Restaurants and bars in big cities miss the expenses of office workers on Mondays and Fridays

Many downtown restaurants and hotels are seeing sales return to pre-pandemic levels, but only on Tuesdays, Wednesdays and Thursdays.

In cities like New York, Los Angeles and Atlanta, the three-day in-person work week has posed challenges for hospitality businesses. With fewer workers in offices on Mondays and Fridays – which for some companies were their strongest selling days – many companies have been forced to change working hours or launch initiatives to attract customers at the start and end of the week. weekend.

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

Hotels are also experiencing slower starts and weekends for business travelers. However, hotels across California have seen more examples of business and leisure travel combined, according to Pete Hillan, a partner at public relations firm Singer Associates, who has clients in the hospitality industry.

WFH Research, which conducts surveys and research projects on working arrangements and attitudes, released findings last week showing that remote working costs 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 described a dozen cities with a reduction in annual expenses of more than $2,000 per person.

In-person workdays have declined the most, 37%, in Washington from pre-pandemic levels, followed by Atlanta at 34.9% and Phoenix at 34.1%. The information, finance, and professional and business services sectors lead the way in working from home.

According to WFH Research co-founder Jose Maria Barrero, 28.2% of employees are hybrid — working some days in the office and some days remote — compared to 12.7% who are fully remote. Although 59.1% of workers are full-time on-site, hospitality businesses that accommodate office workers are still struggling to make ends meet, Barrero said. WFH research found that only 5% of paid work hours were done remotely 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 out for happy hour after work, when they find themselves in commercial districts, compared to the amount they spend in restaurants. and bars in their neighborhood when working remotely.

However, the demand for corporate dinners and catered meals has not gone away in many cases.

“We have seen that there is significant demand from the business community, both from a lunch point of view but from a really entertaining happy hour later, to many degrees above that of ‘before the pandemic,’ said Atlanta-based Fifth Group partner Steve Simon. Restaurants.

This month, the only restaurant Ruth’s Chris Steakhouse in Manhattan announced it would close in April, and many downtown Manhattan restaurants, including upscale Thai-inspired Random Access, closed.

“Even if you’re busy on Wednesdays and Thursdays, your Mondays and Fridays can be really slow,” Rigie said. “If someone were to walk past a restaurant at lunch or dinner time on a Thursday, they might say, ‘Wow, this restaurant is packed, it’s so busy’, but that’s not isn’t like this every day.”

The Bureau of Labor Statistics found in a study that the increase in remote working leads to a reduction in foot traffic in urban centers. A 10% drop in foot traffic in a census tract leads to a 1.7% drop in food and accommodation employment and a 1.6% drop in trade employment wholesale and retail trade.

Regions with positive increases in traffic saw increases in employment in the same sectors.

“Especially because census tracts that have seen increased foot traffic are more suburban, moving away from dense urban areas, so what that implies is that employment seems to be doing better in restaurants, bars and retail in these more less dense suburban census tracts,” said Michael Dalton, research economist at the office who led the study, which was released in August.

Barrero of WFH Research said significant spending has been shifted to locations outside of downtowns, hurting downtowns.

“To the extent that it moves from New York to adjacent counties in the metropolitan area, it means lost sales tax for the city,” he said. “This goes hand in hand with a loss of revenue related to public transit ridership, etc.”

Over the past six months, Barrero said, the data showed stable amounts of total days worked from home for the overall economy at just under 30%. There was a reduction in remote working in January to around 27% from 29%, although he expects remote working levels will not drop below 25% in the near future.

“The bad news for these restaurateurs and so on is that I don’t think we’re getting back to normal, and we’re probably very close to the new normal,” Barrero said.

Rigie of the New York City Hospitality Alliance said full-service restaurants may have more consistent long-term business, due to tourists and people attending shows, than limited-service fast-casual restaurants. , which are more office-oriented. crowds. However, full-service restaurants, which have higher overhead, will continue to face staff shortages, he said.

“If the employees realize why am I in this restaurant if a lot of nights aren’t as busy and I don’t earn as much, they can go to a restaurant in another neighborhood where there are more people earlier in the week,” he said. .

Emily Williams Knight, CEO of the Texas Restaurant Association, said restaurants in downtown Texas are experiencing two different types of workforce recovery. She said Houston reported office spaces are 60% full with a 30% vacancy rate, while Austin led the nation in returning to in-person work.

On a recent trip to downtown Houston, Williams Knight said she “never saw empty streets like 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 has been particularly slow.

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

“When you had five, six, seven restaurants within blocks of each other and you could choose, you tried to go into town and eat at your favorite restaurant,” Williams Knight said. “Now that lack of selection is also keeping people at home, and all that kind of matching with that spending isn’t happening.”

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

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

Rigie said downtowns need to focus not just on office workers, but also on tourists and residents of nearby neighborhoods, while changing schedules, cutting expenses and building relationships with local businesses. as remote work continues.

And despite talk of repurposing many low-occupancy office buildings into residential units, restaurants may not benefit for years.

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

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

“Suburban restaurants are suffering from the same things as downtown or office park-type restaurants, which is not everyone is back to work,” Vaught said.