UPDATED Thursday, March 26, 2020, 5:55 p.m.: A group of more than 250 restaurant owners including chefs Bobby Flay and David Burke are ready to put the heat on the real estate industry.
The organization, dubbed The Restaurant Network, seeks to establish a set of “universal terms” restaurants can present to their landlords. It was started by New York City hospitality consultant Steven Kamali, who wants to draw up a roadmap to help restaurants survive the coronavirus pandemic and eventually reopen.
Though the terms are not yet finalized, the core concepts include restaurants being relieved of rental payments for the duration of a stay-at-home or shelter-in-place order; paying no rent, or reduced rent, for a period following the lifting of those restrictive orders; and that landlords give restaurants back their security deposits to put towards the costs of getting their venue reopened.
The game plan is to present a finalized memo of terms to the Real Estate Board of New York. The organization hopes REBNY and its members will engage in negotiations over the terms and ultimately adopt the plan as an industry-wide approach to helping restaurants. Kamali sent an introductory email to the trade organization on Wednesday, but has not yet had any discussions with REBNY.
A spokesperson, who confirmed the receipt of the email, noted that REBNY has been discussing similar issues related to restaurants with groups such as The Partnership for New York City, the NYC Hospitality Alliance and Manhattan Chamber of Commerce.
The Hospitality Alliance has released a rescue plan for restaurants and is taking the position that rents and related legal obligations should be forgiven so long as Gov. Andrew Cuomo’s order prohibiting in-house dining remains in effect. Based on a recent survey of members, 1,870 restaurants, bars and nightclubs laid off or furloughed 67,650 employees since the order.
Kamali said the Network stands out for its singular focus on dealing with landlords.
“The reality is that none of the groups are focusing their efforts just on real estate,” said Kamali. “This is something that we felt we could be very effective with and no other group was focused on this space.”
The Alliance’s executive director Andrew Rigie said in an email that he welcomed the Network: “We’ve been leading the charge to forgive restaurant rent in a responsible way, and we welcome additional voices to join the chorus.”
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Kamali said security deposits would be a key cash infusion for many restaurants because they “don’t have the ability to call on banks.”
“This is from business owner to business owner,” he said. “These are the components that we’re going to need to be able to re-open.”
Kamali, who runs the consultancy Hospitality House, said the group began after he sent out an email to a group of clients on Monday after he and his team had been fielding “countless” requests on how to speak to landlords about rent relief.
In the email, he proposed working towards a common “message” to landlords and invited anyone interested in participating to join a WhatsApp group.
“For business owners to rely solely on themselves through this devastation is too great a challenge,” he wrote. “We need to be aligned and clear with our challenges and our expectations if we are to rebuild.”
As of Thursday, the group has broadened beyond Hospitality House clients through word-of-mouth and the setup of Instagram and LinkedIn accounts for the Network.
The more than 250 restaurant owners in the Network collectively run about 1,000 venues throughout New York State, according to Kamali. Prominent members include restaurateur Stephen Starr, chef Alex Guarnaschelli, and restaurants such as The Smith, Cipriani and nightclub 1OAK. There are also chapters of the Network launching in Miami, Los Angeles and Chicago, according to Kamali.
He said that the Network is consulting with a group of attorneys, accountants and insurance providers as it puts together its terms. He said he’s also been running terms by institutional landlords to get their reaction.
Though Kamali expects to encounter pushback from the real estate industry, he said the Network is ready to negotiate and he believes they all share a common goal.
“They don’t want to lose their tenants,” he said of the landlords he’s spoken to. “It’s going to be a dialogue.”
Write to Erin Hudson at ekh@therealdeal.com
Editor’s note: The story was updated with comment from NYC Hospitality Alliance’s executive director Andrew Rigie.