New York Restaurant Chain Cashes in on Office Crowd

Naya, a fast-service restaurant chain offering food in the Middle East, is thriving in one of New York City's darkest pandemic landscapes: Manhattan's Midtown office district.

Most of Naia's dozen offices are located next to office towers and serve the crowds at the workplace, a tricky place where New York City office occupancy is stuck about 40% from pre-pandemic levels, according to Kastle Systems, which collects data on how many workers are infiltrating office buildings.

But this year, the chain is generating more weekday sales than in 2019, largely driven by the tuesday-to-Thursday lunch crowd, according to Naya founder Hadi Kfuri. The growing demand for bowls, salads and Naya wraps shows that even if the occupancy rate of offices remains well below their pre-pandemic level, some businesses can still thrive.

"When people came back to the office, they craved our food," Mr Kfuri said.

Naya owes much of its success to lunches priced around $15, a relative deal in Manhattan where inflation is pushing food prices everywhere, and because many of its Middle Eastern dishes can't be easily replicated at home, said Andrew Moger, vice chairman of brokerage Ripco Real Estate and an investor in Naia.

Others say that with so many operators in Midtown currently out of operation due to the shift to remote and hybrid work, those who survived could attract more customers. Manhattan lost 820 food and beverage establishments between the fourth quarter of 2019 and 2021, according to an analysis of federal data conducted by the city's office.

Not all fast food restaurants can withstand this new landscape either. Traffic for weekday lunches and dinners at Midtown's Shake Shack burger chain locations is more than 40% below 2019 levels, the company said earlier this month. Sweetgreen Inc. cut its 2022 financial forecast last week after saying low occupancy in the cities hurt sales in the second quarter.

New York City office occupancy has been on the rise in recent months, but pedestrian traffic in Midtown remains significantly easier than it was three years ago. However, on a recent Tuesday afternoon, the queue was outside the door at Naya's office on 52nd Street and Madison Avenue, with much of the dining crowd dressed in a business-like casual setting. Delivery drivers in bicycle helmets zipped up to receive online orders from a large shelf near the cash register.

Nick Rosato, a 20-year-old intern at Swiss bank UBS, said he buys lunch at Naya two to three times a week. "I just like it. It's good food. It's on the healthier side. Quick and easy too," he said.

Like most restaurants, Naya laid off employees and closed for several months at the start of the pandemic, Mr Kfuri said. When it began reopening stores in June 2020, stores that previously earned $15,000 in daily sales barely cleared $2,000.

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Within months, Mr. Kfuri secured loans through a federal payroll protection program and signed an agreement with private equity firm TriSpan to fund the expansion of the network. Naya locations returned to profitability in September 2021.

Mr Kfuri, who opened his first restaurant in New York in 2008, said he had leverage as a tenant for the first time during the pandemic and had been aggressively negotiating with landlords. New leases often included large checks from the landlord for tenant improvements and significantly reduced rents during the first two years.

Mr Moger said it was risky to double manhattan's office district when there were few workers in the buildings. But Naya investors felt confident in a meaningful return on their investment because the cost of opening new places was much lower. The midtown bet eventually paid off, he said, and Naya's sales are now above pre-pandemic levels.

Naya isn't the only restaurant that's bouncing back. Little Collins, a coffee shop and sandwich shop, also has long lines at its office building near Central Station, said Craig Deutelzweig, chief executive of Marx Realty.

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His firm gave Little Collins a hiatus after it opened in a difficult spring of 2020, temporarily accepting 8% of sales instead of a fixed monthly rent. But the coffee and sandwich business was so lively that Mr. Dalitzweig said he raised more revenue during that annual agreement than he does now under the terms of the original lease.

Mr Kfuri, meanwhile, said he was looking beyond office districts. Naya recently opened at Moynihan Train Hall near Penn Station and at Brookfield Place Shopping Center near the World Trade Center. Both locations, unlike those in Midtown Nayi, are open seven days a week to grab business from nearby residents and tourists, Mr Kfuri said.

Naya is also expanding into suburbs. Naya will open an office in Paramus, New Jersey, this fall and another in Darien, Connecticut, by December or early next year, Mr. Kfuri said. According to him, by the end of 2023, he intends to open another 10 stores, 60% in the suburbs.