by David Sax
Sandwiches, the most popular items on his menu, were actually the least profitable items for Rasp to sell. “If this place is packed on a Sunday night, and I sell six thousand dollars’ worth of sandwiches I’m out of business. If we didn’t have catering, we’d close. A sandwich is all meat. Chinese food is a little meat and a lot of vegetables. . . . I can’t charge fifteen dollars for a sandwich, there’s a resistance. People say, ‘Hey, it’s just a corned beef sandwich!’ I can’t cut costs either, because it’s irresponsible and I’d end up with the worst quality meat. . . . These margins are why kosher delis are going out of business!” Rasp said, throwing his hands in the air, defeated.
I asked Rasp if he could go back, would he still have opened his deli?
“Hell no!” he said, without hesitation. “In ten or fifteen years there won’t be anybody left.”
For New York’s delicatessens, rent and property values are what ultimately dictate life and death. Those who can pay survive; those who cannot will close. It separates New York delis into two categories: owners and renters.
Two of New York’s most famous delicatessens are the Stage and Carnegie, set just one block apart on 7th Avenue, slightly north of Times Square. Both have been around since 1937. Both specialize in giant sandwiches that require a python-like dislocation of the jaw to ingest, as well as combinations named after celebrities. They are similar in size, roughly two thousand square feet apiece. A spirit of healthy competition exists between them. In 1988, the two delis went head to head in what the New York Times dubbed “The Pastrami Wars,” and over the years both delis have tried to outdo each other by increasing the size of their sandwiches, like meaty towers of Babel. Today, the Stage’s owner Steve Auerbach and the Carnegie’s Sandy Levine maintain cordial, though hardly loving, relations. What really separates these two classic delis, and what will determine their fates more than opinions, food, or sales numbers, is property. The Stage rents 834 7th Avenue, whereas the Carnegie purchased 854 7th Avenue in 1991 (for $1.2 million).
“If you don’t own the building, the landlord is your partner,” said Sandy Levine. “That’s what’s causing a lot of the competition to go out of business. When their leases are up, the landlords are very, very demanding and you can’t make deals. Landlords prefer leasing to Starbucks or to the bank because the risk is lower.” Levine placed his annual insurance alone in the six-figure range, but at least he’s secure in the knowledge that rising real estate values can only work to his deli’s advantage.
Down at the Stage, owner Steve Auerbach laid out his dilemma in cold numbers: rent was roughly $500 a square foot per year, which came out to approximately $1.2 million for the deli, increasing on average 10 per cent a year. “What’s happened in this area is that we’re getting pushed out by the cheaper chain restaurants,” Auerbach said. “We try and keep up by raising prices. We try to keep up by being innovative and bringing more people in, but with 135 seats, there’s only so much innovation you can bring, and there’s only so many people you can serve in the course of a day.”
In the past, delis had the option of moving to a less expensive property when the rent increased, but in today’s Manhattan, affordable areas of the city that can sustain a delicatessen are rare to nonexistent. For a midtown deli like the Stage, a similar location would cost the same amount or more. Factor into this the cost of rebuilding a deli’s infrastructure (which Auerbach estimated at $1.5 million) and the loss of clientele, and the prospect of a move seems impossible. When I asked Freddy Klein (a veteran Manhattan restaurant broker who has been involved in the purchase, sale, and lease of most major Jewish delicatessens in New York, including both the Carnegie and the Stage) where in Manhattan a deli could find a reasonable lease that wouldn’t drive them out of business, Klein didn’t hesitate to answer: “There’s nowhere to go.” Period.
The primary reason that New York’s Jewish delicatessens cannot afford New York rent is because of the foods they serve. As Harry Rasp said, if he sold sandwiches all night he’d go broke. How is that possible? The answer lies in the margins.
When you take the food cost of an item added together with the other costs needed to run a restaurant, and subtract that from the sale price, the resulting percentage is the profit margin. It is in these margins that delis live or die. To a deli owner, the most desirable items are those with high margins. Not only are they cheap for the owner, but they cost relatively little for the customer. The cost of an order of french fries to a deli is roughly 15 per cent of what it sells for (85 per cent profit). Fountain soda is 10 per cent (90 per cent profit), and a bowl of matzo ball soup is a healthy 23 per cent (77 per cent profit). “I love to sell soup and eggs,” Carnegie’s Sandy Levine said, as a table of four ordered bowls of matzo ball soup at $7.50 each. But customers line up outside the Carnegie and the Stage for pastrami, not soup and eggs, and that’s the problem. Why is that so?
Empire National is a small kosher meat and delicatessen purveyor in Williamsburg, Brooklyn. The company was founded in the early 1950s by Hugo Weinberg, a sausage maker from Germany who fled the Nazis. H. Weinberg and Sons supplied kosher deli meats to customers and two dozen—odd Jewish delicatessens spread around their small corner of the Bronx. After a fire in 1968, Empire National relocated its factory to Williamsburg, where it remains today.
Hugo’s grandson Eddie Weinberg runs the company with his wife, Karen, from a cramped office with a hot dog-shaped mezuzah attached to the doorframe. Dressed in camouflage cargo pants, an army hat, and a black weightlifting sweatshirt, the solidly built Weinberg looks the part of a Marine drill sergeant. The company is regarded as one of the last boutique deli producers in New York, selling kosher corned beefs, briskets, salamis, hot dogs, and pickled tongues to such revered New York kosher delicatessens as Ben’s Best in Queens and Liebman’s in the Bronx. But it’s the New York pastrami that Empire National is really famous for.
Pastrami is most commonly made from a cut of beef known as the navel. Kosher laws allow for the consumption of meat only from the front half of cattle, and the navel is found (should you go looking) directly behind the brisket, along the bottom of a steer’s belly. Navels are tough and fatty, basically the bacon of beef, which is why pastrami requires such extreme treatment. A raw, trimmed, non-kosher navel ranges from twelve to fifteen pounds and costs roughly $1.75 per pound directly from the meatpacker. Kosher meat supposedly costs anywhere from 12 cents a pound to a dollar more, and glatt kosher would likely be another dollar on top of that.
Until recently, these cuts of meat were inexpensive. From 1960 to 1985, raw, non-kosher briskets sold between 30 cents a pound and 60 cents a pound. Navels cost even less. This meant that deli meats were cheap to buy and sell. But several factors have increased demand and prices for traditionally Jewish cuts of meat: the rising popularity of Texas-style BBQ brisket now has non-kosher briskets trading above the $1.50-per-pound range. Tongue prices, driven by exports to Asia, have shot up ten times since 1980. Domestically, new pressure is coming from the energy sector, where the rising cost of oil has created a boom market in corn ethanol, increasing the price of cattle feed.
To make pastrami, Empire National will take a navel and pump the meat with a pickling solution based mainly on garlic, salt, water, and nitrates. The navels marinate in large metal barrels for two days. Navels are then individually rubbed with pastrami spice, which consists of cracked black pepper, mustard seed, coriander seed, burnt sugar, and whatever secret ingredients Empire National uses. The traditional method of making pastramis, which is practiced by a select few New York purveyors, is dry curing. Rather than injecting the meat, a dry cure instead focuses on rubbing the raw navels with the spice coating, so the meat slowly absorbs the cure by osmosis and pickles over a period of one to two weeks. Dry-cured pastrami is naturally a darker red, is somewhat drier, and has a more complex flavor; however, it is less consistent and requires more care.
Once the black, caramel-like coating has marinated the meat, the pastramis are hung on
racks and wheeled into one of three gas-fired ovens, each the size of a minivan. These smoke the meat for four to five hours at a low temperature (roughly 180°F). Though Empire National once used wood smoke, health regulations have eliminated wood from the process. The smoky flavor comes from the dripping fat sizzling on the gas element. To keep the meat moist, steam is pumped into the ovens during the smoking process. Each pastrami will lose anywhere from 10 to 15 per cent of its mass in the smokehouse. Once smoked, the pastramis are cooled, wrapped, and ready to ship.
“Twenty-five years ago I sold [pastrami] to a majority of kosher butchers and kosher delis,” Eddie Weinberg said. “That’s where our business was. The number of kosher delis has been dwindling and dwindling and dwindling. As somebody closes there’s really nobody opening up [in their place].”
Weinberg recalled first noticing the decline in the mid-1980s. This was back when 65 per cent of his company’s sales were to delicatessens. Since then, Weinberg estimated that forty or so of his kosher deli clients have closed down, representing a 90 per cent decline in the delis he services. Empire National’s direct-to-deli sales currently hover around 15 per cent. When the 2nd Ave Deli closed in 2006, Empire National lost its largest customer, to the tune of 150 pastramis and 150 briskets a week. Weinberg has been forced to find new outlets for his products, including hot dog carts, nursing homes, and supermarkets. But the retail market is dominated by giants like Hebrew National.
The Hebrew National Kosher Sausage Factory Inc. opened in 1905 above a Lower East Side tenement. Twenty-three years later, it was purchased by “Issy” Pines (born Isadore Pinckowitz), who turned it into the most recognizable deli brand in America. Hundreds of kosher delis in New York once blazed neon Hebrew National signs. Issy’s son Leonard Pines sold the business in 1968 to Riviana Foods of Texas for the tidy sum of $13 million (roughly $75 million today). Colgate-Palmolive purchased Riviana in 1976, but sales were so poor that Leonard’s son Isidore “Skip” Pines brought the company back into family hands in 1980. Thirteen years later, Skip Pines sold off Hebrew National to the giant food conglomerate ConAgra for $100 million. Though many identify Hebrew National as the quintessential New York deli company, the meat has been processed at ConAgra’s plant in Quincy, Michigan, since 2004 and the company is directed from ConAgra Foods’ headquarters in Omaha, Nebraska.
ConAgra Foods is one of the largest processors of foods in the world, operating dozens of brands such as Chef Boyardee, Pam, Orville Redenbacher’s, and even Gulden’s Spicy Brown Mustard, in over a hundred countries. Profits in 2007 were over $2.6 billion from $10.5 billion in sales. As Hebrew National has grown with ConAgra, they have eliminated certain deli products and changed others because how Manhattan expects pastrami to taste is very different from how Montana expects it to. Eddie Weinberg feels that Hebrew National’s meat has become somewhat “homogenized.” “Hebrew National doesn’t want to sell a few pastramis a week to small delicatessens,” said a New York deli manager who uses their products, “they want to sell five thousand cases to a supermarket chain.”
Empire National is one of the last family-run deli purveyors in New York, a fraction of the dozens that existed just a quarter of a century ago, and they face increased costs from corporate competition. Skilled meat trimmers and sausage makers have been lured away by salaries and benefits Weinberg cannot match. Empire National’s forty-year-old plant is quaint and accounts for much of the food’s taste, but it is inefficient compared to modern facilities. With regard to price, Weinberg cannot hope to compete with Hebrew National. “Here we are, like a little fly between mega giants,” said Weinberg, pinching his thumb and forefinger within an inch of each other.
To survive in this hostile market, Empire National has focused on selling traditionally made products to delicatessens willing to pay a premium for a classic taste, though the kosher issue is a problem. The products that Empire National sells are kosher, not glatt kosher. Orthodox Jews will not eat Empire National pastrami. It might as well be lobster. Although gaining glatt certification could open up new markets to Empire National, the added cost of supervision would increase the price of Weinberg’s meats beyond what his customers will pay. Empire National’s business rests in the narrowest segment of the deli business, and one that tends to be disappearing the fastest.
“I don’t want my kids to get into this business,” Weinberg said, looking back at the photo of his son in full military uniform, “not unless they beg me. I told them, ‘Don’t figure on this, I don’t have a good feeling about this.’”
A whole pastrami will yield between two and six sandwiches, depending on the size of the navel used. On average, your neighborhood New York deli serves an eight- to ten-ounce sandwich, though spots like Carnegie and the Stage will put a pound or more of meat in theirs. Waste is inevitable and as much as a fifth of a pastrami may end up in the trash. Yet, even with pastrami sandwiches at fifteen dollars and up, most New York delis are breaking even or losing money on their namesake item. Really good profit margins on a pastrami sandwich run from 10 to 15 per cent (that’s an 85 to 90 per cent cost) though many in New York sell the item closer to the 5 per cent range. Other restaurants that serve slim-margin items make up for their losses in other ways. A place specializing in chicken wings can sell pitchers of draft beer at a tremendous markup. But alcohol is seldom sold at delis because Jews aren’t big drinkers. Customers also have a perceived expectation that Jewish delis have always been, and will always be, cheap places to eat. Were delicatessen customers asked to pay the real cost of their sandwich, they’d surely revolt.
New York’s Jewish delicatessens have found themselves sandwiched between skyrocketing rents, astronomical food costs, and a customer base unwilling to pay more. Many have taken refuge in the business of tourists, who will pay a premium for the chance to eat at a New York deli. But in Times Square, once the thriving heart of the deli trade, they’re vastly outnumbered by glitzy theme restaurants.
“Look, [delis] were the original theme restaurants, okay?” said Stage’s owner, Steve Auerbach. “You walked in and you could be sitting next to Milton Berle. That’s a theme restaurant. The shtick was real, the gruff service was real. I just came back from a trip to Italy, and let me tell you, over there ‘old’ is old. Buildings are a thousand years old. Here in New York a building is a hundred years old and they tear it down. How many restaurants are seventy years old? You have twenty-year-old restaurants that are torn down and called ‘institutions.’ What are we? Or Carnegie? Or Katz’s? We’re national treasures. We should be saved! When . . . no . . . if we go, that’s when people will realize it’s the cashing in of an era, and by then it’ll be too late.”
Squirting a glob of the Stage’s fiery pale mustard onto a plate, Auerbach rolled up a slice of pastrami, dredged the meat in the mustard, and popped it in his mouth. He chewed, paused for a few seconds, and finally pumped his fist in a sort of momentary victory. “Oh yeah,” he exclaimed in triumphant satisfaction, “that’s a good piece.”
Death of a Deli: The 2nd Ave Deli
“A sandwich to a Jew is just as important as a country to a gentile. If the pastrami sandwich goes down the drain, there’s no hope for this country at all.”—Comedian Jackie Mason, on the closing of the 2nd Ave Deli
At the dark, cold end of New Year’s Day 2006, Jack Lebewohl walked out the door of the 2nd Ave Deli, pulled down the gates, and turned the key. He stepped over the worn names on the deli’s Walk of Stars, out from under the blue awning bearing his departed brother Abe’s name, and walked away. There had been no prior announcement, no grand finale, no teary hugs from friends and customers. The 2nd Ave Deli’s closing was so sudden and secretive that even the staff working that night had no idea what had transpired until they showed up to the shuttered delicatessen the next morning.
Word of the 2nd Ave Deli’s closing spread quickly, first through panicked phone calls, then onto the pages of the New York Times. “My current rent is $24,000 a month for 2,800 square feet,”
Jack Lebewohl told the Times. “They want $33,000. I can’t afford that.” Most hoped that Lebewohl, a successful real estate lawyer with millions in personal property, could successfully reduce the 35 per cent increase. But things were more complicated than they appeared. Jack Lebewohl had actually negotiated the lease himself some fifteen years before, when his brother Abe still ran the 2nd Ave Deli. The landlord even claimed to have offered a $3,000 reduction to the deli. But Jack Lebewohl didn’t mince words. “This is life,” he told the paper. “Life goes on.”
By the end of the week, workers were removing the deli’s signature name from above the door. The two-foot-high Yiddish-inspired lettering of the 2nd Ave Deli lay dismantled on the sidewalk, like battlefield casualties in a Civil War photograph. Restaurant service companies carted tables, chairs, and appliances away. Slicing machines that had cut millions of sandwiches were packed up for sale. Tubs filled with chopped liver were dumped, cleaned, and stacked. Photographs of great entertainers and luminaries noshing on knishes went into boxes. The deli’s big blue awning, emblazoned with the name of Abe Lebewohl, was soon sagging on the ground. In a matter of days the 2nd Ave Deli had gone from a bustling institution to a Manhattan memory.