“People aren’t going to stop living, and dining out is one of the most therapeutic things people can do,” said Tracy Nieporent, marketing director and partner in the Myriad Restaurant Group, which owns Tribeca Grill, Nobu and other pricey eateries around the city.
Yes, this economy is quite depressing, but people still have to eat (and live) in New York, and the million-dollar question is whether everyone’s going to forgo the metaphorical strip steak in favor of the frozen ravioli at home.
What’s the big worry?
In a word: bonuses. Year-end Wall Street bonuses are likely to fall by more than 50 percent in 2008, down from $28.9 billion in 2007, according to estimates from the city comptroller’s office.
And that’s a big problem, especially considering that nothing has fueled New York’s luxury economy, from top-notch apartments to high-class cars, more than Wall Street bonuses. Wall Streeters, for instance, account for 60 percent of the $5-million-and-up apartment market in Manhattan, according to Kirk Henckels, a top broker with Stribling & Associates.
Now that the bonus well has run toward dry, who, exactly, is going to buy all of this expensive stuff?
The projected total bonus payout is expected to be $14.5 billion for 2008, a tidy sum for sure, but one rendered quite paltry when stacked up against the $28.9 billion that was awarded in 2007 and the $34 billion doled out in 2006.
According to Marcia Van Wagner, a deputy city comptroller, the projected year-over-year decline in Wall Street bonuses is the most significant since the city started tracking bonus statistics in 1991. “We certainly expect that those high-end luxury outfits are going to be feeling some pain,” Ms. Van Wagner said.
For so many toiling in the bowels of big Wall Street firms, bonuses are a vital supplement. In a good year, bonuses double financial salaries, giving a junior banker an extra $75,000 or $100,000 in liquid cash to throw around on whatever he or she damn well pleases.
Indeed. There are no ready wells of liquid cash that could replace Wall Street bonuses; no single industry compensates more at year’s end, a reality never lost on services industries, which live for the year-end trickle-down that gooses their own bottom lines.
“It’s a tough thing out there, but we are holding our own,” said Mr. Nieporent.
While Mr. Nieporent has noticed slower traffic from the Wall Street crowd, overall patronage is consistent with years past. The company has made some internal adjustments to prepare for any downturn, paring the staff and asking employees to work longer hours and more double shifts.
Banquet parties and company events have slowed down, though, and there are a concerning number of open dates for holiday parties. In the past, Mr. Nierporent has hosted events for big Wall Street firms, especially around the holidays, and has, on occasion, closed down a restaurant for private parties. “That may not be happening now,” he said.
According to one junior level employee on Wall Street who requested anonymity, apartments were the primary expenditure for bonus babies. Mid-level associates in their late 20s and early 30s would spend their $500,000 bonuses on studios or two-bedroom apartments, while VPs blew their larger wads on million-dollar homes in Westchester and New Jersey.
“This year I don’t think anyone is going to be buying anything,” he said.
Employees at his firm are bracing for their bonuses to be 50 percent less than last year, and most are planning to save the bulk of their catch. “Everyone is of the mind-set of saving as much as they can,” he said, “since nobody really knows how safe their job is.”