The Rent's Too Damn High

Lucky Cheng's restaurant in the East Village went up for sale recently, with a monthly rent supposedly of $40,000. Let me say that again: $40,000 per month. A few weeks ago, Kate's Joint, the longtime, much-loved vegetarian restaurant on the corner of Avenue B and West 4th Street was seized for nonpayment of, seemingly, everything and put back on the market. I took a look at the space (which is huge!) and the asking price was around $13,000. For a restaurant, a good rule of thumb if you want to survive is that you need to make your entire rent in one good night. Dirt Candy's rent is around $2600 and that's what I can pull in on a really great Saturday night. But the idea of pulling in $13,000 in a night? Or $40,000? There's only one conclusion: the rent is too damn high.

Mars Bar: closed.

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The restaurant space next door to Dirt Candy has been through 5 incarnations since I opened roughly 4 years ago. First it was clothing store Funky Lala, then it was Sintir, then it was Olivia's, then Zi Pep's, now another restaurant is coming into the space after Zi Pep's shuttered last month. The problem is, in part, that rents in the East Village are going up, but menu prices aren't. I've talked before about the fact that food prices have more to do with your rent than the cost of food. And I talk about it in the Dirt Candy Cookbook, too:

I haven't raised my prices since I opened and every year the rent creeps up by a few percentage points and the gap between my gross and my net profits gets a few percentage points wider. If a restaurant doesn't have a decent lease, or a cash buffer, that gap turns into a chasm, the chasm turns into a bottomless hole, and eventually it swallows you and your restaurant.

Kate's Joint: closed.

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The problem with the East Village is that the commercial real estate price per square foot is about $225-350 these days (up from $150 per square foot in 2005). There's nothing wrong with landlords making fair market value for their properties, that is entirely fair and it's their right. So I'm not blaming them at all. But you reach a point, which we're fast approaching, when small restaurants with individual owners are priced out of the market and the only restaurants which will be able to afford the rents in the East Village are places that can either draw a huge number of people to their bar, which is hard on residents and leads to things like the expensive battles between the Community Board and restaurants that want a hard liquor license, or restaurants and bars backed by a large management company, meaning more and more huge restaurants backed by groups that own several restaurants.

Holiday Cocktail Lounge: closed.

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There's nothing wrong with any of this, it's just the way the world is, but if you look at the real estate listings you realize that small restaurants with single owners are not going to be long for the East Village because, believe me, rents never go down, only up. We're going to see more restaurants from China Grill Management and other hospitality groups, and we're going to see more restaurants that hold hard liquor licenses transformed into nightclubs and bars so that the expensive overhead of a kitchen can be cut from their budgets and their lucrative bar business can expand so that they can afford their rents.

Life Cafe: closed.

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There's no way to stop this: it's the way of the East Village. You can't make landlords take less than market value for their property and you can't make chefs with a dream and a business partner suddenly richer. And once rents are raised, they're never lowered. The future of the East Village: less small restaurants, more bars, more nightclubs.

You can read about a spate of closings on Avenue B at EV Grieve.

 

.http://www.youtube.com/watch?v=Gg5SwyTvAHw