If restaurants go, what happens to cities?

By Aug. 31, more than 32,000 restaurants and 6,400 bars and nightspots that had been open on March 1 were marked closed on Yelp. In New York City — perhaps the nation’s dining-out capital — a survey by the Hospitality Alliance found that 87 percent of restaurants were not able to pay all of their August rent.

In September, the New York state comptroller estimated that one-third to one-half of the 24,000 restaurants in the city could close permanently over the next six months. Forty-three percent of bars were closed on Oct. 5, and spending at those still open was down 80 percent from the same day in 2019, according to Womply, a company that provides technological platforms to small businesses.

In a desperate call for help, the Independent Restaurant Coalition argued in a letter to Congress in June that “this country risks permanently losing as many as 85 percent of independent restaurants by the end of the year.”

Downtown restaurants in big cities are suffering the most. And it is urban America that will feel the shock of their demise most intensely.

In 2019, restaurants, bars, food trucks and other dining outlets took at least 47 percent of the food budget of consumers in cities with populations above 2.5 million, according to government data. That compares with 38 percent for people outside urban areas. In the early 1970s, by contrast, urban consumers devoted 28 percent of their food budget to dining out.

Restaurants have been a key element of America’s urban transformation, helping draw the young and highly educated to city centers. This has often turned industrial and warehouse districts into residential areas. It has also overhauled many low-income neighborhoods, sometimes forcing longtime residents out of town.

As restaurants fail, cities will lose economic output and jobs, of course — over two million restaurant jobs and 173,000 bar jobs were lost between February and August. But they also stand to lose their glue.

In a recent research paper, Sitian Liu of Queen’s University in Canada and Yichen Su of the Federal Reserve Bank of Dallas conclude that the declining value of urban restaurants is contributing to a residential reorganization in which suburban housing is in great demand while the market in the densest urban areas is dormant. In a nutshell, if you can’t go out to eat, why even live in the city?

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