From switching off AC to closing on Sundays, how rising costs are changing NYC restaurants

New York City restaurants are cutting operating hours, switching off air conditioning and raising prices as surging insurance, wages, energy and other business costs squeeze their margins. The pressure has become so severe that many eateries are focusing less on growth and more on simply staying open, Bloomberg reported on Tuesday.

CakeBurgers, an East Harlem restaurant that serves burgers and cakes shaped like burgers, switched off its air conditioning after its gas and electric bill rose to $1,400 a month, despite temperatures in New York regularly reaching the 90s this summer.

Frank Scotto, who owns several neighborhood bars between Chinatown and Midtown, said liability insurance premiums at one establishment had increased fivefold in four years to $24,000 a year. He plans to raise alcohol prices by up to 15% after the holiday season, or about $1 for a can of beer.

At some restaurants owned by Scarpetta founder John Meadow, Sunday operations have been reduced to control costs as wages and insurance premiums pressure margins.

New York state recorded its biggest net year-over-year decline in eating and drinking establishments in the first quarter of 2026 in at least 36 years of Bureau of Labor Statistics data, surpassing even the steepest drop during the Covid-19 pandemic.

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“Whenever we talk to our members about this issue or the industry in general, they come back with death by a thousand cuts,” said Melissa Fleischut, chief executive officer of the New York State Restaurant Association. “The idea that they’re looking three years down the road, five years down the road, has just been thrown out the window. They’re looking into maybe, if I’m lucky, three weeks down the road.”

Rising costs hit businesses

Employee health-insurance costs for New York-area service firms rose 12.9% last year, while utility costs increased 8.5%, business insurance 7% and wages and salaries 3.4%, according to the Manhattan Chamber of Commerce.

CakeBurgers co-owner Evette Zayas has responded by consolidating food into fewer refrigerators overnight to save power. But ground beef that cost roughly $3.40 a pound earlier this year has climbed to as much as $5. Delivery apps take as much as 30% in fees from her orders.

Meadow said building a restaurant that once cost about $700 a square foot now costs at least $1,000. At a project at John F. Kennedy International Airport, costs reached about $3,000 a square foot, largely because of labour costs.

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Customers are cutting back

The pressure is also changing consumer behaviour. Khyla Duarte pays $3,500 a month for daycare for her two children and now eats out far less.

“I eat out once a week, if that,” said Duarte, 29, who pays close to $28 round trip each day on mass transit to get to work from Long Island. “Food is one of the things we have more control over when it comes to spending.”