Ninety percent of New York restaurants report they will likely not be profitable by year’s end without assistance from the government, such as commercial rent relief, increasing capacity for indoor dining, and insisting that insurance providers cover business interruption claims, according to a survey by the New York State Restaurant Association (NYSRA).
The survey reflects the economic crisis restaurant owners are experiencing after state-mandated closures and restrictions were implemented to stop the spread of COVID-19.
While the vast majority of New York restaurants are suffering, some are doing well, such as pizzerias that had established takeout and delivery services before the closures. Some establishments where indoor dining was impacted by social distancing requirements once restaurants were able to reopen, said that allowing for outdoor dining has enabled them to serve more customers.
“It gave me about another 25 to 26 seats,” Vic Marchese, owner of Main St. Pizza Company in Batavia, told NNY360. “I guess it was originally a New York state idea, just to make the seating available closer to the road. They’ve (the tables and chairs) got to be about 2 feet away from the roadway so people can open their doors.”
The majority of restaurants are still struggling, though. According to the survey, 93.6% of restaurant operators saw a decrease in sales volumes from April to July compared to the same period in 2019 — as much as 70% or more since state shutdowns began. More than 91% of restaurant owners said they were forced to furlough or lay off employees, and more than half (54.7%) had to either lay off or furlough 90-100% of their employees. Another 18% of restaurants remain closed — including some permanently — due to lagging business, lack of employees, or not enough seating.
Without relief from the government or insurance companies, many more New York restaurants may have to close their doors for good.
Hundreds of restaurants have tried to file claims against their business interruption insurance but have been denied by their insurers. Business interruption insurance provides coverage of payroll and bills in the event a disaster forces to a temporary close. Insurers are telling restaurants that pandemics are not the kind of disaster they cover, despite in numerous cases plans do not have virus exclusions.
As a result, restaurants are suing their insurers for breach of contract. Beasley Allen lawyers are helping by actively investigating and filing claims against various insurance companies for denial of business interruption coverage during the COVID-19 pandemic. They are also involved in advocating for consolidation of these actions in multidistrict litigation (MDL). Dee Miles, head of our Consumer Fraud & Commercial Litigation Section, Rachel Boyd, and Paul Evans, lawyers in the Section, are spearheading this litigation for our firm and are monitoring all MDL developments as they arise.