The pandemic exposed how costly, high‑tax locations can cripple even top‑performing businesses. A Manhattan restaurant that once ranked among the nation’s highest‑grossing eateries has closed its indoor dining room, slashed revenue by 85 % and announced it will never open another venue in New York City, opting instead to expand in Florida where operating costs are far lower.
New York restaurant shifts to Florida
- Location: Bryant Park Grill, a 1,000‑seat restaurant in mid‑Manhattan, part of the ARK Restaurants portfolio (20 U.S. locations).
- Impact of COVID‑19: Tourist traffic vanished, office towers emptied, and the dining room was shut. The business now serves guests on a patio and generates roughly $12,000 per day, an 85 % decline from pre‑pandemic levels.
- Executive decision: Michael Weinstein, CEO of ARK Restaurants, declared he will not open another restaurant in New York. He plans to replicate the same volume in Florida using the same square footage but with significantly lower expenses.
- Broader context: The article cited other Manhattan‑based national chains—JCPenney, Kate Spade, Subway, and Le Pen Quotidian—that have permanently closed their New York locations.
Why high‑tax jurisdictions are losing businesses
- Operating costs: New York’s rent, labor wages, and stringent labor laws make it difficult to sustain profitability when revenue drops.
- Regulatory burden: Complex regulations increase overhead and limit flexibility in staffing and cost control.
- Pandemic vulnerability: Lockdowns and reduced foot traffic hit high‑cost cities harder, leading to bankruptcies that were once considered unlikely.
- Cash‑flow pressure: Companies with high fixed costs often cannot survive more than a few months of reduced income, unlike firms that maintain low debt and ample cash reserves.
Benefits of relocating to lower‑tax regions
- Reduced taxes and fees: States like Florida have no personal income tax and lower corporate taxes, directly improving margins.
- Lower labor costs: Wages and benefits are generally cheaper, and labor regulations are less restrictive, allowing easier staffing adjustments.
- Simpler permitting: Opening a restaurant or other on‑ground business can be faster and less costly.
- Potential incentives: Some jurisdictions offer residency permits, citizenship pathways, or tax breaks for investors who create jobs or make sizable capital contributions.
- Diversified risk: Operating in multiple locations spreads exposure; a shutdown in one city does not collapse the entire enterprise.
Practical considerations for entrepreneurs
- Assess total cost of ownership: Compare rent, utilities, payroll, taxes, and compliance expenses across potential locations rather than relying on brand prestige alone.
- Plan for cash reserves: Maintain sufficient liquidity to weather revenue downturns without resorting to high‑interest debt.
- Explore international diversification: Many successful restaurateurs operate in several countries (e.g., France, Italy, Singapore, China, Macau, United States) to mitigate localized shocks.
- Asset protection: Structure ownership through entities in favorable jurisdictions to shield assets from adverse regulatory changes or sudden policy shifts.
- Regulatory research: Understand local labor laws, health codes, and licensing requirements before committing capital.
Risks and caveats
- Market familiarity: Moving to a new state or country may involve a learning curve regarding consumer preferences and supply chains.
- Political stability: Some low‑tax jurisdictions may have higher political or economic volatility; due diligence is essential.
- Currency exposure: International operations introduce foreign‑exchange risk that can affect profitability.
- Reputation considerations: Leaving a high‑profile market like New York may impact brand perception among certain customer segments.
The case of the Bryant Park Grill illustrates a broader trend: entrepreneurs are increasingly prioritizing environments where they are “treated best”—lower taxes, fewer regulations, and more flexible operating conditions—over the historic allure of marquee locations. Diversifying geographically and structuring businesses to minimize regulatory and fiscal burdens can provide a more resilient foundation for long‑term growth.
