Today the Post sees the restaurant industry’s glass being half empty, while Crain's finds it half full. First, Steve Cuozzo complains that “the torrent of argument-starting launches that matter culinarily and/or socially has thinned to a trickle,” citing supposedly dumbed-down openings (Michael White’s downtown spot, Marcus Samuelsson’s uptown spot), as well as a lack of critical buzz (“Times critic Sam Sifton reviewed four new Manhattan restaurants in the past 10 weeks”) as evidence that “the credit crunch is hurting restaurants as painfully as the office-building sale market.” As a result (and as others have pointed out), restaurateurs can only launch ambitious projects if they’re underwritten by a hotel or museum. Even Danny Meyer says he doesn’t think he’d open another freestanding restaurant right now, because the cost is “so prohibitive, you’d be working for your landlord rather than for your investors.” It all sounds very grim, but Crain's sees the upside of it.
That publication quotes Dan Warren, the owner of Common Ground and new spot West 3rd Common: “If you run a restaurant in a low- to middle-price range in New York City, you're almost immune to the recession.” And to prove it, Warren says he made $22,000 in the month of January. How so? Well, by paying “modest wages” to chefs fresh out of culinary school, and by hiring a front-of-house staff of young folks and immigrants.
The low salaries help keep startup costs fairly minimal. Rent is the biggest issue. West 3rd Common is paying $14,500 a month for its space. The $500,000 in startup costs are covered by a silent investment group of friends and family who also funded Common Ground. Success, according to Mr. Warren's formula, requires pulling together enough operating capital for nine months of losses plus an extra $100,000 in capital reserves. He anticipates annual revenues of $1.5 million by 2012, similar to Common Ground's.
So there you go: It’s still possible to open a profitable freestanding restaurant so long as you have sliders and wings on the menu.