The Valencia Bakery has been in business since 1952, and it is most popular for their pineapple-filled cakes. There is only one problem, according to owner Alexandra Diaz. Following the end of the pandemic, all of her costs have increased.
“Everything’s going up,” she said. “Landlord, rent, utilities. It didn’t go up 20%. In this location, in the last four months, it went up 47% to 50%.”
Although the city is officially reopened, food services businesses like the Valencia Bakery are caught in a post-pandemic double bind. Not only is inflation eating into their profits, it also means fewer nights on the town from their neighbors.
This is a citywide problem, according to industry bodies. Restaurant reservations are still 40% lower than they were in 2019, according to a report by the online reservations company OpenTable. The average number of diners is about 10% lower than before the pandemic.
The Bronx is a little better off, according to Michael Brady, the CEO of the Third Avenue Business Improvement District, just north of the Valencia Bakery.
“It is not like midtown Manhattan, where you have this onslaught of office workers who are responsible for the local economy,” he said in a phone call. “We have a solid residential core, which helps maintain our low vacancy rate.”
But the bigger problem is rising costs. “There’s no doubt that things have gotten more expensive,” Brady added. “Whether you’re in a restaurant and you’re ordering beef, or whether you’re ordering backpacks for back to school, everything has gotten more expensive, and the businesses are trying to do their very best to protect the consumer.”
It’s no surprise that consumer prices are rising, but the bite is particularly bad for the restaurant industry. According to the U.S. Department of Agriculture, food prices rose 11% in the year before August, even more than the official inflation figure.
And even that does not reflect how wildly their costs have increased. Some prices rose more than others: Meat prices slipped from their peak in 2021, but egg prices are expected to double this year, according to USDA projections. Wholesale chicken is already up a whopping 136% from August of 2021.
Those prices are straining the budgets of restaurants that were already hanging by their shoestrings. “Merchandise went up about 80%,” said Joseph Gattuso at Angie’s Cafe and Pizza on Morris Avenue. “Some items are like a thousand percent more.” A roll of aluminum foil that cost $19 before the pandemic now costs $56, Gattuso said.
While some owners turned to government or bank loans to make ends meet, the majority had to reach into their own pockets. “I managed to stay alive since I’ve been in business so long,” Gattuso added. “I saved for the rainy days, otherwise I’d be out of business like everybody else.”
Nearly six in ten New York restaurant owners dipped into their savings during the pandemic, according to a survey by TouchBistro, a company that produces restaurant management software. Those savings helped them weather the pandemic, but left them with fewer resources to invest once the economy reopened.
There are several government programs to support businesses in areas like the South Bronx. The Bronx Chamber of Commerce offers guidance for small businesses, helping them navigate the legal labyrinth of city regulations.
They also arrange public events. Last month, to celebrate Hispanic Heritage Month, the Chamber hired a mariachi band to perform at Angela’s Cuisine on East 138th Street. Alejandro Espinosa, who works at the restaurant alongside his mother, sister, and other relatives, said that the party could drum up traffic for the Mexican restaurant.
The eventual goal of the Bronx Chamber of Commerce, according to Chamber President Lisa Sorin, is to create a business improvement district similar to the Brady’s Third Avenue BID. “Businesses that were part of a BID had a higher survival rate during the pandemic,” Sorin said. “Because you had an advocate, you had a leader who was getting the information, sharing it out with their businesses, helping the businesses stay open.”
Espinosa’s family had pooled their savings to launch the restaurant, which was only in business for six months before the pandemic hit. “Basically all our family’s money is here,” Espinosa said. “Like my brother’s cousins, mother, we’ve been here in this country for 20 years.” During the pandemic, a campaign on GoFundMe for Angela’s Cuisine raised $820.
Many restaurants are hoping for traffic to pick up during the holiday season. At Angela’s Cuisine, Espinosa hopes an outdoor seating area will keep his tables full. “I never thought it was going to be so difficult,” he said of his first restaurant venture. “But it’s helping me up.”