Le Cirque & 4 More NYC Restaurants Closing: Higher Rent Forces Move to Cheaper Locations

Le Cirque & 4 More NYC Restaurants Closing
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Le Cirque, one of New York City’s most famous restaurants, looks like it might be closing its doors due to soaring rent. The owners of the high-end French restaurant are on the lookout for a new, smaller location. A number of other New York restaurants also shuttering their doors: The Gander has closed due to higher rent, while Lindy’s Restaurant and Courtyard New York LaGuardia Airport by Marriott are closing due to economic reasons.

Le Cirque Likely to Close After New Year’s Eve

After 43 years as one of the top dining destinations in New York City and favored by the likes of President Trump, Le Cirque is set to shutter its doors after the ball falls in Times Square on New Year’s Eve.

It’s not a total surprise. The storied eatery has faced many hurdles, including bankruptcy filings, class-action lawsuits, sexual-harassment lawsuits, and poor reviews.  This time though, Sirio Maccioni and his son, Mauro, say its because of high rent. The family is looking for a new, smaller location that is closer to Madison Avenue.

If the Maccioni family finds a new place to open the circus-themed French restaurant, it will be its fourth location. Le Cirque, which first opened in 1974, currently resides in the Bloomberg Tower on East 58th Street.

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While Le Cirque has been heralded as one of the best restaurants in the world, it has, in more recent years, been besieged by bad news. This past September, the restaurant’s social media manager got into an online spat with Yelp reviewers who did not take kindly to the restaurant hosting a $35,000-per-person fundraising event hosted by President Donald Trump. Writing on an account under owner Sirio’s name, he called Trump-hating reviewers, “social media Nazi white supremacists.”

Earlier this year, Le Cirque filed for bankruptcy; the company owed between $500,000 and $1.0-million to more than 100 creditors. Shortly thereafter, head chef Tom Valenti left. Le Cirque has also been the target of a wage lawsuit and a sexual harassment lawsuit. In a 2012 review, The New York Times downgraded Le Cirque from three stars to just one star, saying, “Le Cirque classics like steak au poivre, Dover sole almondine and even the famous chocolate soufflé lacked conviction. New dishes lacked rationale. Nearly everything lacked seasoning. The kitchen gave the impression that it had stopped reaching for excellence and possibly no longer remembered what that might mean.”

Bon appetit.

4 Other NYC Restaurants Closing & Laying Off Employees

Four other well-known New York City restaurants are also calling it a day. Lindy’s Restaurant at 825 7th Avenue will be closing its doors and laying off 35 employees on January 7, 2018. The company cited “economic” reasons for the closure.

Temple Bar, which is renowned for its creative beverages and traditional cocktails, said it was laying off 13 employees. Their last day serving shrimp and lump crab cocktail will be on December 31.

The Hotel Chandler, a boutique hotel in the NoMad/Flatiron district is terminating 60 employees. Citing economic conditions, those 60 workers will be looking for work, and probably will not want to spend $319.00 per night to stay at the Chandler.

The NoHo Star, a casual Chinese/American restaurant located in Manhattan, is closing and laying off 54 people. The restaurant, which has been open since 1984, said their last day of work will be December 31, the same day the restaurant closes for good.

Higher Rent Leading to Closure of New York Restaurants

Soaring real estate might be good for property owners, but it’s killing New York City’s once-flourishing restaurant industry, forcing many restaurants to close their doors for good.

In fact, rent, labor costs, and food costs in New York City are higher than in any other major urban center in the U.S., including Los Angeles and San Francisco. Some expenses in New York City are twice as costly as those on the West Coast.

For example, in Manhattan and in popular Brooklyn neighborhoods, rent is $120.00 per square foot. In Los Angeles, the priciest restaurant rent averages about $52.00 per square foot. Rent in San Francisco’s business district is a much more modest $45.00 per square foot.

These out-of-control rents are forcing many New York City restaurants to rethink their business strategy. Danny Meyer’s Union Square Cafe, which first opened its doors in 1985, was paying $4,500 per month in rent. Over the last 30 years, that rent increased fivefold and forced Meyer to move his restaurant to an area northeast of Union Square.

The space currently being rented by Blue Water Grill, which is also on Union Square West, is being marketed for close to $2.0-million a year. Even though Blue Water Grill is one of the most successful restaurants in New York City, it cannot afford the $2.0-million+ in rent and will be locating sometime over the next 12 months.

It’s not just sky-high rent that is forcing restaurants in New York City out of business, it’s also the cost of food and labor. A flat of strawberries costs $65.00 in New York City and just $36.00 in Santa Monica. A six-ounce lamb rack goes for $24.95 in New York City, in Los Angeles, it’s 65% cheaper at $8.85.

Labor costs are also more expensive on the East coast than West coast. In 2015, the average salary for a cook in New York City was less than $29,000. In San Francisco, it was above $31,000 and in Los Angeles, it was $25,300. But minimum wage in New York is going up to $15.00 per hour. With New York City restaurant margins already tight, these costs will either be passed on to customers or restaurants will, like Le Cirque, close their doors.

 

Sources

Le Cirque Will Likely Close After New Year’s Eve,” Eater, October 3, 2017.

Le Cirque Blames ‘White Supremacist’ Comments on Social Media Manager,” Eater, October 2, 2017.

Voluntary Petition for Non-Individuals Filing for Bankruptcy,” U.S. Bankruptcy Court for the Southern District of New York, March 24, 2017.

It’s Been A While, Hasn’t It?The New York Times, September 19, 2012.

WARN Report,” New York State Department of Labor,” September 29, 2017.

WARN Report,” New York State Department of Labor,” September 29, 2017.

WARN Report,” New York State Department of Labor,” September 29, 2017.

WARN Report,” New York State Department of Labor,” September 29, 2017.

The Struggle Is Real: Running a Restaurant In NYC Really Does Cost More,” Eater, October 26, 2017.

How Rent Spikes Are Creating Fine Dining ‘Deserts’ In New York City,” Bloomberg, July 20, 2017.

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