THE BLOG
06/29/2009 05:12 am ET Updated May 25, 2011

New York Eateries: It's a Jungle Out There!

With many teetering or falling by the wayside, the last thing New York City needs is another restaurant.

Some Belgian investors don't believe it. In a bold financial endeavor that's practically equivalent to wrestling with a crocodile, our intrepid Belgians, ignoring a tough economic climate that is provoking a major upheaval in the city's fiercely competitive restaurant business, banded together and anted up close to $10 million to open an imposing new dining spot, Rouge Tomate (means red tomato in French), which made its debut last October in midtown Manhattan's east side.

Not only that, the group committed itself to a pricey $100,000-a month lease for 10 years, a gutsy move, what with the streets of New York City littered with empty restaurants and boarded-up dining spots.

The investors weren't blindfolded. "Of course, we were worried; we knew we were opening at the worst possible time, in the midst of an economic crisis, but we did our homework and I believe we were being realistic," said Nil Sonmez, vice president and general counsel of the Rouge Tomate Group, which operates a similar restaurant in Brussels.

Housed in an ultra-busy shopping area on East 60th street off Madison Avenue, the restaurant is located directly across the street from Barney's and a few blocks from Bloomingdale's. The Big Apple's Rouge Tomate, a two-level lounge and restaurant that seats 275 and employs a staff of 95, including office personnel, features modern American nutritional and seasonal cuisine in a casual setting. Most of it comes from local farms.

The emphasis, explains Somnez, is on healthy food; they stay away from what's bad. Accordingly, no cream or butter is used in the appetizers or entrees, and there is no salt shaker on the table. In addition, all food-related leftovers are composted. "We want to be as green as we can and environmentally correct," Somnez said.

"Affordable quality" is how she described the restaurant's prices, which run an average $60 for lunch or dinner, including wine. Restaurants galore in the city are bombarding diners with specials and Rouge Tomate is on that act as well, offering three-course lunches at $29 and three-course dinners at $45.

Apparently, the red tomato is making some noise in restaurant circles, having already attracted such celebrities as Kirk Douglas, Barbara Walters, Demi Moore and Matt Lauer.

To date, business hasn't been up to initial expectations, Sonmez admitted, but she hastened to note "We're growing steadily and the customer account between March and April grew 16%." The goal: to break even in two years, and then take it from there.

Whether the restaurant, at the site of what once was the Copacabana nightclub, makes it is anybody's guess, but escaping financial indigestion won't be a breeze. The plight of the dining-out business, reflecting the nasty impact of tough economic times, is visible everywhere in the city, where practically every New York City restaurant is being forced to cut back in the face of shrinking customers.

A captain at the famous 21 club, which now offers diners a three-course dinner for just $35, as does Le Cirque, one of the city's most prominent French restaurants, took note of the many empty tables at around 8 p.m. and told one steady customer "if things continue this way, I don't know if we can make it to the end of the year."

Speaking of staying power, Nicola Civetta, the affable owner of Primavera, the city's premier Italian power restaurant, sees additional heartaches in the wings for the industry, even a possible bloodbath. Pointing to the diminishing number of diners throughout the city, and with most restaurants, he estimates, down this year an average 40% from a year ago, Civetta serves up an ominous forecast--namely that as many as 20 to 25% of the city's restaurants may not last through the summer.

"I can't remember when I've heard so many complaints about the state of this business," said Civetta, who owns the building that houses his Upper East Side restaurant. Without that edge, he says, he might have to close.

Meanwhile, cutbacks at restaurants are most graphically conspicuous by the reduction in help. In some cases, it's said to run as high as 40% to 50%. Working hours have also been reduced. Some eateries, in fact, have eliminated their hat-check gals, with that chore being taken over by the maitre d', waiters or, at times, even by the owner. Yet other money-saving efforts include lunch and Sunday closings.

It's anyone's guess how many city restaurants have closed their doors over the past year (no one seems to compile such statistics), but some industry sources figure this year's and last year's closings alone could easily run in the thousands.

One of the big problems, say a number of restaurateurs, is the unwillingness of landlords to show any kind of flexibility on their lease renewals. Some of them, in fact, are warning of hikes.

What seems to be clear is any new entries into the restaurant will have their hands full. Still, they keep coming. For example, New York City's Department of Health and Mental Hygene reports that food permit applications for the first four months of the year are up 25% from a year ago.

Andrew Rigie, director of operations at the New York State Restaurant Association, thinks the jump in applications could largely reflect a move by a number of people who have lost their jobs, mainly financial types, to pursue a new career by investing in or owning their own restaurant. If you're one of them, a word of warning: Only the fittest will survive.

One final note:
Beware of city restaurants trying to rip you off, such as Morton's Steakhouse, which charged me an additional $2.50 (or 50 cents an ice cube) for ordering a drink on the rocks. Needless to say, I refused to pay.

Dan Dorfman has written financial columns for the Wall Street Journal, USA Today and The New York Sun. Email him at Dandordan@aol.com