Strained by the Pandemic, Big NYC Restaurant Groups Slated to Extend Layoffs Past Six Months

Keith McNally’s Minetta Tavern, which began “separations” with 93 employees in March when the COVID-19 shutdown took effect, said in a state filing last week that those layoffs are expected to continue past six months. The announcement, known as a WARN notice, adds that some of the job cuts at the steak-centric brasserie might “become permanent.” McNally, who didn’t respond to request for comment, issued the same notice for his management company, which laid off 22 employees; for his Italian spot Morandi, which laid off 106 staffers; and for his French-y Balthazar restaurant and bakery, which laid off 266. Aside from Pastis, which McNally runs with mega-restaurateur Stephen Starr, only Morandi has publicly announced plans for a limited reopening, starting in mid-September.

All told, McNally restaurants have made it clear that the most of the 487 employees who have been out of work for the past half year will remain out of work. That tough news comes during tough times; the COVID-19 pandemic has killed over 180,000 in the U.S., and there are still more jobless restaurant workers than open restaurant jobs. Enhanced federal unemployment benefits, which made life a little less crushing for millions, expired over one month ago.

Other major culinary groups have been extending their furloughs too, or making additional cuts, as the city’s economic crisis — and indoor dining ban, whose goal is to save lives — continues. The historic Rainbow Room at the top of Rockefeller Center is keeping 153 unionized workers on furlough for an “undetermined period of time.” Neither David Chang’s Momofuku restaurants nor Danny Meyer’s Union Square Hospitality Group is planning on bringing back the bulk of its staff just yet, both confirmed to Eater. And things also don’t look too good for the nearly 700 Maison Kayser employees who were laid off or furloughed in March; virtually all of the French bakery’s stores remain closed. Maison Kayser did not respond to requests for comment.

These layoffs are not anecdotal outliers. The city’s jobless rate remains nearly double the national level at a Depression-era 20 percent. And new unemployment claims for food service workers throughout the state hit 4,200 last week — even as restaurants prepare to staff up for the fall — compared with 656 that same week a year before.

---

As the above numbers attest, New York’s food service economy, while showing signs of life, exhibits undeniable marks of peril. While patrons book up some of the hottest alfresco tables a few weeks out, other venues sit empty for lack of sufficient outdoor space. Scores of restaurants are closing permanently, with many of their job losses going unreported as smaller venues aren’t required to file WARN notices. Even some of the best-capitalized operators are cutting back on staffing or postponing reopenings.

Indeed, a fresh round of economic data suggests that any type of nascent restaurant industry recovery is beginning to lose steam. Those realities, combined with a Congressional stalemate over enhanced jobless aid and an almost inevitable slowdown in consumer spending, hint at a tough fall to come for restaurants and their embattled workers.

Full-service bars and restaurants in New York, according to data released late last month, gained about 29,000 jobs in July, representing a 22 percent increase. That is good news — really, any type of rise in employment is welcome — but it’s still about three percentage points lower than June’s increase. Like the larger U.S. jobs market, the worry is that things are improving at a slower pace than before.

If that all sounds like economic hand-wringing, consider the following: A slower recovery has very real effects for the city’s unemployed hospitality workers, of whom there are still over 163,000, about half the local industry. A more sluggish recovery means those individuals will have a more difficult time finding work, which is all the more alarming given that enhanced unemployed benefits expired in late July. Furloughs that extend past six months are even more concerning; long-term unemployment has been shown to contribute to higher poverty rates, and individuals who have been out of work for a long time tend to earn less when back on the job.

David Chang’s Momofuku empire laid off 331 people in the spring. Many of those former employees are now edging toward the six-month anniversary of that date. Momofuku’s mall venues — Noodle Bar Columbus Circle, Bang Bar, Kawi, and Peach Mart — all remain closed, as does Bar Wayo. The restaurants that remain open are operating with “lean” teams, per a spokesperson for the group. Or, put more explicitly: “We haven’t been able to bring back a substantial number of the employees that we laid off in March,” said the spokesperson, who added that “with no guidance or timeline for indoor dining,” Momofuku isn’t able to rehire more employees. The restaurant group continues to pay COBRA costs for employees who received their health care through Momofuku.

Alex Raij, who runs La Vara, El Quinto Pino, and two other acclaimed Spanish restaurants in Chelsea and in Cobble Hill with her chef-partner, Eder Montero, has only been able to rehire about 26 out of 65 ex-employees so far. Raij said she’s happy to be able to meet those staffing numbers, given the group’s limited hours and reduced frontage in Brooklyn. That ratio of rehires indeed is higher than at bigger chains.

Union Square Hospitality Group, which normally employs thousands, has only rehired approximately 7 percent of the roles that existed pre-shutdown, a spokesperson tells Eater. The rehires have supported outdoor dining efforts at Gramercy Tavern and Union Square Cafe, as well as a partnership with the Rethink food charity. Like Momofuku and others, Meyer’s restaurants are awaiting guidance for indoor dining and larger events. In the meantime, the group has created a nonprofit that has awarded over $1.8 million in grants to team members experiencing hardships.

At New York’s four Boqueria restaurants, owner Yann de Rochefort has rehired for about a third of the 324 people he laid off in March. He said he hasn’t been able to use all of his Paycheck Protection Program loans because business hasn’t improved enough to justify more hiring. Rochefort, who called for the city and state to offer a path to indoor dining — which he believes can be done safely — said early returns from an employee survey showed 90 percent “definitely” want to return to work.

---

The slowing pace of restaurant jobs growth jibes with a larger city jobs market that remains brutally stagnant. As the country’s overall unemployment rate fell to 10.2 percent in July, the New York City rate remained almost unchanged at 20 percent. The labor economy is even ghastlier in the Bronx, where unemployment rose a whisper to 24.9 percent in July.

A high unemployment rate combined with a cash-strapped population is not a good recipe for the type of spending that restaurants rely on. Nationwide consumer spending only grew at a pace of 1.9 percent in July, according to data released by the Bureau of Economic Analysis last week. That’s down sharply from June’s 6.2 percent increase and May’s 8.2 percent uptick.

Economists cited in the Wall Street Journal say consumer spending will be “clouded” in future months, especially given the expiration of the enhanced $600 unemployment checks. Gov. Andrew S. Cuomo has applied for a new federal program called the Lost Wages Assistance program, but it will only supplement more austere state benefits by $300 per week. It is initially slated to last for three weeks, and New York has not yet announced when the program will begin.

The U.S. will release national August jobless numbers for the hospitality industry on Friday — the industry’s unemployment rate was 21.8 percent in July — though New York State data won’t be available for another few weeks. In the meantime, food service jobless claims, released weekly, hint at a very mixed picture. Over the past month, over 15,000 hospitality workers in the state have filed for unemployment benefits for the first time. Those claims are much, much better than earlier in the pandemic, but they show that restaurants continue to lay off at a clip that would be unprecedented during normal times.

The numbers are staggering. The permanent closure of Thomas Keller’s TAK Room cost the city 76 jobs, according to a state filing. The closure of Taladwat by David Bank and Brian Ghaw, a more intimate Thai spot in Hell’s Kitchen, resulted in the loss of 30 jobs. Lady M Bakery, a chain famous for its $95 green tea crepe cakes, converted 45 furloughs in Queens into permanent separations earlier in August.

HMS Host, which runs food service operations at John F. Kennedy International airport, said earlier this month that any of its 246 furloughed employees who aren’t recalled by mid-November will be permanently laid off. And as air travel remains weak, two major airline catering companies, Flying Food Group and LSG Sky Chefs, followed suit by announcing just under 1,000 anticipated layoffs total for the beginning of October. For many people in the larger food services industry, things aren’t getting better; they’re getting much worse.

Disclosure: David Chang is producing shows for Hulu in partnership with Vox Media Studios, part of Eater’s parent company, Vox Media. No Eater staff member is involved in the production of those shows, and this does not impact coverage on Eater.