‘People Are Just Exhausted’: What Happens When A Business Decides It Can't Go On
For 35 years, Coogan’s was an institution in Manhattan’s Washington Heights neighborhood, providing good times and refuge, along with plenty of food and booze, for New Yorkers.
On May 27, Peter Walsh and his two partners in the beloved Irish pub swept the floors of the bar one final time. He looked across the empty room, turned the lights out and never went back.
“I'm 73 years old, and I've worked my whole life, whether it was at school or working in the military or working jobs,” Walsh said. “That was the first time in my life that the next day I wasn't going to work somewhere.”
Three months after President Donald Trump declared the coronavirus a national emergency and states began closing or limiting business operations, owners of businesses of all sizes are deciding that enough is enough.
States and cities across the nation have started to loosen certain health restrictions and provide new social distancing recommendations so consumers feel confident to go out and shop, but it was either too little or too late for owners of many restaurants, bars and other retailers around the country.
While retail bankruptcies such as JCPenney, Neiman Marcus and Pier One dominate the national headlines, small businesses, long considered the backbone of the U.S. economy, are quietly shutting down in large numbers or penning goodbyes to customers on social media or their websites.
Bisnow spoke to several of these small-business owners to capture what happens when a global health crisis forces them to turn the store they have rented for years back over to their landlords.
“This is a no-fault divorce,” NewMark Merrill President and CEO Sandy Sigal said. “No one cheated or did any bad thing.”
Nationwide, as of Jan. 1, more than 4,000 major retail stores have closed, according to Coresight Research, a global advisory and research firm specializing in retail and technology. Coresight estimates that more than 25,000 stores will close by the end of the year, and its figures only cover retailers with national footprints.
For small businesses, many of which don’t have access to corporate lines of credit, teams of attorneys ready to battle landlords or simply enough cash to keep the lights on, the pain could be even deeper.
“Small businesses are a vital instrument in not only bringing new employees into the job world but also sustaining our local economy,” said Eric Groves, the co-founder of Boston-based small-business networking site Alignable. “Our most vibrant local economies are because people want to be there and shop there.”
Groves said if people only shop online for the foreseeable future and don't patronize their local businesses, “you’re going to see a lot more vacancies on Main Street. You’re going to see housing values decrease in communities and jobs in those communities decrease.”
Alignable has surveyed more than 400,000 small businesses every month since the coronavirus pandemic hit, and almost 3% report they have permanently closed because of the coronavirus. More than 41% temporarily closed.
"Some people are just exhausted,” said Sigal, who leases his real estate portfolio to more than 1,600 retailers. “Some had pre-existing conditions prior to COVID. Some didn’t want to pay the Paycheck Protection Program or don’t have the energy to want to reopen.”
Minority- and women-owned businesses have also been hit hard by the crisis. Groves said another one of Alignable’s surveys found that only 50% of minority- and women-owned businesses have received PPP funding, while more than 70% of other or non-minority-owned companies have received government subsidies.
Taylor Hoang, CEO of Taylor Hoang Restaurants and co-chair of the Seattle Small Business Recovery Task Force, closed 10 of her Vietnamese restaurants due to the coronavirus. She is hoping to reopen them when things get better.
“For minorities, the coronavirus has been extremely difficult to bear,” Hoang said. “They are dealing with racism and negative stereotypes because the virus came from Asia. Many come from immigrant communities and don’t speak English or don’t understand how to apply for the PPP loan, and a lot of information about when to reopen is coming from secondhand sources.”
For many immigrants, opening and operating their own small business was one of the only ways to achieve the American dream, Hoang said. Thousands of those dreams have already been shattered.
Tuan Nguyen permanently shut his Chicago restaurant, Simply It, on April 30, 45 years to the day after he fled his native Saigon.
“I left Vietnam on the last day of the South Vietnamese government,” he said.
The then-22-year-old law student was packed into a small merchant ship with about 1,000 other refugees, including his wife, infant daughter and about 30 other family members. Six weeks later, Nguyen arrived at a Virginia Holiday Inn and found a new career.
“I got work in the restaurant as a dishwasher, and my salary was $2.25 an hour,” he said.
That began a lifetime of waking before dawn to shop for restaurant supplies and working late into the night, with few chances to rest a pair of now-arthritic knees.
Nguyen moved to Chicago in 1985. He and several of his family members, plus about $30K in savings, opened Simply Pasteur, a North Side restaurant that helped introduce Vietnamese cuisine to Chicago.
“The restaurant business was very tough, even before COVID we struggled, but you’re happy when you see people enjoy your food, and you forget you’re tired and exhausted,” he said.
He struck out on his own in 2006 with Simply It, a 56-seat Vietnamese restaurant at 2269 North Lincoln Ave. in the affluent Lincoln Park neighborhood. The hard work paid off — at first.
“It was a golden time," he said. "In summer and winter, people would be lined up out the door, and I would hand out tea and Vietnamese egg rolls for free to everyone standing outside."
The new business survived hard times. The 2012 shutdown of nearby Children’s Memorial Hospital sliced Simply It’s customer base, and Nguyen had to find other ways to pay Lincoln Park’s high rents. Catering and takeout "were life vests,” he said.
But Illinois’ pandemic-related shutdown in March started a cascade of problems Simply It could not overcome. Nguyen tried continuing with only carryout and deliveries, but beef prices soared along with the costs of essential supplies like hand sanitizer, and some employees were afraid of contracting the coronavirus.
“A busboy called and said, ‘I’m sorry Uncle Tuan, I can’t come to work today because my Mom and Dad won’t let me,’” Nguyen said.
Simply It could only generate 25% of its previous sales, he added, and he shut down the carryout operation on March 30. Nguyen applied for a small-business loan from the federal government, but paying around $7,300 per month rent, plus workers’ compensation, equipment leasing and all the other fixed costs still seemed impossible.
“We wanted to keep him as a tenant, and made no demands that Tuan pay rent and asked for nothing in return, until there was clarity on the COVID situation,” said Anel Pasic, the manager of United Investors Inc., which represents the owner. “He is one of the hardest workers I’ve ever seen, and a kind and gentle soul that we went out of our way to help.”
But after Gov. J.B. Pritzker announced on April 23 he was extending Illinois’ stay-at-home order at least until May 30, the pandemic seemed likely to continue depressing the restaurant sector. Nguyen said he decided to give the keys back on April 30.
Nguyen identified his landlord as Chicago investor and politician Alexi Giannoulias, but Giannoulias would only tell Bisnow the owner was an entity called Lincoln Belden LLC. Pasic said he was not allowed to disclose who owned the building, except to say multiple parties were involved.
"I went to the restaurant at noon, and I left at 1 p.m. with all of our personal belongings, including our Vietnamese paintings, but I had to leave all of the heavy equipment behind," Nguyen said.
Shortly after, he drove past his old business and saw a “For Lease” sign in its window.
“I cried when I saw that,” Nguyen said.
The outpouring of affection from customers when they heard the news, both on the Simply It Facebook page and in personal letters, made the past 14 years worthwhile, he said.
“When I left Simply It, I lost everything, all of my investment, but came away with all the sympathy and love of my neighbors,” he said. “We are friends, we are family.”
Today, Nguyen’s back at Simply Pasteur in the Edgewater neighborhood, where he still lives next door. The state recently loosened restaurant restrictions, and Nguyen works without pay to help his sister-in-law and brother reopen Pasteur’s outdoor patio. But fixed costs remain high, and during his frequent visits to St. Ita’s Catholic Church just across the street, he wonders if the family’s remaining restaurant will make it.
“Sometimes I pray for a miracle,” he said.
Lucky's Burger & Brew
For Ernie Geyer, closing Lucky's Burger & Brew after five years of operation just came down to the dollars. His location, in an affluent suburb just north of Atlanta next to Emory University, was no longer making them.
“Honestly, at Emory the last couple of years, the sales haven't quite been up to par,” Lucky's founder and owner Geyer said. “Nobody really knew what the future would look like as far as this pandemic. Your margins are 10% at most. With the university closing, that eliminated 50% to 60% of our business right there. It just wasn't feasible to stay open.”
Lucky's has three other locations around Atlanta, in the affluent communities of Roswell, Brookhaven and a food hall location in Marietta. The Emory Village restaurant was two months into a one-year extension on its lease. The pandemic forced Emory University to close its campus, so he went to his landlord's office, taped his restaurant's keys to the glass door and walked away.
“You are emotionally involved. You got a lot of investment. But it boils down to the dollar. Can you afford to stay open, and is it worth the pain and misery to come up every month to pay the money?” he said. “If you don't have the cash to maintain it, you're basically going to be out of business soon.”
The move, though, has left tenant and landlord, The Meddin Co., at odds, despite a relationship that spans 30 years, founder Stuart Meddin told Bisnow. At issue was Geyer's personal guarantee of six months' rent on the lease.
“Every other tenant over there, and in all my other locations, was in constant conversation with me, 'How can we work together'? And I am working with every one of those other tenants on how to do that. We're all trying to find a way,” Meddin said. “Ernie's the only one of all my tenants that did this.”
Meddin said most of his other tenants have held their own by doing takeout, but Geyer said that wasn't a real prospect for his restaurant. The lack of traffic from a shuttered university was a big issue, and Lucky's wasn't selling alcohol anymore.
“I don't think this country, at least in my lifetime, experienced something like this, where the government came in and said you can't operate,” Geyer said, adding that he tried takeout only for a week before giving up on it.
“Unfortunately, it's got to break down somewhere” without dine-in business.
Meddin said tenants sometimes lack an understanding that losing the business is just as difficult for the landlord.
“I'm in a horrible position like any other landlord right now,” he said. "We all got expenses. And it's not the easiest to find new tenants right now."
Geyer and Meddin both said they are close to a compromise for breaking the lease, and Meddin said he has no intention of taking his former tenant to court.
“We'll work it out personally. I've known Ernie a long time, we'll work this out,” Meddin said.
When Walsh spoke of his plans to open an Irish pub in Washington Heights in 1983, he was often met with strange looks. At that time, the neighborhood was a hot spot of the crack cocaine epidemic on the East Coast and had one of the highest homicide rates in all of New York City. But, it also had one thing that made it a promising business venture: It was right next to New York Presbyterian Hospital, Walsh told Bisnow.
“They always say if you want to open a successful bar and restaurant, open across the street from a funeral home,” he said. “But what’s better than a funeral home is opening a bar around the corner from the hospital.”
The pub, Coogan’s, opened at 4015 Broadway in the heart of a Dominican neighborhood. It became famous for bringing together community members of different races and walks of life. Each night, the bar’s nearly 9K SF was packed with local residents, doctors, nurses, politicians, judges and police officers, Walsh said.
Over the years, the pub survived a lot. In 2018, Coogan’s nearly shuttered after its landlord, Royal Charter Properties — the real estate arm of New York Presbyterian Hospital — sought to raise rent $45K per month. A New York Times story spurred local outrage at the closing of the pub. Soon, the story went global: Walsh and his co-owners were in newspapers and television news segments all over the world, from Russia to Ireland, Walsh said.
“New York Presbyterian nurses were ready to picket,” he said.
Even the 21st century king of Broadway, Hamilton writer and star Lin-Manuel Miranda, who was a Coogan’s regular growing up in nearby Inwood, spoke out. A petition started by a neighbor of the pub received 15,000 signatures in a matter of days.
Faced with an unprecedented flood of support, Royal Charter Properties let up on their non-negotiable stance to increase rent, and inked a lease extension that kept rent at the same rate for a short period of time, Walsh said.
“There wasn’t that much time left on the lease, that’s all I can say,” Walsh said.
Royal Charter Properties declined to comment for this story.
Not even two years later, the coronavirus hit. This time, no amount of community support could save Coogan's.
Now, the space at the corner of 169th Street sits empty for the first time since Ed Koch was mayor of New York. Through all it survived, it could not survive the coronavirus. Coogan's co-owner Dave Hunt said he knew within days of the stay-at-home order that the pub would not be able to reopen.
“I could tell you, once we realized that we would not have the biggest individual day of the year, St. Patrick’s Day, I immediately realized that we were not going to survive,” Hunt said.
For the next month, Walsh, Hunt and co-owner Tara McDade planned for the ultimate permanent shuttering of a neighborhood institution. They announced to their employees they would not be reopening on April 20.
“We took our emotions, put it in the box and put the top on it and put in a closet because we're on a mission,” Walsh said. “The mission was to be effective and as decent as possible to our employees.”
The three hosted an online auction for the bar furniture, cleared out the remainder of the pub into a dumpster and swept the floors until the place was “broom clean,” they said.
“I said we're going to do the best at returning a piece of property that anybody could do,” Walsh said.
A representative of New York Presbyterian’s real estate arm was supposed to pick up the keys on the night of May 27, but a Royal Charter representative who came to pick the keys up didn't bring a letter that outlined the state that the building was left in, Hunt and Walsh said. The three owners insisted that they wouldn't hand over the keys without a letter, so they would have to wait another day.
The next day, Hunt, 70, drove from his house in Bergen County, New Jersey, to Washington Heights and parked his 2012 Ford Flex on St. Nicholas Street. He walked along the street he had gone down as a bartender, and later as the pub’s owner, toward his empty store for the last time with the keys in his pocket. By then, he said, the emotions had worn off. This was just business.
He met his landlord at the door, walked him through the bar and showed him the pub's little idiosyncrasies, like the best way to lock the door from the inside, Hunt said. The types of things only someone who spent decades taking care of a business would bother to mention.
All in all, it took 15 minutes.
The two shook hands, signed an agreement that stated the building was left in good condition, and Hunt drove home. Walsh hasn't been back.
Roozbeh Dehgahi remembers the day he turned in his keys: March 22. The owner of Messina's Mediterranean Cuisine slipped the keys into an envelope and mailed them back to his landlord, Atlanta-based Newburger-Andes & Co., from a neighborhood post office.
Dehgahi said he has days where he still feels sadness over the decision. He operated Messina's in Lilburn, a suburban city more than 20 miles north of Downtown Atlanta, for some 20 years, and during that time, he put a lot of passion into growing his business. But the pandemic disrupted the precarious balance small restaurants must maintain.
“I believe it was the right decision. From my understanding, everyone is in the same shoes,” Dehgahi said. "I have sympathy for the ones that are hanging in there."
Newburger-Andes Chief Investment Officer David Andes said Dehgahi first informed him about his decision to close the restaurant with a voicemail.
“He wrote me back and said he's so upset he couldn't talk,” Andes said. “There's a lot of blood, sweat and tears that went into that restaurant for 20 years.”
Andes said Dehgahi has time left on his lease at the stand-alone building at 4075 Highway 29. But going after him for unpaid rent would be the wrong move to make in this environment, he said. Besides, Newburger-Andes has no debt on the property, giving the company leeway to work with tenants.
Messina's is not Newburger-Andes' only tenant to close. The firm, which specializes in investing in small flexible office, industrial and triple-net retail properties for smaller investors, has 10 restaurants in its portfolio closing shop during the pandemic, including Ruby Tuesday and burger chain Krystal.
“They realized that the world has really changed for restaurants, and they just don't have the energy to fight it out. Whereas the landlord, we have time. I can go a year without payments for a tenant and be OK,” Andes said. “I would not dare go after that Messina's guy. He gave it his best, I believe he did. And I'm a local landlord and he'll remember me. He'll refer somebody to me someday.”
Dehgahi said he's unsure what he will do next in his career.
“It's a difficult decision. I would love to stay in the food industry,” he said. "But right now, with my contacts, it's not a good time to get employed in the field."