Back to the Future

As seen in Crain's New York Business

New York City has reopened and is finally coming back to life, but what and who is it coming back to?

Restaurants are welcoming guests, offices are inviting their employees back, and Broadway shows and sports games are once again selling tickets for live attendance.

Is all of this an indication that the City that Never Sleeps is waking up?

Not so fast — we might need to hit the snooze button.

What’s taking a bite out of Big Apple restaurants?

The restaurants that survived have reopened and, in some cases, are even thriving.

The driving forces behind their success include the continuation of pandemic-era expanded outdoor seating coupled with customer appetites that have been accumulating for more than a year. Customers are eager to get out of the house, meet with friends and find some semblance of normal. The combination of these ingredients may sound like a recipe for success, but many restaurants are having a hard time reaching their full potential.

So, what’s the problem? For starters, depending on the neighborhood, business lunches have not made a full return because of the low office-occupancy and tourism levels. Also, it’s no secret that many restaurants have been struggling to find staff to hire or rehire. With an unemployment rate of 10.1% in June, compared with 3.8% in June 2019, the pool of potential talent theoretically exists.

Discussion about the cause of the problem, much of it politically charged, abounds.

Could the various federal unemployment programs that increased benefits during the pandemic and that were recently extended be the cause of the disconnect between unemployment rates and businesses struggling to hire? We will see what happens now that these payments have terminated. Does the mass exodus of residents in big cities such as New York and Los Angeles to states with lower income tax such as Texas, Florida and Tennessee explain the worker shortage?

Perhaps both scenarios have some merit, but the word on the street is that many employees from the industry have discovered new career paths. As the co-leader of the Restaurant and Hospitality Practice at Citrin Cooperman, I believe this development is of great importance to the future and success of all restaurants.

Leading the way back to the hybrid model office

Many office-based businesses have started to bring their employees back from a remote-work environment. Most have begun with a “soft opening” in which working in the office is voluntary. The majority of companies intend to transition to a hybrid model, probably in the fall. In this model, workers will spend time working in the office and from home.

Business leaders think this shift is permanent. This hybrid model could end up being the best of both worlds, offering flexibility without completely eliminating human connection.

Seeing co-workers for the first time in 18 months could be exciting and exhilarating—but also awkward. People need to get reacquainted and perhaps relearn how to socialize appropriately in a professional work environment following a period in which virtual meetings brought co-workers into one another’s private homes. Businesses should be cognizant of the culture shifts brought on by the long-term office closures and plan their reopening accordingly.

Industries that flourish from impeccable client service need to be mindful that there is no replacement for a face-to-face conversation. For the less experienced, it is believed that growth has been decelerated. In-person, hands-on training can be much more effective than virtual training.

One of the best ways to learn a new language is to submerse yourself into a new culture, and the same theory applies to learning and growing in your profession. Without the opportunity for employees to be surrounded by mentors and colleagues in the workplace, a lot can be lost in translation. Learning by osmosis is of significant value, and business leaders should take that into consideration when developing their long-term strategy.

Bottom line: There’s no going back to the status quo. I foresee offices operating with a skeleton crew on Mondays and Fridays, unless there is a specific reason workers need to be in the office. As the managing partner of Citrin Cooperman’s New York City headquarters, I say that only time will tell, but I look forward to seeing our employees and clients, and sooner rather than later.

Be our guest, there’s plenty of room!

Madison Square Garden boasted in May of expecting nearly 15,000 fans for the Knicks playoff game. Although that was not full capacity, MSG said it was “leading the way, showing everyone that New York is back.” For their first 48 home games, the Yankees had an attendance of almost 900,000, and the Mets welcomed almost 600,000 attendees to their first 37 home games. Although this is a far cry from a packed stadium, remember certain restrictions remain for unvaccinated attendees.

Some Broadway shows started previews in August, with opening nights beginning in September. The reopening of Broadway will attract New Yorkers to get out and enjoy all that the city has to offer, and it should help reinvigorate one of the city’s largest revenue producers: tourism.

NYC & Company, the city’s tourism marketer, says the New York City travel industry probably won’t return to full strength for more than three years. The prediction for 2021 is 36 million visitors, which is half of what was forecast before the pandemic. The upside is that with the low occupancy in hotels, the room rates are significantly lower than they were in 2019 for the same period.

Will that entice people to visit New York? I am cautiously optimistic.

Will more and more people refrain from attending events with hundreds or thousands of people while we are still dealing with the highly contagious Delta variant? Maybe.

But according to our client Noam Dworman, owner of Comedy Cellar, his venue is selling out and even having to turn people away at the door. Interestingly, though, Comedy Cellar is turning away fewer people than before the pandemic. Is that because the attendees were required to be vaccinated even before the city mandated it? Conversely, maybe that is why Comedy Cellar was selling out while others were not. Either way, people are probably attending in droves because the need to laugh is greater now than ever before.

While there are still many challenges ahead, we should celebrate the positive trend. Businesses are coming back, and people are laughing and hugging each other like long-lost friends. A new normal isn’t a bad thing; it is just different. Out with the old and in with the new.

The City that Never Sleeps is here to stay, and it will welcome everyone with open arms.