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Nick Morgenstern Isn’t Optimistic About New York’s Recovery

Optimistic about frozen treats, less so about a city in crisis.

Nick Morgenstern is chef and owner of Morgenstern’s Finest Ice Cream in New York.

I worked as a pastry chef for many years in some fine dining establishments here in New York and in San Francisco, where I’m from. I started owning and operating restaurants about 12 years ago, in 2008. I opened Morgenstern’s in 2013.

I had made ice cream at every place that I worked. That was always part of what we were responsible for in the pastry departments that I worked in. I had an ice cream cart in front of my first restaurant in Fort Greene, a restaurant called the General Greene. It opened my eyes to the possibility that owning and operating an ice cream shop like that could be possible and would be successful.

I love the product, and I think the more that I do it, the more I realize how much the connection between culture and the zeitgeist of food in America is communicated through the experience of ice cream. It feels like an evergreen career opportunity to continue to explore what serving ice cream in America in the 21st century can be.

We continue to be surprised by how open people’s palates are to different flavors and concepts of what ice cream can be. If you push the boundaries, people will go there with you, and it will translate into sales and volume. Certainly there’s a possibility for someone to be offended every day if they want to be. They can be offended by anything. We look at the other side of it, which is in which categories and which flavors the products are moving.

As soon as the stay-at-home order was placed, we closed both stores. That was towards the end of March. The big store was closed for about five days before we realized there was a real demand for the products. We were getting a lot of email requests and delivery requests, so we opened the big store back up with a really limited staff. It was myself and two others for several weeks. We’ve slowly added services and staff as we tried to meet an increased demand.

Under normal conditions, we serve 88 flavors of ice cream every day at Morgenstern’s. Right now, unfortunately, we have restricted conditions, so we’re selling 55 flavors, which is still a lot. So we have a really broad product mix to look at as far as what the different choices are for the consumer. We’re just surprised to see demand continue to flatten out across the menu matrix. You have your outliers that sell really, really well, and you have your outliers that don’t sell as well. But everything sells.

Our staffing shifts quite a bit throughout the year due to seasonality. If you were to compare now to the same time last year, we’re probably at 30 percent of where we normally would be.

At one point we were just doing delivery and curbside pickup. Now we’re offering delivery through the apps and our own platform. We’ve been doing deliveries for several years before all this. There were definitely adjustments required because the situation is so different for us right now. Having a lot more volume going through those channels changed what we were producing, and when.

We added our ice cream cart to the front of the big store, and we ran that for several weeks. And then we opened both stores for socially distanced purchases about two weeks ago. Only a few customers are allowed in the store at one time. You have to wear a mask when you’re inside the store. There’s a little bit of a different flow for how customers move around in the store to keep them away from each other. In the big store, it’s in one door, then out a totally different door.

Then there’s training the staff on how to maintain hygiene and distancing. It’s been running fine. It’s been really important to have kept the stores open. The blood was continuing to flow through the organism. The reason I opened the store back up was that because the longer you stay dormant or stagnant, the harder it is to get it back moving again. It’s really challenging.

I’m in the store every day, and I work all day, every day. So I feel confident in our capabilities operationally to adapt to whatever we need to adapt to. The real issue is the lack of clarity and communication coming from the leadership within New York City, as well as at the state and federal level. The challenges for small businesses to understand are what we’re allowed to do legally, what is safe to do, and what’s actually going to work for the business. We’re having to reverse engineer what we can do.

The saddest part about what’s going on in New York right now is all of the operators are scrambling as hard and fast as they can to build their shantytown outside dining areas. The reality is there’s not enough customers, and there aren’t going to be enough customers regardless of whatever we try.

We’re running around trying to chase after little crumbs of economics to satisfy the requirement to utilize our Paycheck Protection Program money, because we’re forced to use it in a certain time frame and under certain conditions. And again, we have poor leadership in this situation, from the perspective of a small food service business operator. It doesn’t make any sense. It’s nonsensical. It’s challenging every day to get up and get out there, and really want to push forward, and do the best you can, and also be conscious of the rules and safety, and cognizant of what’s actually going to drive business.

A lot of the larger operators I know have said to me that they’re hanging back three weeks from the rest of us because they’re just like, “Let’s just see what is going to happen.” Because you run out there and you spend your resources, and there’s a certain amount of brain damage involved with all of this. And then you’re like, “Oh well, look at all that stuff I did.”

There was an article in the New York Times about how the Department of Transportation changed the guidelines for dimensions of the barriers that you have to build in order to have dining on the street. All these operators had run out and spent all this money to build these barriers according to the specific guidelines that were sent to them by the city, and then they changed the rules. Ta-da! Then they’re giving you citations and cease and desist orders, and not acknowledging that they made a mistake. They didn’t have it together. They told us what to do, now they’re changing it. It doesn’t work that way.

The big picture here—the sentiment among operators I know—is that we’ve got to get out of here, because New York City has become untenable for small business.

I don’t want to be cynical about it, but when it comes to change, the juice has to be worth the squeeze. We have repeated empirical evidence that the current administration that governs the bodies that dictate those rules is completely tone deaf. I can go and spend my time and rah-rah-rah and sis-boom-bah that we should do X, Y, Z. They don’t listen to us. They never have. And they’re not listening now. They’re implementing rules, and then changing rules and telling us, “Well, you know, we’re allowed to make mistakes, and we don’t know what we’re doing.” So that juice isn’t worth the squeeze to me. It’s a waste of time.

We’re on our own. And I’m responsible for putting food on the plates of my team. Any level of government is going to be an impediment to that obligation. So I have to navigate that impediment and stay out of it. I can’t let it suck my energy. That’s what I talk to other operators about. Don’t get yourself wrapped up in this other stuff. It doesn’t go anywhere. There’s only so many hours in a day to do what we have to do.

We have a socially progressive leader of this city who has no concept of what the businesses do in the city. He’ll find out soon enough. How many people do we have unemployed in New York right now? That’s not going to come back any time soon. I employ people. The restaurant industry employs people. We can’t employ people, and then pay for the errors of the city and all the taxes and all the little tickets and all the stuff that they charge us. I tell other operators, ask your CPA to do a tax analysis of New York City versus a secondary city in this country, and it’ll blow your mind at how much more we pay for these shenanigans. This situation highlights what a sham it is in New York.

Everyone I know In New York who can pull the parachute and leave is talking about pulling that parachute. Now is the perfect opportunity. You can tell your landlord to piss off, and you can get out of the whole thing. You can burn your PPP money hard and fast, grab a little bit of cash right now, and then roll up your tent and go.

I have a big brand in New York. I’ve worked here for a long time. I’ve got a thing that’s recognized nationally and blah, blah, blah. I’ve been in the movies and I’ve been on TV, whatever. And I’m driving a delivery van every day. I look at this bozo who runs our city, Bill de Blasio, and he’s having them open the YMCA for him. I’m like, fuck you, dude. Fuck you. You’re not with us on this. You’re not in this with us, and you don’t know what you’re doing.

It’s shitty for us, because I get up every day, and I’ve got to pound this thing. I’m like, “What are you doing? Get it going, bro. Get it together. Your city is in the worst crisis it’s seen in however many years. I’ve been here 20 years. This is bad news, buddy. You better get mobilized and get it moving. Get out of office, or do something about it.” This is a situation that’s unprecedented. It’s a crisis, and it requires leadership, which means that you have to have integrity and strength.

I’m not optimistic about our capability to recover as a city. I’m going to sit here and shovel shit for the next year while this guy runs himself in a circle and talks about his social issues? This is a business situation, bro, and you’re not going to have a dollar in your budget if everybody jets out of here. I’m talking to a lot of people. They’re like, clock’s ticking, grab my cash, get my shantytown tent outside, serve as much liquor as I can, bust it through, grab my money, and sayonara guys. Pack it up. I’m seeing it. It’s crazy. This is not hyperbole. This is happening. People are like, I’m out of here.

This situation is unique to New York because of occupancy costs, operating expenses, minimum wage expenses, and lack of a Social Security net here. Then the pandemic ravaged this place, and we don’t have a plan on how to deal with it. Those pressures have been exacerbated in a place that’s already under extreme pressure because of all those other factors. And leadership has not shown that they’re going to do anything about any of that stuff.

As an operator, it’s my responsibility to understand the landscape. There’s no restaurant commission that says we’re going to adjust the landscape. The market is the market. We live in America. The last time I checked, America was ruled by capitalism. The market drives it. So the conditions of the market are going to drive this stuff. We have policy changes happening. You want to raise the minimum wage. You want to try to move things around that way, and then maybe it will have an effect on the other factors within the landscape. So as an operator, your responsibility is to know and understand the landscape, and then adapt and adjust your business plan accordingly.

If anyone told you that selling food was easy, they lied to you, and you were dumb enough to believe them. It’s really hard. This business is hard. It’s stacked against us. How thin are the margins? They’re razor thin. Why do we do it? We do it because we love the food. Nobody said you’re going to make a fortune selling food. That’s just not going to happen. So if you like to do it, you figure it out. There’s some things you’ve got to do to be responsible. We’re all responsible for our own organization. If you have vulnerabilities, take responsibility for your vulnerabilities.

Does this pandemic lay bare the systemic issues in our industry? It’s laying bare systemic issues in our society. Is anything going to change from that? Not really. What are you going to do about it? Weather the storm. Tell your landlord that he’s going to cut your rent down by 70 percent, or you’re leaving. The city’s going to be full of vacant storefronts, even more than it was before the pandemic. Hopefully the market will correct for that. Hopefully de Blasio or whoever comes after him will grow a pair and start to penalize the landlords for having their stores vacant for extended periods. You can only have your store vacant for nine months, a year, or whatever. After that, you’re going to pay the full tax basis of your building, bud. A vacancy can’t be written off as a loss forever. The city doesn’t want to do it because the city doesn’t want to lose the tax basis value. Because what’s going to happen then? All the real estate values are going to come down, and you’re not going to be able to get the same tax income. It’s a Ponzi scheme, and we’re the ones at the bottom paying for it.

I’m a solo operator. I own my business myself. And I don’t come from anything. I moved to New York City with two thousand bucks and two suitcases, and I worked as a cook. You can do anything. You put your mind to it, you can do it. As an operator whose name is on the door, I can make whatever decisions I need to make that are best for my business, for my staff, for my company. This particular scenario right now puts me in a position to actually deal with the realities of what it is, including managing the dynamics and the relationships with the landlords. The hardest thing right now is to get the landlords into reality. And there’s going to continue to be waves of reality crashing on the landlords’ heads.

Luckily, I believe that ice cream in America is evergreen, and the love of ice cream will outlast the pandemic. I feel optimistic about that. I don’t feel as optimistic about New York as I did in March. I do believe that New York will come back. It’s a matter of how and when.

My concern is that the current administration will not be successful at expediting the recovery. The current administration will extend the recovery. And I have to ask myself, do I want to spend my savings on the de Blasio administration’s bungles? That’s what it comes down to for all of us, because your PPP money is going to be gone really soon. Whatever money you have, whether you have to go back to the bank, you’ve got to get a loan and pay it back, you’ve got to go ask mom or dad, you’ve got to go back to your investors. Do you want to spend that money watching the de Blasio administration not know what they’re doing, or worse yet, do nothing at all?

That’s the problem, because there’s no tourism in New York for at least another year, and there are no students in New York for another year. Huge swaths of our customer base are just gone. Do you want to sit here and shovel your money into the de Blasio administration’s chances of getting it together? That’s what I’m asking myself right now. I love it here, but I’m too old, and I’ve worked too hard to just shovel my cash into the hole. There are other places where they’re much more friendly to small business. They understand the value it brings to a local economy and to a community.

If I can tell anyone anything as an operator, it’s fund your reserve, because you’re going to need it. Don’t touch the reserve unless there’s an emergency, unless you want to gamble with your business and get in the press and cry about how hard it is that you don’t have any money, if that sounds appealing to you. It doesn’t sound appealing to me.