Dealing with New York City’s Harsh Rental Reality

Today’s restaurant owners and managers face an abundance of stress factors coming at them from multiple directions. Trendy food trucks, with their lower overhead and low-cost fare, lure diners from indoor tables. “Ghost” restaurants that only take online orders and deliver also take a toll on dining revenue, while the costs of compliance with the Affordable Care Act impact larger establishments and chains.

But the concern we hear the most in our New York City-based Food and Beverage practice is that soaring rents are squeezing even successful eateries with large followings out of business. Some fine establishments, including Danny Meyer’s flagship Union Square Cafe, have recently shut their doors and many more have had to find ways to cut costs to absorb those increases. Even legendary chef Bobby Flay closed his Mesa Grill in the Flatiron District when the rent doubled.

Passing a rent increase along to the customer via menu prices is a risky game, especially if your…