Two of New York City‘s most influential restaurateurs say they are halting future expansion plans – warning that Mayor-elect Zohran Mamdani’s progressive agenda has created a climate of fear that is already driving business out of the city.
Mamdani, 34, is set to become New York’s youngest mayor in more than a century – and its first Muslim, South Asian, and African-born leader.
He ran on a Democratic socialist platform that included raising the minimum wage to $30 by 2030, sparking backlash from some concerned business owners in the city who fear margins are already too tight.
Stratis Morfogen, the veteran entrepreneur behind the newly revived 24-hour hotspot Diner 24, said he raised millions to open three additional diners in 2025 and 2026. But all expansion plans are now on hold.
‘I got one open, and that was two years ago,’ Morfogen told Daily Mail. ‘I raised all the capital, we’re ready to go, but I wanted to wait till the election’s over. And now? Diner 24 is doing great, but our margins are 10 percent. There’s not room for another hit.’
Morfogen, who brought back New York City’s first true 24-hour diner after COVID, said the issue was not the risk of failure but the political math.
‘The $12 hamburger becomes $22. That’s unfortunate, but obviously we have to pay our bills and stay in business. And then on top of it, you’re going to have to get rid of overtime. The numbers aren’t there. And the consumer, I don’t think, wants a 50 to 100 percent increase in the cost of their meal. I don’t think they’re going to pick up that bill.’
Restaurateur Stratis Morfogen says he’s shelved plans to open three new diners in New York, citing rising costs and political uncertainty under Mayor-elect Zohran Mamdani
Pictured: People sitting at tables at Gotham Bar and Grill, New York, USA, America
Mayor-elect Zohran Mamdani won on a progressive platform that includes raising minimum wage to $30 and eliminating the tip credit
For him, the stakes extended beyond the balance sheets. He said his most lucrative hours are between midnight and 5am, a time of night where police security is highly sought after.
‘If he’s going to defund the police, and I’m hearing NYPD heroes are retiring in droves, that’s scary to me,’ he said. ‘If that’s the case, then I’ve got to start limiting my hours, because I’m going to protect my staff.’
While rising labor costs dominate headlines, Morfogen said that rises in storefront rent tax in recent years have been particularly damaging to business owners.
‘There’s nothing left. We won’t be able to pay our bills,’ he said. ‘Tell Mamdani to remove it. If he wants to help small business, that’s where you start.’
Despite his frustrations, Morfogen said he would sit down with Mamdani ‘in a heartbeat.’
‘He’s quite impressive. But he’s never run a lemonade stand,’ Morfogen said. ‘I’d love to give him a perspective as a small business owner. We’re the ones that create the jobs. Not necessarily the billionaires.’
Richie Romero, a heavyweight of the hospitality industry for 33 years, has operated more than 40 venues and owns 29 restaurants nationwide. He said New York’s regulatory maze had become ‘impossible’ for small businesses.
‘There’s red tape everywhere,’ Romero said. ‘A young dreamer spends a year and a half trying to open, burns all their capital, and never gets the place off the ground. Meanwhile, big companies can afford to wait.’
Romero, born and raised in the city, said the vacancy crisis was visible on every block, with ‘thirty to forty percent’ of storefronts showing ‘For Rent’ signs.
He blamed rising taxes and remote work for hollowing out the city’s business core.
‘When Bloomberg was mayor, offices were full, it was business-friendly, and the top fed the bottom,’ he said. ‘Now, we’re living in a remote world and offices are emptying.’
‘The business tax already went from 5.6 percent to 7.5 percent in 2021. Now he wants to take it to 11.4 percent. Why do business here?’
Like Morfogen, Romero worried that Mamdani’s proposals represented the final straw.
Morfogen says New York’s rising labor costs and rent taxes have made expansion impossible, despite raising millions to open three new diners.
Morfogen revived New York’s first true 24-hour diner post-COVID – but says safety concerns and thin margins could force him to cut hours.
He said eliminating the tip credit, which allows restaurants to pay tipped workers a lower base wage, provided their tips bring them up to the full minimum wage, would bring the industry to its knees.
In high-tip environments, workers often earn far more than the minimum.
Romero warned that scrapping the credit would not only raise costs for employers, it could also reduce take-home pay for staff and lead to widespread closures.
‘The business would cost $25,000 to $40,000 more per employee annually,’ he said. ‘If you’re a bartender or server used to making $600 to $700 a shift, now you’re capped. You’ll make $240. Are you going to continue doing that?’
Romero said Mamdani’s plan to raise minimum wage to $30 an hour would make New York uniquely hostile to operators.
‘You eliminate the tip credit, raise minimum wage, raise business taxes – you’re talking 60 percent closures,’ he said. ‘Why would anyone do business here? The risk versus reward doesn’t make sense.’
Romero said he was already diverting future growth to other markets.
‘Next year, I have 15 locations opening. Only one is in New York,’ he said. ‘Secondary markets are stronger because developers, government, and small business actually work together. They want you there.’
He pointed to Nashville, where tipped employees earn $2.30 an hour but make more overall, as an example of the support missing in New York.
‘We do higher numbers and make bigger margins in other cities,’ he said.
Romero described himself as politically disengaged for decades, but said this year was different.
‘I never voted in over 20 years,’ he said. ‘This was the first New York City mayoral election I ever voted in.’
Romero said he met Mamdani on September 10 along with the rest of the Hospitality Alliance board.
‘He didn’t know a lot of the basic economics,’ Romero said. ‘He didn’t really understand the Department of Labor, how the tip credit or how minimum wage and labor costs affect why there’s so many places that are closed. Now, I’m hoping he puts on the right people that will help him do it.’
Romero said the mayor-elect’s lack of experience was a major concern.
‘He’s gonna be handling $100 billion budget, and he’s never did payables in his life. He’s never had the staff. We’re handing it over to someone that just doesn’t have the experience. And that worries me.;
Romero said he congratulated Mamdani publicly, but noted that 75 percent of his transition team came from the De Blasio administration.
‘If I saw Bloomberg people, I would have more faith,’ he said.
Hospitality veteran Richie Romero, who owns 29 restaurants nationwide, says Mamdani’s policies could trigger mass closures across the city
Morfogen echoed that sentiment, saying he saw a city that was pricing out the very people who shape its culture.
‘We’re being taxed left and right,’ he said. ‘There’s nothing left.’
New Yorker Romero, who once could not imagine leaving his hometown, said even that assumption had begun to crack.
‘I made a commitment for the next four years,’ he said. ‘But I never thought I’d consider leaving. Now? The last couple of years, I’ve been thinking about it.’
Out of more than 30 business partners across his hospitality ventures, he said only one now lived in New York City.
‘No one lives here anymore,’ he said. ‘That should tell you something.’
Despite their warnings, neither restaurateur wanted Mamdani to fail.
‘I hope he works with everyone to make this New York what it used to be, and even better,’ Romero said. ‘This isn’t about my ego. This is about the only place I call home, and all these young dreamers that still want opportunity to be here.’
Morfogen agreed. ‘He should hear from small business owners,’ he said. ‘We’re the ones creating jobs. If he wants to protect New York’s future, that’s who he needs to start with.’
‘New York used to be the place where you can expedite your dreams,’ Morfogen said. ‘It was about opportunity. Now we went from opportunity to survival. The cost of living in 49 other states is a lot cheaper. You could have a better life.’
