Chain Restaurants Expanding While Smaller Competitors Close
When most independent restaurants are struggling, chains and company-owned restaurants are taking advantage of the pandemic to expand.
Among all the industries in the nation, the restaurant industry has been hit the hardest by COVID-19. The National Restaurant Association estimates that more than 110, 000 eating and drinking establishments in the U.S. closed their doors in 2020.
While over 1,000 NYC restaurants have closed since last March due to the pandemic, the city saw the opening of at least 40 new dining places in the past month. The vast majority of these newborn restaurants are either chains or at least have the backing of a pre-existing business, rather than being founded by entrepreneurs. Kaaryn Simmons, the director of Columbia-Harlem Small Business Development Centre, also confirmed this emerging tendency.
In comparison to independent restaurants, chains and company-owned restaurants have access to greater funds, loyal consumers, and an ability to safely take risks which enables them to overcome and even take advantage of the pandemic, according to Simmons. “If you’re opening a restaurant from a restaurant,” Simmons said, “it’s easier.”
Midtown restaurant Marezzata, a business owned by a Japanese meat distributing company, opened on January 27. For manager Erika Yamada, the pandemic is an opportunity rather than a threat. “Many restaurants went out of business,” she explained. “This is a chance for us to take a step forward.” Even though this high-end restaurant has attracted few customers in the first month, support from their parent company will keep the restaurant open.
Another Midtown restaurant, Fieldtrip, opened on February 2, is the third restaurant founded by celebrity chef JJ Johnson. Manager Patrick Mwesigwa considered the consistency of chains a strength, which secured customer loyalty while allowing them to confidently expand. “For companies like mine,” Mwesiga said, “people can trust the food always being good.”
Being owned by a pre-existing business also empowers restaurants when dealing with risk. Fieldtrip’s new location is beneath the Rockefeller Center, a prime area for restaurants. A year after the outbreak, New York City rents have reached their lowest level in a decade. In order to sign a ten-year lease while rents are at their lowest, Fieldtrip is willing to risk losing money until the pandemic is over.
Apart from Fieldtrip and Marezzata, other chain restaurants are also taking advantage of the pandemic to expand. Pelicana Chicken opened its Forest Hills store a week ago. Chinatown brand Vanessa’s Dumpling House established a new Upper West Side branch on February 5. Ramen chain Kyuramen expanded to East Village in early February. Texas-based chain MOOYAH Burgers, Fries and Shakes admitted its first customers in NYC on February 1.
Giant chain companies are taking even larger measures to expand in the midst of the pandemic. Shake Shack opened 20 new restaurants in 2020, and plans to have 35 to 40 openings in 2021. Starbucks plans to open 50 new stores in the U.S. this year. McDonald’s plans to open about 500 new restaurants in the U.S. in 2021, according to its fourth quarter earnings call.
Simmons believes the pandemic has led to an upward redistribution of wealth in the restaurant industry. As independently owned restaurants closed, she described chain restaurants as “really just taking their places.” Many of them are expanding on the ruins of family-owned restaurants. The new location of Pelicana Chicken was once the location of Taci’s, an independent Turkish restaurant which closed last March. DeGrezia, a 33-year-old Italian restaurant owned by a father and son, closed last March at Marezzata’s address.
DeGrezia’s headwaiter, Julio Suquinagua, waited until July for the restaurant to reopen, only to find out that the restaurant would be permanently closed. The owner texted him to come pick up his uniform on August 1. “I couldn’t sleep at night. I had no idea if I could live the next day,” said Suquinagua. Six month later, Marezzata opened.
