Passengers arrive at the Oculus Station and The Mall in Manhattan on November 17, 2022 in New York City.
Spencer Platt | Getty Images
Many downtown restaurants and hotels are seeing sales return to pre-pandemic levels — but only on Tuesdays, Wednesdays and Thursdays.
In cities like New York, Los Angeles, and Atlanta, the three-day in-person work week has posed challenges for hospitality companies. With fewer people in offices on Mondays and Fridays – which for some companies were their strongest sales days – many companies have had to change work schedules or launch initiatives to attract customers at the start and end of the week.
Restaurant Amalie, which sits on the edge of midtown Manhattan, pulls at least a quarter of business midweek on Mondays and Fridays, managing partner James Mallius said.
Hotels are also seeing slower starts and ends in the week for business travelers. However, hotels across California have seen more cases of both business and leisure travel, according to Pete Helan, partner at public relations firm Singer Associates, which has clients in the hospitality industry.
WFH Research, which conducts surveys and research projects on work arrangements and attitudes, released results last week showing that remote work costs cities billions a year. According to data collected from June to November, the decline in per capita spending in New York City was $4,661, followed by $4,200 in Los Angeles and $4,051 in Washington, DC. The study identified twelve cities with a decrease in annual spending of more than $2,000 per capita.
Personal workdays are down 37% in Washington, compared to pre-pandemic levels, followed by Atlanta at 34.9% and Phoenix at 34.1%. The information, finance, and professional and business services sectors are driving home work.
According to Jose Maria Barrero, founding partner of WFH Research, 28.2% of employees are blended — they work a few days in the office and some days remotely — compared to 12.7% of employees who are completely remote. Although 59.1% of workers work full time on site, hospitality companies that cater to office workers still struggle to make ends meet, Barrero said. WFH research found that pre-pandemic only 5% of paid hours worked.
People are more likely to spend more on breakfast or lunch, or go out to happy hour after work, when they’re in business districts, said Andrew Rigge, executive director of the New York City Hospitality Alliance, than they spend at restaurants and bars in their neighborhood when they’re in. Distance working.
However, the demand for corporate dinners and takeaway meals has not disappeared in many cases.
“We’re finding there’s a lot of demand from the business community, both from a lunch standpoint, but after a really fun happy hour, and by many degrees at a higher level than it was before the pandemic,” said Steve Simon, partner with the Atlanta-based Fifth Group. Restaurants.
From city centers to suburbs
This month, Manhattan’s only Ruth’s Chris Steakhouse announced it would close in April, and several midtown Manhattan restaurants, including the Thai-inspired Random Access, have closed.
“Although you may be busy on Wednesdays and Thursdays, Mondays and Fridays can be very slow,” Reggie said. “If someone walks by a restaurant at lunch or dinner time on a Thursday, they might say, ‘Wow, this restaurant is packed, they’re so busy,’ but it’s not like that every day.”
The Bureau of Labor Statistics found in a study that increased telecommuting leads to a decrease in foot traffic in urban centers. A 10% decrease in foot traffic in the census leads to a 1.7% decrease in food service and lodging employment, as well as a 1.6% decrease in wholesale trade and retail employment.
Areas with positive increases in traffic saw increases in employment in the same sectors.
“Especially as the census areas that have seen increases in foot traffic are more suburban, and move away from dense urban areas, what that means is that employment seems to work better in restaurants, bars and retail in these places,” said Michael Dalton, researcher. The economist in the office who led the study, published in August, says the suburbs are the least densely populated areas.
Barrero of WFH Research said the big spending has moved to locations outside of downtown, hurting city centers.
“To the extent this moves from New York City to neighboring counties within the metro area, it would mean a loss of sales tax for the city,” he said. “This goes hand in hand with loss of revenue for transit passengers and so on.”
Over the past six months, Barreiro said, the data has shown steady amounts of total days worked from home for the overall economy at just 30%. There was a decline in remote working in January to around 27% from 29%, although it is expected that remote working levels will not drop below 25% in the near future.
“The bad news for restaurant owners and such is that I don’t think we’ll ever get back to normal, and we’re probably going to be very close to the new normal,” Barrero said.
Reggie, of the Hospitality Alliance in New York City, said full-service restaurants may have more consistent business in the long term, due to tourists and people going to shows, than limited-service fast-food restaurants, which cater to larger office crowds. However, full-service restaurants, which have higher overheads, will continue to deal with staffing shortages, he said.
“If the employees realize why I’m at this restaurant if I don’t have many busy nights and I don’t make much, they might go to a restaurant in another neighborhood where it’s busier earlier in the week,” he said. .
Restaurants in downtown Texas are seeing two different types of workforce recovery, said Emily Williams Knight, CEO of the Texas Restaurant Association. Houston reported office space 60% full with a 30% vacancy rate, she said, while Austin led the nation in returning to in-person work.
On her recent trip to downtown Houston, Williams-Nite said she had “never seen the streets so empty as in the middle of the week, in the middle of the day.” She added that the return of conferences and business travel has been particularly slow.
Houston and Dallas, which both average commute times around a half hour, have seen small lunch and weekday hustle happy hours over the past few months. She said that along with high inflation in four decades and labor costs of more than 20% in the past two years, some restaurants have had to close or relocate.
“When you have five, six, seven restaurants within blocks of each other, and you can take your pick, you’re going to try to go into town and eat at your favorite,” said Williams-Knight. “Now, that lack of choice also keeps people at home, and all that kind of overlap with that spending isn’t happening.”
Nick Livanos, owner of the Livanos Restaurant Group, has two restaurants in Manhattan and two in Westchester. While Westchester restaurants offer more consistent lunch and dinner service, he said, Oceana in Midtown is “very busy” on Tuesdays, Wednesdays and Thursdays, but much weaker on Mondays and Fridays.
The group’s upscale Greek restaurant, Molyvos, moved out of Midtown in November to a smaller space in the residential restaurant Hell’s Kitchen. He said the new location has attracted longtime residents who are more loyal, like the Westchester crowd.
Downtown needs to focus not only on appealing to office workers but also to tourists and residents in nearby neighborhoods, Reggie said, adjusting hours, cutting expenses and forging relationships with local businesses while still working remotely.
And despite discussions about repurposing many low-occupancy office buildings into condominiums, restaurants may not take advantage of this for years.
A few independent one-unit restaurants in Houston and Dallas are moving to the suburbs.
Tracy Foote, who owns five restaurants in the Houston area, said work from office workers in downtown locations doesn’t pick up until later in the week. Four of its restaurants are now closed on Mondays, and another restaurant is closed on Tuesdays and Wednesdays for lunch. She expects business to pick up at all locations as spring approaches.
“Suburban restaurants are experiencing the same things as downtown or office park restaurants, and that means not everyone is going back to work,” Foot said.