In early March, Glady’s, a Caribbean restaurant in Brooklyn, was bringing in about $35,000 a week in revenue. The Bank Street Bookstore, a 50-year-old children’s shop in Manhattan, was preparing for busy spring and summer shopping seasons. And Busy Bodies, a play space for children in Brooklyn, had just wrapped up months of packed classes with long waiting lists.
Five months later, those once prosperous businesses have evaporated. Glady’s and Busy Bodies are closed for good and Bank Street, one of the city’s last children’s bookstores, will shut down permanently in August.
The three are victims of the economic destruction that threatens to derail New York City’s recovery from the financial collapse triggered by the coronavirus pandemic.
An expanding universe of distinctive small businesses — from coffee shops to dry cleaners to hardware stores — that give New York’s neighborhoods their unique personalities and are key to the city’s economy are starting to topple.
More than 2,800 businesses in New York City have permanently closed since March 1, according to data from Yelp, the business listing and review site, a higher number than in any other large American city.
About half the closings have been in Manhattan, where office buildings have been hollowed out, its wealthier residents have left for second homes and tourists have stayed away.
When the pandemic eventually subsides, roughly one-third of the city’s 240,000 small businesses may never reopen, according to a report by the Partnership for New York City, an influential business group. So far, those businesses have shed 520,000 jobs.
While New York is home to more Fortune 500 headquarters than any city in the country, small businesses are the city’s backbone. They represent roughly 98 percent of the employers in the city and provide jobs to more than 3 million people, which is about half of its work force, according to the city.
When New York’s economic lockdown started in March the hope was that the closing of businesses would be temporary and many could weather the financial blow.
But the devastation to small businesses has become both widespread and permanent as the economy reopens at a slow pace. Emergency federal aid has failed to provide enough of a cushion, people remain leery of resuming normal lives and the threat of a second wave of the virus looms.
The first to fall were businesses, especially retail shops, that depended on New York City’s massive flow of commuters. And months into the crisis, established businesses that once seemed invincible, including some that had ambitious expansion plans, are cratering under a sustained collapse in consumer spending.
One business that will not reopen is Bank Street Bookstore, a nonprofit on the Upper West Side run by the Bank Street College of Education. More than 90 percent of its revenue was in-store sales, mostly to neighborhood parents, the college’s students and elementary schoolteachers.
“We had to keep reinventing the business every week to two weeks, based on new guidelines,” Caitlyn Morrissey, the store’s manager, said about the past months. “Our cornerstone was in-person sales, not web sales.”
Unlike larger firms, small businesses — bookstores, bodegas, bars, dental practices, gyms and day care centers — typically do not have the financial resources to overcome a few rough days or weeks, let alone months.
There is no clearinghouse for reliable data on the number of small businesses that have closed in New York or nationwide. The actual number of permanent closings in New York is probably higher than Yelp’s tally since it largely focuses on consumer-facing businesses. A small business is broadly defined by economists as those with under 500 employees.
From March 1 to the end of April, during the height of the pandemic in New York City, businesses in the city that use the payment company Square saw their revenues drop by half, according to an analysis the company provided to The New York Times. The most significant revenue declines were in the Bronx and Manhattan, the company said.
As part of a $2.2 trillion emergency aid package adopted in March, the federal government set aside about $500 billion in small-business loans to keep workers employed and companies afloat. But business owners said they have spent all or most of their loans, paying salaries and bills, including rent.
More help for small businesses is part of negotiations as the Trump administration and Republicans and Democrats in Congress try to iron out another rescue package.
While the worst of the pandemic in the United States struck New York City first, small businesses across the country have been clobbered.
Between early March and early May, roughly 110,000 small businesses nationwide shut down, according to researchers at Harvard.
In New York, the restaurant and hospitality industry has been one of the hardest hit. More than 80 percent of the city’s restaurants and bars did not pay full rent in June, according to the NYC Hospitality Alliance.
Among those restaurants was Glady’s in Brooklyn. Its revenue plummeted by two-thirds since March, to about $12,000 per week in June. The majority of its sales were from tropical rum drinks served through a side window of the restaurant.
The owner, William Garfield, said he decided to close in June before officials started allowing outdoor dining after his landlord said he had to start paying the full monthly rent, $8,000, starting in July. Mr. Garfield said the healthy revenue from drink sales was still not enough to make ends meet.
“We were thriving,” said Mr. Garfield, 32, said about Glady’s business before March. “I would disagree with the sentiment that if someone had a thriving business they should be able to survive this.”
Mr. Garfield has another restaurant, Mo’s Original, and a bar next door, both of which he plans to keep open. His staff among his businesses has shrunk from 56 to seven.
He has spent almost all of his small-business stimulus loan, known as Payroll Protection Assistance, about $72,000. His insurance company denied his business interruption claim, citing New York State’s order that restaurants were “essential businesses” and could stay open.
“It’s the most frustrating situation because it’s not about passion anymore or the work you put in or the hours you put in,” he said. “It’s all about the mitigating circumstances that are out of your control.”
In recent weeks, “For Lease” signs have started to appear on storefronts on streets throughout New York, evidence that businesses that tried to ride out the initial months or abruptly shift to new online business models could no longer survive.
Business owners said they are at a tipping point. They have exhausted their federal, state and local aid. And while some landlords have offered breaks on rent, some business owners say others have been less flexible.
Owners say they also have to cope with constant uncertainty — not just the threat of a resurgence of the virus but also having to navigate shifting reopening plans.
Restaurants in New York City were expecting to restart indoor dining in July. Owners bought food and supplies for what they thought would be larger crowds. But days before the restrictions were to be lifted, officials halted the plans, citing rising cases in other states that had allowed indoor dining.
Nearly a third of the 2,800 businesses in New York City that have permanently closed were restaurants, according to Yelp.
The remaining businesses represent a broad swath of the city’s economy, including small law firms, beauty stores, spas and cleaning companies.
“As a small-business owner, I’m surprised that more businesses have not closed yet,” said Andrea Dillon, the owner of Busy Bodies, a day care she opened on Fulton Street in Brooklyn in 2016.
Ms. Dillon said she noticed the ripple effect of the pandemic in late February, a few weeks before the city shut down. Parents and caregivers were canceling upcoming birthday parties and classes.
By early March, she realized that her entire business model — in which up to 70 children and adults cram into a play space with toys and live music — could not coexist with the coronavirus.
She asked her landlord for a break on her $6,000 a month rent, but he refused. Ms. Dillon said she decided in early April to close down.
“The face of New York City storefronts, they will not be forever changed,” she said. “But they will be changed for the foreseeable future.”
While her management company did not offer a break on rent, another landlord, Brian Steinwurtzel, said he was doing just that for some of his roughly 2,000 tenants in New York City, many of them small businesses. Mr. Steinwurtzel, the co-chief executive at GFP Real Estate, said he helped them apply for federal assistance and lowered their rents while business is down.
“It doesn’t make any sense to kick them out or fight with them as long as we are all working together,” Mr. Steinwurtzel said. “We believe we are all in it together, and we all have to help each other out.”
The most vulnerable small businesses in New York City might be those operated by minority or female owners. Recent studies have shown that these were largely shut out of federal aid. There are about 10,500 business that New York City has certified as minority- or female-owned.
A survey of such businesses released by the New York City Comptroller’s Office found that 30 percent of them believed they were likely to fold within the next 30 days.
Among those businesses is ThroughMyKitchen, a catering and snack company owned by Evelyn Echevarria. Before March, she derived most of her income from selling goods at street fairs and catering. Her last event was in March, catering a 120-person wedding in South Carolina.
She is surviving on unemployment benefits, but the largest portion of that, the federal stimulus of $600 per week, expired at the end of July. She also received $2,000 in assistance from the city.
“It’s been very, very hard,” Ms. Echevarria, 58, said. “The small businesses won’t be able to survive this. This, to me and many others, is devastating. It’s devastating.”
Sheelagh McNeill contributed research.