What Will Manhattan Congestion Pricing Do to Restaurants?

The sky did not fall during the first week of Manhattan’s congestion pricing. But you wouldn’t have known that by talking to restaurant owners in the affected zone, who are in a state of high anxiety.

The charges — $9 for a car or van, up to $21.60 for a truck entering Manhattan below 60th Street between 5 a.m. and 9 p.m. — went into effect on Sunday. Virtually all the boroughs’s luxury dining options are in the zone, along with thousands of smaller restaurants that feed Midtown, SoHo, Greenwich Village, Chinatown, Chelsea and more.

The new charges, ordered by Gov. Kathy Hochul, are meant to relieve traffic and pollution, and raise money for the city’s beleaguered transit system. And while many restaurant owners agree those are worthy goals, they were far more preoccupied this week with how the charges will affect their employees, deliveries, customers and costs.

“This is all anyone is talking about,” said Todd McMullen, the manager of Steak Frites, a bistro in Hell’s Kitchen near the mouth of the Lincoln Tunnel. He said the constant noise and pollution on Ninth Avenue have been a longstanding problem, so he hopes the charges thin traffic.

But since the trucking companies that bring in essentials like produce, meat, liquor and laundry will pass the new costs on to restaurants, he added, ”there’s no way this doesn’t cost us money in the immediate future.”

Jae Jung, the owner of Kjun in Murray Hill, said Friday that her produce, meat and fish vendors had announced new surcharges on each delivery. Because her restaurant is small and has limited storage space, she said, she receives deliveries three or four times a week, and will try to consolidate those into one or two.

Still, she said, it’s “inevitable” that she will have to pass some of the new costs on to customers by raising prices.

The timing of the new traffic charges also worries many owners. “This could not come at a worse moment,” said Salil Mehta, who operates three Southeast Asian restaurants in the zone.

January is the slowest month for New York restaurants. It is also when vendors impose their annual price increases. New Year’s Day brought another bump in the minimum wage, from $16 to $16.50 per hour. And prices for ingredients like chicken, eggs and other staples are at record highs.

But Mr. Mehta said raising his prices was not an option. When he opened Laut near Union Square in 2010, the least expensive dish, roti canai — flaky flatbread with a spicy broth for dipping — cost $5. Today it’s $11, and he said customers are already balking. “How much higher can I go?” he asked.

Many of his guests drive in from the suburbs, he said, and pay about $20 in tolls and $50 for parking even before congestion pricing. Mr. Mehta said that they are both cost- and safety-conscious, and that forcing them to chose between spending more for an evening out or braving public transit will keep them out of Manhattan altogether.

“It would be different if the subway were as clean as the one in New Delhi,” where he grew up, he said.

Several restaurateurs have jumped at the chance to appease and attract customers, offering rebates and discounts. Le Jardin Bistro, on the Lower East Side, Mr. Mehta’s restaurants and the Sushi by Bou omakase chain are offering a $9 discount on each check to customers who have paid the driving charge. (Guests aren’t required to provide proof of payment.)

Other restaurateurs are more immediately concerned about their employees.

Jeffrey Bank runs the Carmine’s and Virgil’s mini-empire, including two of the largest restaurants in Times Square. He said that suddenly imposing a daily $9 charge ($45 per workweek, or about $2,000 of post-tax income annually) on restaurant workers — many of whom make close to minimum wage — was unfair.

Last week, he said, some employees had resorted to driving into Manhattan north of the congestion zone, parking there and taking the subway to the Times Square, adding time and hassle to their commutes. Amanda Cohen, the chef and owner of Dirt Candy on the Lower East Side, said cost-of-living challenges, like an extra charge for taking an Uber to or from work ($1.50 each way for rides into and out of the zone), could add to the labor shortage that has plagued restaurants since the pandemic began. Many of the experienced servers and cooks who left the city never returned. Even her recent advertisement for a dishwashing job at $29 per hour drew only a few applicants, she said.

Still, she supports the goals of congestion pricing. “It’s a cost, but at least it has a benefit,” she said.

Jake Dell, an owner of Katz’s Deli, estimated that one-fifth of his employees drive to work, usually because they live in parts of Queens, Brooklyn and the Bronx that are underserved by public transit. The extra charges, he said, would be yet another challenge for them, and for him.

“This isn’t a hardship for Bank of America” and other white-collar companies, he said. “There is a real squeeze on small businesses in this city.” Mr. Dell said that rising costs had forced him to raise the price of his signature pastrami sandwich (now $28.95) every year since 2022, and that he hoped not to do it again in 2025.

Late last month, hundreds of New York food businesses, including restaurant groups like the chef Thomas Colicchio’s Crafted Hospitality and major suppliers like the Fulton Fish Market and Hunts Point Market, signed a letter to Governor Hochul urging a complete exemption from the congestion charges for vendors based in the city, pointing out that food can’t travel by public transportation.

“We should not face the same constraints as out-of-state operators when serving our local community,” it read.

Those businesses, like most employers in the city, already contribute up to 0.6 percent of their earnings to the Metropolitan Transportation Authority, through a tax that went into effect in 2009.

Sam Spokony, a spokesman for the governor’s office, said in a statement: “Governor Hochul has been a champion for New York’s food and restaurant industry, advancing a massive $1.7 billion plan to ease access to the Hunts Point Terminal Market and signing multiple new laws to support restaurants and other small businesses.

“By reducing traffic in and around Manhattan’s central business district, this program will make deliveries easier and faster.”

Baldor is a Bronx-based distributor that supplies about 3,000 restaurants in Manhattan with everything from fresh amaranth to dried ziti. Seth Gottlieb, the company’s director of logistics, said he sends 80 trucks into the zone each day, delivering up to a million pounds of food. At $14 per two-axle truck, he estimated that the new charges would cost the company $250,000 to $500,000 per year. (Trucks are charged each time they enter the zone, while cars are charged once per day.)

Mr. Gottlieb said 20 percent of Baldo’s deliveries already take place overnight, and he expected that number to rise; congestion charges are steeply discounted from 9 p.m. to 5 a.m. Some restaurants already have “key drop” systems that allow Baldor employees to deliver ingredients directly into walk-in refrigerators, but, he said, many chefs who prize (and pay top dollar for) top ingredients still insist on receiving deliveries themselves. And few independent restaurants keep staff on hand overnight.

Robert DeMasco is the director of restaurant sales for Citarella Purveying, which makes multiple deliveries of seafood each day to restaurants like Le Bernardin and Gramercy Tavern. He said he was considering new options, like leaving the company’s vans parked inside the congestion zone and running just one truck in and out, dividing its haul among the vans to make the last-mile trip to the restaurants. Logistically, he said, it would demand more people and slow down deliveries.

“We want to be in the seafood business,” he said, “not the trucking business.”

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