Is Congestion Pricing Really a Threat to Manhattan Restaurants?
Eater NY seems to think so. So we spoke to some owners and did some basic math.
11:02 AM EST on January 10, 2024
On January 3, Eater NY published an article by its editor Melissa McCart titled "Three Reasons Your Favorite Restaurants Will Likely Raise Prices This Year." The first two reasons—an increase in the minimum wage and higher credit card fees—seem logical. But the third was a little more eyebrow-raising: congestion pricing.
"Consumers will feel that $15—in addition to the $16 bridge or tunnel toll—every time they’re driving or taking an Uber into most of Manhattan," McCart wrote. (Drivers using the Lincoln or Holland Tunnels from New Jersey will receive a $5 credit, per the proposed rules.) She also suggested that food wholesalers would pass on the cost of those tolls to their restaurant customers, which would in turn trickle down to diners. She quoted the owner of Park Avenue Tavern and the Rockaway Hotel, who told her that "public transportation is not reliable for service industry workers, as we [Editor's note: "We"?] work late into the night and some still don’t feel safe taking subways home," implying that congestion pricing would make all the rideshares service workers apparently call on a regular basis even more expensive. (FYI, the tolls go down to $3.75 after 9 p.m., and only apply to people coming IN to the zone.)
That wasn't the first time Eater NY had written that congestion pricing, slated to go into effect later this year (lawsuits notwithstanding), would negatively impact the city's restaurant industry. It had appeared as a point of concern for the industry in an end of year list that the outlet published on December 29, and in a blurb on the closure of a taco cart in Madison Square Park published on January 2. In the latter, the proprietors of King David Tacos told McCart that congestion pricing worries were their number one reason for shuttering their Madison Square Park cart.
But how concerned are Manhattan's restaurant owners and workers in the industry, and how big could the impact possibly be? After all, the MTA's environmental assessment of congestion pricing's impact found that implementing the plan would have "no significant impact" on "neighborhood character" (which includes restaurants and other retailers, per the MTA's analysis) in the area that will be subject to the new tolls.
Although he didn't comment on whether he thought congestion pricing would decrease the number of people who drive or grab rideshares into Manhattan to dine, transport economist Charles Komanoff told Hell Gate in an email that he didn't foresee increased expenses from congestion pricing becoming a concern for restaurant owners. Based on his own rough calculations, "[t]he food purveyor's charge can be made up by adding one-half of one percent to food prices, which seems eminently manageable," Komanoff wrote to Hell Gate. "And I haven't said anything about the trucker/purveyor's time savings due to fewer vehicles on the road—and curbside as well."
Hell Gate spoke to several restaurant owners in Manhattan, and there was no consensus on whether congestion pricing would lead to higher costs for customers, or fewer customers in general.
One West Village restaurateur, who asked to remain anonymous in order to stay on Eater's good side (he's an industry vet whose first restaurant is slated to open in late January), told Hell Gate that he "honestly hadn't thought about" the potential impact of congestion pricing on his new business. "Nobody I know has mentioned it," he said—not in terms of price hikes from wholesalers, impact on customers taking rideshares to dine, or servers using rideshares to commute home after work. (Hell Gate also asked how common that latter kind of commute was, and the owner said that there are "definitely not many" service workers who take Uber or Lyft to and from home.)
Amelie Kang, owner of Málà Project, which has three Manhattan locations that fall under the area regulated by congestion pricing, said she was similarly unconcerned. "I am not too worried at the moment, although I’m sure if there is a dip in business volume, it’s going to be hard to identify what the actual cause is," she told Hell Gate. "I think it may be minimal fluctuations, since as far as I know, the suppliers always make multiple deliveries in one go…For us, they always visit all three Manhattan locations together. If they have other clients, then the cost can be spread out across the board."
Other restaurateurs were more concerned. "I mean yeah, it will definitely affect us. Think about every produce truck that comes into the city every day," Dave Rizo, owner of Yellow Rose, told Hell Gate.
"My concern is around the destination customers [coming] to NYC going down, thus impacting a price hike across the board. Food prices have to go up, since suppliers have to pay extra to enter NYC, plus the clientele coming in from NJ, Connecticut, or even other boroughs will diminish," said Roni Mazumdar, owner of Unapologetic Foods, whose restaurants Dhamaka and Semma are located in the congestion pricing zone.
Janie Cureau, owner of Janie's Life Changing Baked Goods, was more ambivalent. "It's not something that I think about often, but when I hear 'congestion pricing,' I'm like, 'ooh, how's that gonna work for us, are we gonna have to change how we do things?'" she said. "I'm sure most restaurants would say the same thing, but part of being based in Manhattan is that per square foot, it's so expensive, so a lot of restaurants and small bakeries have less storage space. We only have walk-ins at one location, so the rest is like, we really do rely on multiple deliveries a week to two locations." Cureau also said she currently relies on Instacart deliveries to ferry butter to her bakeries, because buying butter from Costco is currently cheaper than any wholesale options—a cost she also anticipates being impacted. "Now that I'm actually talking about it, I'm like, 'oh shit!'" she said with a laugh.
While the economist Komanoff predicted that these potential increases would be both minimal and manageable, we asked the restaurant owners we spoke with to estimate what they would look like for their businesses.
Cureau said that she gets butter delivered to her three locations via Instacart between five to six times a week, and gets other wholesale deliveries six to eight times a week. The anonymous restaurant owner said in kitchens where he's worked in the past, they received food and dry goods deliveries on a roughly daily basis, and alcohol deliveries around three times a week, for a total of ten vehicles ferrying goods to a single location on a weekly basis.
These are estimates, and costs will vary by business—but under congestion pricing, and assuming drivers will pass all of the costs of the tolls down, Cureau would be paying a maximum of an extra $15 a week for butter from Costco (six times the $2.50 toll, the 24-hour toll on for-hire vehicles), and the passed-down cost of an additional $192 in weekly tolls for small trucks ($24/entry for eight entries into the congestion pricing zone) or $288 a week for large trucks ($36/entry for eight entries)—assuming she is the only proprietor those trucks deliver to. The anonymous restaurant owner could pay for the passed-down cost of up to $360 a week ($36/entry for ten entries) in large-truck tolls if his establishment was the only one receiving deliveries, or $240 a week ($24/entry for ten entries) if those ten deliveries came on small trucks.
Cureau told Hell Gate that in one month in 2023, she actually had an average of 300 transactions per day across all three of her stores, not including e-commerce and wholesale transactions. Again, this is a hypothetical, given that we have no idea if vendors will pass on the cost to their restaurant clients, but in this highest-cost scenario, if Cureau has, say, 2,100 customers each week, and all of her drivers pass those toll costs to her and she passes all of those costs down, then based our calculations, at most, customers would pay roughly $0.15 more per order. Not nothing, but is that really cause for concern about cataclysmic price bumps for diners?
The repeated references to congestion pricing in Eater NY articles struck at least one reader as odd: "TIL the editor of Eater NY - which has run multiple anti-congestion pricing takes over the past few years - lives in New Jersey. Now I see the pieces really starting to fall into place," one transit advocate wrote in a post on X.
When Hell Gate asked McCart—who lives in Jersey City—about the post (and its implied accusation of bias), she was firm that her New Jersey residency has not impacted Eater NY's congestion pricing coverage. "My living in New Jersey is not a factor," she wrote.
McCart also told Hell Gate that Eater NY hadn't "really started covering congestion pricing," noting that it was her first byline on the subject and that "at this point, whether restaurants think it will or will not affect them is...almost beside the point." (The same point, one might argue, could also be made of the opinions of restaurant owners who are concerned.)
"It isn't a reality until it happens. But we are already seeing places close, like King David Tacos, citing its closure in anticipation of congestion pricing," she wrote. "Sure, a restaurant can say it may not affect them, but it will be interesting to circle back once it has begun. I hope they are right, but I fear that struggling restaurants will be more taxed."
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