BANKRUPT: America’s highest earning restaurant

Recessions are incredibly destructive to the hospitality industry. Personally, I believe this may be a good thing as it does clear away a lot of dead wood from what is a very competitive business. Having said that, it’s never nice being on the receiving end, and I speak from experience here.

One restaurant that hasn’t made it through is New York’s famous Tavern on the Green, which has filed for bankruptcy protection. Ironically, the restaurant opened in 1934 during the Great Depression and has been taken down, in part, by the current recession. Figures in 2005 showed that Tavern was earning nearly $38 million every year. It can seat up to 1500 people at a time and serves up to 750,000 patrons per year.

2007_06_tavern
Tavern on the Green

New Yorkers, however, have been complaining about the place for years, saying it is nothing more than a tourist trap serving substandard food. The current operators, the LeRoy family, who have owned the lease since 1976, have, according to the New York Times, filed for bankruptcy:

In a statement, the current license holder, Jennifer Oz LeRoy, chief executive of Tavern, said that the filing was “our only alternative given the current situation.” She said the decision was the result of “two factors — the extreme financial distress brought on by the current financial crisis and the City of New York’s decision not to renew our license.” 

The tavern licence is issued by the NYC parks department and this department has decided to reissue the licence to another operator after the current managers fell behind in their payments. Debts are estimated between 10 and 50 million dollars.

When the New York City Department of Parks & Recreation put the Tavern on the Green contract to bid earlier this year, numerous restaurateurs were interested, but most backed out when they learned of the estimated $25 million in structural and facility improvements that the restaurant requires.

This is just one of a number of high profile closures in New York. Over at The Atlantic, Daniel Indiviglio asks if Gotham is falling, given the number of well-established restaurants that have recently hit the wall. Another classic place to close recently is the upper west side Café des Artistes which has been operating for 92 years. Its shuttering closely followed the failure of La Goulue, an upper east side eatery that folded after 36 years in the trade.  

The Daily News reports that according to market research company NPD Group, some 512 NY restaurants have closed this past year. The foodie website, Eater.com, now runs a regular column called The Shutter where readers can send in photos and information about new restaurant closures.

The damage is not limited to New York, however, and in a similar vein to Eater.com, SF Weekly has been running a monthly column this year charting the recessionary impact on San Fran’s restaurants. Here, too, there have been some major casualties. These include one of SF’s oldest restaurants, Jeanty at Jack’s, as well as one of owned by world-famous chef Wolfgang Puck, the 20-year-old Postrio. A common pattern emerging is that restaurants which closed for the summer break just never bothered to reopen.

The doom and gloom, however, is not universal. Over in London — a city that has been hard hit by the collapse of the finance industry — there are some surprising figures out on restaurants this week:

A total of 64 restaurants have closed in the past year while openings have risen from 111 last year to 121 this year marking a return to the decade’s normal range.

 The speculation around these figures is that the restaurant-going public have not lost their jobs and have benefitted from much lower mortgage rates and a drop in Value Added Tax, thus enabling them to maintain their discretionary spend.

So there you have it — a restaurant recession report. It’s an unpredictable business and I’m glad I’m no longer in it.

Further Reading: Fine Dining in the Recession


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2 Responses

  1. I’d like to examine those figures for openings in London and see if those “entrepreneurs” aren’t simply, misguided white middle-class folk, in the thrall of celebrity chef culture, who are finally “living their dream”.

    Good luck with that folks…

    Not bitter

  2. […] a quick follow-up to last week’s restaurant recession report, new information in the past week further supports a significant difference in the effects of the […]

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