Subscribe to our US Editor's Choice newsletter to receive the top exclusive stories Two of New York CityProminent restaurant owners clai...
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Two of New York CityProminent restaurant owners claim they are pausing new development efforts - indicating that the progressive policies of incoming Mayor Zohran Mamdani have generated a sense of anxiety that is already causing businesses to leave the city.
Mamdani, 34, is scheduled toemerge as New York's youngest mayor in over a hundred years - and the city's first Muslim, South Asian, and African-born leader.
He campaigned on a Democratic socialist platform proposing to increase the minimum wage to $30 by 2030, leading to criticism from some local business owners worried that profit margins are already too slim.
Stratis Morfogen, the experienced businessman who has brought back the 24-hour gathering place Diner 24, mentioned that he secured millions to establish three more diners in 2025 and 2026. However, all growth initiatives are currently paused.
I have one open, and that was two years back," Morfogen said to the Daily Mail. "I secured all the funding, we're set to proceed, but I decided to wait until the election concluded. Now? Diner 24 is performing well, yet our profit margins stand at 10 percent. There's no space for another failure.
Morfogen, who reintroduced New York City's first genuine 24-hour diner post-COVID, mentioned that the challenge was not the possibility of failure but the political calculations.
The $12 hamburger now costs $22. That's disappointing, but we clearly need to cover our expenses and keep the business running. Furthermore, you'll have to eliminate overtime. The financial figures don't support it. And customers, I believe, won't want a 50 to 100 percent rise in their meal prices. I don't think they'll be willing to bear that cost.
For him, the risks went beyond financial records. He mentioned that his most profitable hours occur between midnight and 5am, a period when police protection is in high demand.
If he plans to cut the police budget, and I'm hearing that many NYPD heroes are leaving in large numbers, that worries me," he said. "If that's true, then I need to start reducing my working hours, as I must protect my employees.
As increasing labor costs take center stage, Morfogen noted that the recent hikes in retail space rental taxes have been especially harmful to business owners.
There's nothing remaining. We'll not be able to cover our expenses," he stated. "Instruct Mamdani to take it down. If he aims to support small businesses, that's where you should begin.
Although he was frustrated, Morfogen stated he would meet with Mamdani without hesitation.
He's very impressive. However, he's never managed a lemonade stand," Morfogen stated. "I would enjoy giving him an insight into being a small business owner. We are the ones who generate employment opportunities. It's not always the billionaires.
Richie Romero, a prominent figure in the hospitality sector for 33 years, has managed over 40 locations and owns 29 restaurants across the country. He mentioned that New York's complex regulations have turned into an 'unmanageable' challenge for small businesses.
There's bureaucracy everywhere," Romero remarked. "A young visionary invests a year and a half in getting started, uses up all their funds, and still can't get the business off the ground. Meanwhile, large corporations have the luxury of waiting.
Romero, who was born and grew up in the city, mentioned that the empty space problem was evident on every block, with 'thirty to forty percent' of shopfronts displaying 'For Rent' signs.
He attributed the decline of the city's commercial center to increasing taxes and the shift to remote work.
When Bloomberg was in charge, the offices were bustling, it was a business-friendly environment, and the top supported the bottom," he stated. "Now, we are residing in a remote world and offices are becoming vacant.
The business tax increased from 5.6 percent to 7.5 percent in 2021. He now aims to raise it to 11.4 percent. Why are businesses here?
Similar to Morfogen, Romero was concerned that Mamdani's suggestions were the last drop.
He claimed that removing the tip credit, which enables restaurants to pay employees who receive tips a lower starting wage, as long as their tips make up the difference to reach the full minimum wage, would cause the industry to collapse.
In settings with generous tipping, employees typically receive significantly more than the minimum wage.
Romero cautioned that eliminating the credit would not only increase expenses for businesses, but could also lower employees' net income and result in numerous shutdowns.
The business would add between $25,000 and $40,000 per employee each year," he stated. "If you're a bartender or server who previously earned $600 to $700 per shift, you're now limited. You'll only make $240. Are you going to keep doing that?
Romero stated that Mamdani's proposal to increase the minimum wage to $30 per hour would make New York exceptionally unfriendly to business owners.
You remove the tip credit, increase the minimum wage, and boost business taxes — you're looking at 60 percent of businesses closing," he stated. "Why would anyone operate here? The risk versus reward isn't logical.
Romero mentioned that he had already begun redirecting future expansion to different markets.
Next year, I will be opening 15 locations. Only one of them is in New York," he stated. "Secondary markets are performing better because developers, the government, and small businesses collaborate effectively. They want you to be there.
He highlighted Nashville, where service workers receive $2.30 per hour but earn higher total incomes, as an illustration of the lack of support in New York.
"We achieve higher figures and generate greater profits in other cities," he stated.
Romero considered himself politically detached for many years, but mentioned that this year is different.
I haven't cast a vote in more than 20 years," he stated. "This was the first time I participated in a New York City mayoral election.
Romero stated that he encountered Mamdani on September 10 together with the rest of the Hospitality Alliance board.
He wasn't familiar with many fundamental economic principles," Romero stated. "He didn't truly grasp the Department of Labor, how the tip credit works, or how minimum wage and labor costs influence why so many businesses are shut down. Now, I'm hoping he appoints the right individuals who can assist him in this.
Romero expressed that the incoming mayor's inexperience was a significant issue.
He will be managing a $100 billion budget, and he has never dealt with payables before. He's never had a team. We're entrusting it to someone who lacks the experience. And that concerns me.
Romero mentioned that he publicly praised Mamdani, but highlighted that 75 percent of his transition team members were from the De Blasio administration.
"If I encountered Bloomberg staff, I would have greater confidence," he stated.
Morfogen expressed the same view, stating he observed a city that was pushing out the individuals who contribute to its cultural identity.
We're being taxed from all sides," he said. "There's nothing remaining.
Romero, a native of New York, once couldn't picture himself leaving his city, but even that belief had started to change.
I pledged myself for the next four years," he stated. "But I never anticipated contemplating departure. Now, over the past few years, I've been considering it.
Among over 30 business partners in his hospitality businesses, he mentioned that only one currently resided in New York City.
No one resides here anymore," he stated. "That should indicate something.
Even though they cautioned, neither of the restaurant owners wanted Mamdani to collapse.
I hope he collaborates with everyone to restore this New York to its former glory and beyond," Romero said. "This isn't about my ego. It's about the only place I consider home, and all these young dreamers who still seek opportunities here.
Morfogen agreed. "He should hear from small business owners," he stated. "We are the ones generating employment. If he aims to safeguard New York's future, that's where he should begin."
New York used to be the place where you could speed up your dreams," Morfogen stated. "It was all about opportunity. Now we've moved from opportunity to survival. The cost of living in 49 other states is much lower. You could lead a better life.
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- Can New York City endure Zohran Mamdani's progressive pledges of rent controls and increased taxes, prompting citizens to consider leaving in large numbers?
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