and headaches."

Luigi Militello, the owner of Luke's Bar & Grill on the Upper East Side, said the city's confusing red tape ended up costing him thousands of dollars at a time when money is already tight.

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"The roadway dining, for the first 10 days, they allowed us to do it. On the 11th day, they came with all the restrictions and guidelines to how they want it built. It cost me almost $5,000 to have mine built," Militello said. "Just to comply with their planters, and the height of it, and the width of it, and this and that. I don't know where it's going to stop. Well, it's going to stop when the majority of us have to close our doors."

The city's confusing rollout of its outdoor dining was just the beginning though, as other regulations have also been put in place about what hours a restaurant can keep and what they are allowed to serve. Notably, New York Gov. Andrew Cuomo cracked down on outdoor drinking in mid-July, saying that “restaurants and bars statewide will be subject to new requirements that they must only serve alcohol to people who are ordering and eating food.” He further split hairs over what constitutes “substantive food,” saying that restaurants must serve “more than just hors d'oeuvres, chicken wings.”

New York City Council Member Keith Powers said that restaurants and bars in the city have had trouble keeping up with the changing guidance surrounding alcohol, hours, and other regulations.

"In the recent weeks, I’ve heard from a number of bars and restaurants in my district about guidance changing at the state level, essentially from the state liquor authority, and then immediate enforcement of those guidelines.” Powers said. “And lots of the ones I’ve spoken to still can’t fully understand what they’re supposed to be doing at any moment, have gotten fines, have to now go to the SLA and fight the enforcement."

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The New York State Liquor Authority said that they have issued 408 charges to bars and restaurants in the city, and suspended the liquor licenses from 46 bars and restaurants.

“While we understand the hardships bar and restaurant owners have faced during this crisis, we are still in a global public health emergency — and protecting New Yorkers must come first,” an SLA spokesperson said in a statement to FOX Business. “As we've seen in other states, bad actors are putting both New Yorkers’ health and our continued economic recovery at risk, and we will hold the 10% who are violating these rules accountable so the 90% who are following the rules can remain open. We understand some people are unhappy, but better that than sick or worse.”

Cuomo’s office did not respond to multiple requests for comment.

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White Horse Tavern in the West Village was one of the first bars in the city to have its liquor license yanked following reopening. The owner, Eytan Sugarman, said that his restaurant simply couldn’t handle the crowds that descended on them in June.

“The whole pandemic thing just changes the landscape of anything any of us knew. I think we have to kind of walk that tightrope of keeping people safe and still attempting to stay in business and keep our employees’ families fed,” Sugarman said. “The governor proposed a way of doing this, which we all have to live within those guidelines. They’re not easy, because so much of it relies on us policing sidewalks and things that we’ve never done before. But this is a new normal and this is what we’re going to have to do to use this lifeline.

Rigie said that social distancing and other safety protocols are the most important thing to most restaurants right now, but in order to survive this pandemic, the government has to work with restaurants instead of punishing them.

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“While public health and safety has to be paramount, we also need to ensure that enforcement focuses on the bad actors blatantly violating the requirements," Rigie said. "And for those small businesses that are trying to do the right thing under extraordinarily trying circumstances, we need to focus on education and training instead of just issuing violations and potentially suspending liquor licenses.”

But even bars and restaurants that are doing everything right are still having trouble breaking even. Mitch Banchik, who owns eight bars in the city, said that outdoor dining alone is barely making a dent in his losses.

"You look at all the cafes in the city and it looks great and people love it. Dining outside on the street is kind of a unique thing for New York City people. But the fact of the matter is, everybody is still off 90 percent,” Banchik said. “We're doing 10 percent of what we used to do.”

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