The city's new outdoor dining program can easily cost business owners more than $35,000 for a setup in the roadway, including thousands of dollars in city fees, construction costs, and insurance, Streetsblog has found.
As City Hall celebrated the return of roadway dining for the first time this year on Tuesday, the now-seasonal program legislated by the City Council and signed into law by Mayor Adams in 2023 has logged a deep drop in participation compared to its year-round pandemic-era predecessor, whose applications were free and entailed fewer bureaucratic hurdles.
Restaurateurs cited the high price as the top reason for not participating in the new Dining Out NYC program, according to a recent survey by the public policy group Open Plans [PDF], which shares a parent group with Streetsblog.
"The cost is just an insane amount of pressure and the margins are very thin, and [the pandemic-era 12-month program] was a thing that eased it just a little bit," said Sam Goetz, owner of Judy's, a wine bar in Sunset Park, Brooklyn.
During the pandemic, between 6,000-8,000 restaurants participated at a given time, DOT estimates. The new program counts about 2,450 roadway and sidewalk set ups, but it has reverted back to mostly Manhattan and wealthier parts of Brooklyn, similar to the much more restrictive pre-Covid sidewalk café program, a recent Streetsblog analysis reveals.
A state lawmaker has already launched a bill in Albany to override the city and bring back full four-season dining.
Goetz was one of the 47 lucky businesses that got through the entire Department of Transportation application process for a roadway café outside his establishment on Fifth Avenue (another 600 or so are conditionally approved), but per the Council law, the structure must come back down from December through March.
The Brooklyn business owner was able to set up his streetery for about $5,000 and he, luckily, has room to store the equipment in the off-season, but many other businesses do not.
The new rules have spawned an entirely new cottage industry of companies that offer all-inclusive construction, demolition and storage of structures.
A full-year curbside program would cut many of the expenses, Goetz said, especially getting rid of the need for storage for four months of the year.
"The year-round thing would make a huge, huge difference," said Goetz. "You would just build your own instead of renting. ... A one-and-done cost."
There are also additional insurance costs and likely fees for attorneys and architects to sift through the permitting process. Those are not necessarily required, according to DOT, but the agency acknowledged it will work with the Council to reform the program.
"DOT has worked to establish equitable fee structures and promote affordable roadway rental options and looks forward to discussing future reforms to keep improving the program with the City Council," said agency spokesperson Vin Barone in a statement. "In the first year of Dining Out NYC, we’ve cut red tape to allow for thousands of restaurants to participate in a program that is already more than 2.5 times the size of its pre-pandemic equivalent."
Streetsblog spoke to restaurant owners and industry experts to get a better sense of all the costs involved.
Fees upon fees
DOT lists some of the costs on its Dining Out NYC website, and provides a calculator, since the price of each item will vary depending on the restaurant. The Council's law set many of these costs, while fees for experts like law firms and designers have also become a common feature.
Here is our attempt at cataloging a restaurant's up-front al fresco costs:
- License fees are $1,050 each for a sidewalk and roadway café, or $2,100 for both for four years.
- Revocable consent fees range from $5-$25 per square foot per year for roadway cafés and $6-$31 for sidewalk cafés. It's essentially rent for the city and varies depending on which part of the Five Boroughs you're in.For example, Judy's new seating is about 140 square feet and is in the cheapest zone, which would net $700 per year. That same space in the most expensive zones, such as the West Village, would go for $3,500 a year.
- An up to $1,000 public hearing notice fee for all roadway dining applications, and those sidewalk cafés that the local community board recommends to disapprove.
- A $2,500 security deposit for roadway cafés, and $1,500 for the sidewalk option.
- The cost of buying insurance, including commercial general liability insurance, which can go for around $3,000 a year, and liquor law liability insurance, if they serve alcohol, which can come at a steep $13,000. Prices vary and some insurers bundle coverage.
- Legal fees, which also vary but can quickly come to $3,000-$6,000 to hire an attorney for an outdoor dining application, and another $2,000-$3,000 for a liquor license alteration.
- Architects or engineers drawing, which can range from $2,000 to as much as $10,000, restaurant owners told Streetsblog.
- Building, demolishing and storing a roadway café. There are companies now offering to take care of all of that, starting at $1,000 a month, or $8,000 for eight months, according to DOT. Restaurant owners and lawyers said companies have quoted them or their clients closer to $20,000 a season just for the rental, without the price of designing, setting up and demolishing a structure.
That adds up to more than $37,000 on the low end of the spectrum to set up shop for one roadway café.
Big bucks
Goetz shelled out more than $5,000 to demolish his old structure and erect a new curbside streetery that can seat about 10 people, which he will have to dismantle again in eight months.
"Ultimately, I decided to do it because it is awesome to have outdoor seating," he said.
The city also slapped him with a surprise requirement to take out extra liquor liability insurance for serving alcohol, which he said could cost him an extra $13,400 a year. He did not have to pay that insurance before, since it is usually reserved for establishments that serve hard liquor, and his is a wine and beer bar.
"That’s a fee that’s in there that’s brutal," he said.
DOT officials have said that applicants don't have to hire attorneys or architects to do outdoor dining, but they'll often do so anyway because lawyers will also help them with their liquor license alterations.
Any visit to a community board or a Council hearing will show that many restaurants choose to offload the work onto paid experts.
"It can be scary to go to a community board or public hearing by yourself," said Joseph Levey, a founding partner at Helbraun Levey, a hospitality and cannabis industry law firm. "You could very easily be bullied into something you don’t need to do."
"It’s a high level risk and you want to make sure you do it right," said James Spence, the founder and co-owner of Lenox Hospitality Group, which runs three restaurants in Harlem.
DOT does not require architect or engineer drawings, but Levey said a majority of his clients still get them for their designs.
"I’ve heard of people to pay five figures to pay for designs," the attorney said.
One Bedford-Stuyvesant restaurant owner said she had to get the stamp of approval from an architect for the Department of Buildings and the Landmarks Preservation Commission, because she is in a landmarked district and wanted to set up an awning for her sidewalk café instead of the standard umbrellas.
"I still don’t know [how much it will cost]," said Charlotta Janssen, who runs Chez Oskar in Bedford-Stuyvesant. "I just know that in order to survive I need outdoor dining."
DOT has set up a "marketplace" directory for firms offering their services, and reps said the rental services start at around $1,000 a month, but restaurant owners and lawyers said they've received quotes of more than twice that amount.
"Everyone who comes and makes us an offer, it’s like, ‘Rip me off,’" said Janssen.
