Food Trucks Give Restaurateurs Indigestion

Photo by: Taleen Dersdepanian
Owners of established restaurants in Bay Ridge and elsewhere in Brooklyn say sidewalk food vendors get access to the same customers but avoid the taxes and regulation that burden fixed-location eateries.

The proliferation of falafel carts and other sidewalk food stands in Bay Ridge might make for tasty lunch options. But people who own brick-and-mortar restaurants say the mobile eateries represent unfair competition.

By: Aparna Narayanan

Javaid Syed knows about the vicissitudes of business ownership.

An immigrant from Pakistan, he transformed a small hotel business in upstate New York into Syed Enterprises Inc., a franchise group with 22 city-wide Burger King and Popeyes locations and close to 1,000 employees.

Over the course of 40 years, some ventures went belly up; others needed to be diversified. These he describes as the inevitable risks of entrepreneurship. But a more recent challenge has him crying foul: the proliferation of mobile food vendors in Bay Ridge, where his business is based, over the past two to three years.

It's small business versus even-smaller business in this southern Brooklyn community, as owners of both chain fast-food joints and smaller independent restaurants complain that food carts are siphoning off customers. Already hard hit by the recession since 2008—more than 30 storefronts are estimated to be vacant here—brick-and-mortar merchants charge mobile vendors with cannibalizing sales while operating under more favorable conditions that give them an edge.

In recent years, Syed partially shut down his Burger King restaurant in Bay Ridge and laid off staff—moves that he attributes in “big part” to two falafel carts at the intersection of 86th Street and Fifth Avenue, down the block from his fast-food business.

“Ever since they came in, I have lost 30 percent of my revenues,” said Syed, during an interview conducted at his offices on the Burger King's third floor; below, the first floor bustled with diners, but the tables stood empty in the second floor. “They have 20 items on the menu. They're carrying full restaurants in that little hut.”

Broader complaints

The scale of operations of the new food vendors—as opposed to the traditional hot-dog seller or pretzel man—is stoking resentment among local businesses, the local community board reports.

The large mobile carts—replete with grills, propane tanks, generators and illuminated signs—have also riled residents and local preservationists, who complain about damage to sidewalks, encroachment into public spaces, and unauthorized changes to streetscape, according to Josephine Beckmann, district manager of Board 10.

“Our property owners and business owners are frustrated and upset,” she said, adding that the food carts' elaborate menus and multiple staff make them, in effect, “restaurants on wheels.”

The controversy extends beyond the size and scale of their vending operations. Brick-and-mortar merchants, who pay rent, taxes and insurance costs that mobile food vendors do not, resent this “unfair competitive distinction,” Beckmann explained.

In addition, merchants in Bay Ridge pay additional fees to the area's two business improvement districts, or BIDs, for supplemental sanitation services, streetscape enhancements and marketing efforts—a cost of doing business that food carts don't share, according to Patrick Condren, executive director of the 86th Street and Fifth Avenue BIDs. This makes the issue of mobile food vending especially fraught, local officials said.

Syed and other local merchants contrasted their “six-figure” annual rents plus other costs—including worker's compensation, general liability, and property and disability insurance—to the nominal license and permit fees paid by food cart vendors. A city food vending license costs $50 and food cart permit costs $200, renewable every two years.

“This guy pays no rent, has no liabilities, but is allowed to plop down in front of us,” charged Syed.

A different set of costs

But David Weber, president of the New York City Food Truck Association, disputed the contention that mobile food vendors pay no rent. Their “rent,” he explained, takes the form of costs for required parking at a Department of Health-approved commissary — which mobile food operators in Bay Ridge peg at $1,000 a month.

Weber pointed out that this cost was significant to mobile food vendors: “A food truck never does the revenue that a restaurant does.” Nor are they exempt from related costs, such as disability insurance and workers' compensation, he added.

“It's the same if you're a restaurant or a temporary food establishment or a mobile food vending operation,” he said. “The city has the same requirements from a legal standpoint.”

Weber, who himself co-owns both restaurants and food trucks under the Rickshaw Dumpling brand, prefers to see them as complementary business models that bring choice to the marketplace.

“Every customer will be served best by the business meeting most of their needs,” he explained. “A food truck is great when it's a sunny day and it's convenient for people to grab something on the go. On a rainy day, it's not so great.”

He also refuted the allegation that food vendors dump their garbage into city trash receptacles. “There's good operators and bad operators; it's not the standard for our industry,” he said.

The city responds

Meanwhile, the city Department of Health contested claims that restaurants are always open and subject to food safety inspection, while food carts face neither on-site spot checks nor sanitation grading.

“Department inspectors perform operational inspections in areas where mobile food vendors are located,” a spokesperson said by email. “These inspections check for virtually the same food safety requirements as those required of restaurants, and carts and trucks are issued violations for not meeting regulations.”

But a letter-grading system for sanitary violations was not yet in place for mobile food vendors, because the city would “have to consider a way to afford mobile food vendors the opportunity for due process, as is done for restaurants,” the email added.

For Mahmoud Musleh, manager of one of the falafel carts that has Syed all riled up, the complaints from local businesses boil down to a simple fact—professional rivalry.

“We sell for a fair price, and we make a lot of business,” said Musleh, a Palestinian immigrant. “The problem (for restaurant owners) is the economy is going down. No one wants to pay more than five, six dollars for lunch or dinner.”

Bay Ridge, with its multitude of vibrant commercial corridors, may be the borough's epicenter of protests over food vending, but complaints are spreading even to neighborhoods with less powerful merchants' associations.

According to Shawn Campbell, district manager of Board 14, which includes Kensington and Midwood, local businesses were “chagrined” when a food cart appeared on a sidewalk off Cortelyou Road, a heavily trafficked “zero visibility” street where merchants are not allowed to display wares or set up tables on sidewalk space beyond their property line.

Marnee Elias-Pavia, district manager of Board 11, which includes Bensonhurst and Bath Beach, similarly reported concern from business owners about the appearance of food carts on streets where general vending is restricted.

Questions about regulation

At a Brooklyn Borough Hall meeting in December, officials from three of the city agencies that regulate mobile food vendors—the Departments of Health, Police and Consumer Affairs—explained to a gathering of district managers the challenges behind vendor enforcement.

The multiplicity and complexity of vending rules—general versus food versus veterans—as well as conflicting regulations among the different agencies make enforcement difficult, according to these district managers. Traffic rules, for example, forbid vending on sidewalks, but mobile food vending rules permit it, they explained.

According to Beckmann, city officials at the December meeting acknowledged the problem created by confusing rules and discussed steps for improvement.

“We're trying to problem solve this, but how to fix it we don't know,” she said. “That's the next step.”

In June 2009, Bay Ridge officials requested the city to add food vending restrictions to the 86th Street BID area, where general vending is already restricted. In June of 2010, they extended the request to the Fifth Avenue BID.

In its response, the city wrote that it “continues to believe that a comprehensive review of street vending regulations is warranted” and that “agency efforts have been focused on that purpose.” But no further action has been taken on the requests since then, Beckmann added.

Weber disagreed with calls for enhanced vendor enforcement, arguing that food trucks and brick-and-mortar restaurants serve different customer needs and compete fairly under existing rules.

“I don't think it's the place for a municipality to intervene and regulate competition between these different business models,” he said.