Why this NYC restaurant is closing its doors and relocating to Denver

Delores Tronco-DePierro, owner of The Banty Rooster, joined The Final Round to discuss why she is closing her restaurant less than a year after opening and relocating it to Denver.

Video Transcript

- Well, the National Restaurant Association says 3% of all restaurants in the US have permanently closed so far since the beginning of the pandemic. That number expected to only increase with no extension of the Paycheck Protection Program yet and also, commercial eviction moratoriums being lifted, as well. Our next guest recently closed her restaurant in New York City to relocate to Denver. Let's bring in Delores Tronco-DePierro. And Delores, you recently penned an op-ed titled How a restaurant leaves New York. And I think a lot of-- it struck a lot of small businesses, not just restaurants, just because of this reality you're facing now. You've got the PPP, you tried to renegotiate the rent, but it just wasn't enough.

DELORES TRONCO-DEPIERRO: That's absolutely true. You know, I think after COVID, everything changed, and it changed so quickly. And, you know, whereas a month prior, I was watching sales increase 10% to 15% week over week, growing as a new business, suddenly, we were faced with a closure and then kind of trying to figure out what was available to us, what could we do.

And so as you said, yes, we received a PPP loan. And unfortunately, in a high rent market like New York, those dollars don't go very far when it comes to rent. And so, you know, as you said, I tried to negotiate with our landlord. I made a good faith offer that I felt was very fair and reasonable given the restrictions. And unfortunately, we reached an impasse, and at that point, I had to choose to close and to relocate to Denver, where I originally came from.

- The PPP was supposed to not just keep employees employed, but also, keep businesses like yourself afloat. What do you think was missing here? I mean, you know, just walk me through your calculation, because it sounds like you did reopen. You were able to gauge the business, but the money or the dollars just don't go far enough in a place like New York City.

- Absolutely. You know, the PPP was based on 2 and 1/2 months of payroll expense. And it didn't factor in all of the other operating costs. And in a high rent market like New York-- and I'll speak really candidly-- our rent was $23,000 per month. And so yeah, my payroll was-- it was higher than it would have been in my first restaurant that was located in Colorado, but not significantly so.

And so you're looking at receiving about the same amount of money, whether you're in New York City, whether you're in a lower rent market. And then you're expected to make those dollars work to cover your rent or your mortgage payment. In our situation, we offered-- I offered our landlord a significant lump sum of money. In fact, the really the maximum that I could offer it out of our PPP. And also, a percentage of sales on top of that and asked to go till the end of the year. Unfortunately, that wasn't acceptable.

RICK NEWMAN: Hey, Delores, Rick Newman here. Yours is just one of many stories along these lines and we've got tons of restaurants and other small businesses that are closing trying to figure out, can they make it to the other side of this. And we're going to lose a lot of them. Is there anything the city could or should be doing here to help businesses survive?

DELORES TRONCO-DEPIERRO: Yes, absolutely. The city needs a plan for-- for past the summertime. Outdoor dining does not suffice with the rent numbers and the operational numbers that we look at here in New York City and. Not only here, but in restaurants across the country. I think our elected officials need to ask themselves how we can set restaurants up for success to act responsibly to introduce indoor dining. Outdoor dining isn't cutting it. Restaurants are closing all over the country and certainly, all over New York.

Also, we need to address the rents issue, especially in instances where landlords my own property outright, which was the case for us. Or even in situations where a landlord has a mortgage. Let's work together. Let's find a way to share some of the financial strains so that all of that strain isn't placed on small businesses.

- And Delores, what about the other restaurants-- restaurant owners that you've been hearing from who operate in New York City? Are you hearing them take the same path like yourself? Going to a market where the rent is cheaper, where the dollars go a little further, just curious what you're hearing on the ground.

DELORES TRONCO-DEPIERRO: You know, just in the last two days in New York, we saw two major closures. Uncle Boons, which is a Michelin-starred restaurant that was open for seven years, and then also, Bar Sardine that's been in the West Village, where we're located, and has operated for many, many years both announced closures. While I haven't heard necessarily of those operators moving to other markets, in each of their cases, they also have other businesses up and running in New York, so they may have reason to stay for those.

What I am hearing is the talent, the chefs, the soms, the servers, the line cooks-- those folks are moving out of New York City in huge numbers. My team of eight, six have confirmed that they are leaving New York City. And they're leaving because they can't afford to stay and the jobs are just drying up.

RICK NEWMAN: Delores, how do you feel about leaving New York for Denver? Do you happen to be going home or do you feel like you're being booted out of your adopted home?

DELORES TRONCO-DEPIERRO: Oh, probably a little bit of both, I think. It's-- it's bittersweet. No one loved New York City more than I did, and I still do. The city always had my heart. And I left everything behind in Denver to come here and risk it all to make this happen. And so of course, it's heartbreaking.

On the other hand, I am incredibly blessed to have another place to go. I have family and friends. I have an established reputation as a restaurateur in the Denver market. I have contacts there that will allow me to get up and running again I have supportive banking relationships. I have all kinds of things that are going to allow me to get going. And so I'm very, very thankful for that. But I would be absolutely lying if I didn't tell you that there have been many tears or that my heart isn't broken to watch it New York suffering this way and to leave.

RICK NEWMAN: Would you consider coming back on the other side of COVID?

DELORES TRONCO-DEPIERRO: [SIGHS]

Yes, but probably on different terms. You know, I think that-- I'm not sure I would undertake a full service restaurant again. I think I would look at something with a smaller real estate footprint, because that really proved to be both the most difficult part of opening and also, our undoing in the end.

- And Delores, on the flip side, I'm curious what markets you think could benefit. We've been talking so much about this exit out of the cities, especially those who've been living in a place like New York and a place like San Francisco, now choosing to move to the suburbs. Within the restaurant industry, are we likely to see the same kind of move?

DELORES TRONCO-DEPIERRO: I think so. I think that we'll see markets like Denver, Austin, Nashville, Charleston, Portland, Oregon-- perhaps Portland, Maine, as well-- we're going to see some of those restaurant communities I think really start to thrive. And I think we'll see chefs and soms and operators flee for those markets, where they're able to negotiate leases that makes sense for them, where their overall operating is less, and also, where the barriers to entry in the market are less.

One of the things I spoke about in my op-ed is the difficulty of opening a restaurant in New York. And that's with the Department of Buildings, the State Liquor Authority. It's a long list of institutions with significant red tape that can make the process not only more expensive, but take such-- such a longer amount of time. And that really adds to the difficulty. And I think being in the unique position of having operated also in Denver, I can easily kind of compare what that experience was like in those two markets.

- OK, Delores Tronco-DePierro, appreciate you sharing your story with us. Wishing you the best of luck and hope to have you back on the show once you get that restaurant up and running in Denver. Delores Tronco-DePierro, the owner of The Banty Rooster.