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Hybrid jobs hurting big city restaurants, bars: Study

by SuperiorInvest

Commuters arrive at the Oculus station and shopping center in Manhattan on November 17, 2022 in New York City.

Spencer Platt | Getty Images

For many downtown restaurants and hotels, sales are returning to pre-pandemic levels — but only on Tuesdays, Wednesdays and Thursdays.

In cities like New York, Los Angeles and Atlanta, the three-day personal work week presents challenges for hospitality businesses. With fewer workers in the office on Monday and Friday – the strongest sales days for some businesses – many businesses were forced to change work schedules or launch initiatives to attract customers at the beginning and end of the week.

Amali, a restaurant on the edge of midtown Manhattan, takes only a quarter of its midweek business on Mondays and Fridays, said managing partner James Mallios.

Hotels are also seeing a slower start and end to the week for business travelers. However, hotels across California have seen more cases of combined business and leisure travel, according to Pete Hillan, a partner at the public relations firm Singer Associates, which has clients in the hospitality industry.

WFH Research, which conducts surveys and research projects on working arrangements and attitudes, published findings showed last week that telecommuting is costing cities billions a year. According to data collected from June to November, the reduction in spending per person in New York was $4,661, followed by $4,200 in Los Angeles and $4,051 in Washington, D.C. The study outlined a dozen cities with annual spending reductions of more than $2,000. per person.

Personal work days decreased the most, at 37%, in Washington compared to pre-pandemic levels, followed by Atlanta at 34.9% and Phoenix at 34.1%. In work from home, the sector of information, finance and professional and business services leads.

According to WFH Research co-founder Jose Maria Barrera, 28.2% of employees are hybrid—working some days in the office and some days remotely—compared to 12.7% who are completely remote. Although 59.1% of workers work full-time on-site, hospitality businesses that cater to office workers are still struggling to make ends meet, Barrero said. WFH research found just that 5% of paid working time were distant before the pandemic.

Andrew Rigie, executive director of the New York City Hospitality Alliance, said people are more likely to spend more on breakfast or lunch or go to happy hour after work when they are in commercial districts compared to what they spend at restaurants. and bars in their own neighborhood when they work remotely.

However, the demand for company dinners and catering has not disappeared in many cases.

“We’ve found that there is significant demand from the business community, both for lunch and for a really fun happy hour later, many degrees higher than before the pandemic,” said Steve Simon, a partner at Atlanta-based Fifth Group. Restaurant.

From city centers to suburbs

This month, the only Manhattan location of Ruth’s Chris Steakhouse announced it would close in April, and a number of downtown Manhattan restaurants, including the Thai-inspired upscale casual, have closed.

“Even though you may be busy on Wednesday and Thursday, your Monday and Friday can be very slow,” Rigie said. “If someone walked by a restaurant on a Thursday around lunch or dinner, they might say, ‘Wow, that 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 reduced foot traffic in urban centers. A 10% decrease in foot traffic on the census tract leads to a 1.7% decrease in food service and lodging employment, as well as a 1.6% decrease in wholesale and retail employment.

Areas with positive traffic growth saw employment growth in the same sectors.

“Particularly because the enumeration areas that have increased attendance tend to be suburbs moving away from dense urban areas, then this means that employment seems to be doing better in restaurants, bars and retail. suburban, less dense census tracts,” said Michael Dalton, a research economist at the bureau who led the study, which was released in August.

WFH Research’s Barrero said significant spending has shifted to locations outside the centers, hurting city centers.

“If it moves from New York to the surrounding counties in the metro area, it means a loss of sales tax for the city,” he said. “That goes hand in hand with the loss of shipping revenue and so on.

Over the past six months, Barrero said, the data showed a steady number of total days worked from home for the aggregate economy at just under 30%. Telecommuting fell to around 27% from 29% in January, although it predicts the level of telecommuting won’t drop below 25% in the near future.

“The bad news for these restaurant owners and so forth is that I don’t think we’re going to go back to normal, and we’re probably very close to where the new normal is,” Barrero said.

Restaurant resilience

Rigie of the New York City Hospitality Alliance said full-service restaurants may have more consistent traffic in the long run because of tourists and show-goers than fast-casual, limited-service restaurants that cater more to the office. crowds. However, full-service restaurants they have higher overhead costswill be further addressed staff shortagehe said.

“If the staff realizes why I’m in this restaurant when many nights aren’t as busy and I’m not making as much, they can go to a restaurant in another neighborhood where it’s busier earlier in the week,” he said. .

Emily Williams Knight, CEO of the Texas Restaurant Association, said downtown Texas restaurants are seeing two different types of workforce recovery. She said Houston reported office space is 60% filled with a 30% vacancy rate, while Austin led the nation in return to personal work.

On a recent trip to downtown Houston, Williams Knight said she had “never seen the streets as empty as I saw them in the middle of the week, in the middle of the day.” She added that the return of conventions and business trips is particularly slow.

Houston and Dallas, which have average commute times of nearly half an hour, have seen small weekday lunch and happy hour crowds in the past few months. Combined with four decades of high inflation and labor costs that have risen more than 20% in the past two years, some restaurants have been forced to close or relocate.

“When you had five, six, seven restaurants within blocks of each other and you could choose, you would try to go into town and eat at your favorite restaurant,” Williams Knight said. “Now that lack of choice is also keeping people at home and there’s no such fit in that spending going on.”

Nick Livanos, owner of Livanos Restaurant Group, has two restaurants in Manhattan and two in Westchester. While Westchester restaurants have more consistent lunch and dinner, he said, Midtown’s Oceana has “extremely busy” Tuesdays, Wednesdays and Thursdays, but much weaker Mondays and Fridays.

Molyvos, the group’s upscale Greek restaurant, moved from Midtown to a smaller space in the more residential Hell’s Kitchen in November. He said the new location has attracted longtime residents who are more loyal, like the Westchester crowds.

Rigie said downtowns need to focus on reaching not only office workers, but also tourists and residents of surrounding neighborhoods, while adjusting hours, cutting costs and building relationships with local businesses as remote work continues.

And despite discussions of converting many underoccupied office buildings into residential units, restaurants may not benefit for years.

A handful of independent restaurants in Houston and Dallas are moving to the suburbs.

Tracy Vaught, who owns five restaurants in the Houston area, said business from office workers downtown doesn’t pick up until later in the week. Four of its restaurants are now closed on Mondays and another is closed for lunch on Tuesdays and Wednesdays. He expects business to pick up at all locations as spring approaches.

“Restaurants in the suburbs suffer from the same things that downtown restaurants or office park restaurants suffer from, which is that not everyone is back at work,” Vaught said.

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