Surviving the Restaurant Nightmare: Why New York Is a Financial Graveyard for Aspiring Chefs

Owning a restaurant is the dream for so many chefs in America.

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But be careful what you wish for because if the workload doesn't kill you, the finances may, especially in New York.

Restaurant Furniture recently released the results of a study that set-out to find the Most Expensive States to Own a Restaurant in the US. What they found may not be shocking but it is eye opening. In the end, California was labeled the most expensive state in America but New York was right behind at #2.

The researchers looked at the following cost categories to reach their results:

• Rent
• Minimum Wage for Employees
• The State Corporate Tax Rate
• The State Sales Tax Rate
• Annual Liquor License Costs
• Annual Food Permit Costs

The data was transformed into scores from 1 to 10, where the highest scores would mean better results. Therefore, the lower the total score over 100, the more expensive it would be to open and maintain a restaurant in the area.

California was #1 by fractions, with a score of 28.04 and New York was #2 with a score of 28.39. To put those scores into perspective, consider the next closest rating which was Colorado (#3) with a score of 40.02.

Here are the Top 10 Most Expensive States for Restaurant Owners

1. California

2 - New York

3 - Colorado

4 - Illinois

5 - Arizona

6 - Alaska

7 - New Jersey

8 - New Mexico

9 - Hawaii

10 - Washington

According to the researchers, a lion's share of the expense in New York comes from rent and liquor license costs. The Empire State's yearly rent per square foot is the highest of the top 10 at $69.6, and it has the second most expensive Liquor Licence at a whopping $4,352.

What does all of that add up to? Check out this excerpt from Chron. article about owning a NYC spot:

"Rents and salaries usually sway with economic conditions. Your initial start-up costs can vary widely; no two restaurants and business plans are the same. Each area in New York is vastly different as well. For example, start-up costs for a small Brooklyn restaurant were $450,000 for one restaurateur featured in Forbes and closer to $120,000 for a small eatery in the Brookside neighborhood. According to successful New York restaurateur David Chang, expect to pay anywhere from an average of $300,000 for a small, comfortable restaurant in the city and up to $10 million for a four-star establishment." 

I guess I'm not opening my restaurant, Pappa Peter's Pristine Pickle Palace in Brewster. The rent is too damn high!

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P.S. I have family and friends in the restaurant business and they all seem to agree that their's is more than a job, it is a way of life and they could not imagine it any other way. You have to run on passion to own a restaurant and I have a lot of respect for that.

You'll need that passion to serve people, because people are the worst. It's one thing to deal with unruly customers and another to have to combat digital reviews. I feel for these small business owners who have to defend themselves against every comment on the internet.

There are a lot of brats and baby bitch---- out there. The minute someone is mildly inconvenienced they can go online and do serious damage to the restaurant's reputation and there is little, to no recourse. The deck is stacked in the customer's favor and that isn't always a good thing.