Who’s Eating Indoors in NYC? Mostly Millennials Ordering Pricey Wine

(Bloomberg) -- At 8 p.m. on a March weekday night, the cozy Italian spot Il Buco Alimentari & Vineria had 20 guests sprinkled around the dining room. The majority of the 120 or so diners the restaurant would serve that night ate outdoors, on the sidewalk and on the sheltered terrace. Pre-pandemic, the restaurant routinely served 600 people in a day.

Indoor dining, which resumed in New York City on Feb. 12 and increased from 25% to 35% capacity on Feb. 26, is providing some small economic benefit for restaurateurs in a challenging time. About 5,000 restaurants have closed from the approximately 25,000 eating and drinking establishments that existed in the city pre-pandemic. The industry has lost over 140,000 jobs in New York, according to the New York City Hospitality Alliance. 

“Restaurateurs keep saying they need at least 50% occupancy like restaurants throughout the rest of New York State have had since June,” said NYCHA Executive Director Andrew Rigie via email.

But higher occupancy might not mean a full house, especially as temperatures warm up. Many New York restaurants report that diners, especially regulars, would rather eat outdoors, even in challenging weather.

Those who choose to dine inside tend to be younger, say owners, and in search of experiences they haven’t had for a year, namely digging into a big-ticket steak. And even in the absence of corporate card business dinners, check averages are going up, and so are tips.

‘Three Sweaters’

At Extra Virgin in the West Village, regulars are choosing outdoor seats. “They got used to it, even if they have to wear three sweaters and a parka,” says partner Michele Gaton. She sees a younger crowd sitting indoors.

At Lola Taverna, it’s predominately 30- and 40-year-olds who are eating inside. Owner Cobi Levy says the increase to 35% occupancy didn’t help business because “we still have the spacing constrictions.” But pushing back the curfew to 11 p.m. “increased business 20%.”

Millennials have also replaced the families that used to crowd Black Tap, the burger and shake destination in SoHo. “Probably that’s due to seating restrictions,” says owner Chris Barish.

Still, his alcohol sales are down, because of the earlier curfew. In February 2020, alcohol sales were almost 10% of revenue; in February 2021 they were 2%.

‘We Deserve It’ 

Chef/owner Michele Casadei Massari has seen check averages go up about 20% at his restaurant Lucciola since indoor dining resumed. He attributes that to the steak program, in particular tomahawk chops and dry-aged Niman beef. “We have a selection of beef that no one else on the Upper West Side offers, so we are getting a lot of customers who would normally go to a steakhouse,” says Casadei Massari.

At Carmine’s on the Upper West Side, check averages are also up by 25%. “People are drinking more and ordering more porterhouse steaks,” says owner Jeffrey Bank.

In Midtown, Aquavit’s owner Hakan Swahn has seen demand for higher-price tasting menus. “I assumed diners would prefer more casual food. I was wrong,” he says. “Everyone is asking for tasting menus.” Aquavit’s options range from $105 for two courses to $185 for five courses.

Restaurateurs are also monitoring demand for higher-priced wine. “We’re seeing more expensive wines selling faster,” says Extra Virgin’s Gaton. Pre-pandemic, spendy reds like Barolo and Napa Valley Cabernets were considered special-occasion bottles; now they’re a weeknight wine.

“You can feel the ‘we deserve it’ energy,” says Gaton. “Instead of $50 or $60 bottles, why not go for the $90 or $120.”

She notes that restaurant check averages are also up because people aren’t doing as much restaurant hopping in one night. “We find more people are not only having dinner, but doing whatever drinking they would have done on a ‘normal’ night across multiple places, solely at Extra Virgin instead.”

No More Suits

Even with the resumption of indoor dining, restaurateurs note that the business meal might be gone forever.

“Our business lunches and dinners have not returned,” says Donna Lennard who owns Il Buco Alimentari and sister restaurant Il Buco.

“It’s been a year since I’ve seen anyone in a suit or business attire inside the restaurant,” says Kevin Garry, owner of the Italian restaurant L’Artusi. “Now it’s a lot of social dining.”

Garry also notes the lack of date night married couples; instead the tables are mostly singles and friends. But even without corporate card dining, bigger ticket wines are also a trend here. “For people whose typical bottle was $75, they’re trading up to $100, $110 bottles.”

Bigger Tips

At both Il Buco and Alimentari, tip averages have crept up from 19% pre-pandemic to 21%. That includes some notable spenders that help skew the numbers. “A couple weeks ago we saw a $3,000 gratuity on a $300 check,” says owner Lennard. At L’Artusi, a diner broke Covid restrictions to hand every kitchen worker a $20 bill.

Waiting for Aid

In the meantime, with New York restaurants thousands of jobs, the industry is getting increasingly frustrated by the lack of help from the federal government. 

Aid is non-negotiable, says Rigie from NYCHA. Increased indoor dining capacity “must be coupled with the federal government immediately passing the bipartisan restaurant relief fund to save as many small businesses and jobs as possible,” he says.

Swahn from Aquavit agrees, saying 35% capacity will not work for long unless there is help from the government with more PPP loans, rent relief from landlords, and banks with loan pay-back moratoriums. He expects it will be necessary to get over 75% capacity “to have a healthy restaurant without support” from the government.

“Restaurants are a low-margin business with small cash reserves. We are fighting a lingering fear that eating indoors is not yet safe and will take time to overcome,” says Swahn.

For Bank at Carmine’s, indoor dining limits have to be almost double what they are now to sustain his business. “[It is] not enough capacity during the dinner hour; 66% is our calculated break even,” he says, “So we will have to ask all guests to eat for two until the occupancy restrictions resides.”

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