Grade Pending? Taking a Closer Look at the NYC Restaurant Grading Process

The “Gothamist” recently reported that 95% of New York City’s restaurants have an A-grade. There are 20,018 A-grade restaurant in a restaurant sea of about 25,000. 4,143 restaurants, however, have grades that are “Pending.”

Why is it that so many restaurants are showing either A or pending grades rather than a B or C grade? New York City’s Department of Health (DOH) believes that “every restaurant can achieve an A.” In fact, that is really the grading system’s goal. These grade regulations are an obstacle to the restaurant market, and for good or ill customers are responding.

The DOH implemented its grading system in July 2010, celebrating five successful years this past July. Restaurants are inspected without notice once every year to evaluate their compliance with rules on food handling, personal hygiene, and vermin control. If there are any violations found in any of these three areas, the restaurant receives a certain number of points. Violations can be classified as either “critical” or “general.” General violations receive fewer points than critical violations, as the fewer points a restaurant earns the higher their grade. A-grades are 0-13 points, B-grades are 14-27, and C-grades are 28 or more.

However, there is a plot twist. If restaurants do not receive an A-grade, they are given either the B or C grade card, depending on which they earned, along with a card that reads “Grade Pending.” They have the option to post one of the two cards within five feet of their front doors. They can post “Grade Pending” until an Administrative Tribunal occurs in which the final grade for the establishment is determined. Being a restaurant owner in a very competitive market, it only makes sense for restaurants to post a “Grade Pending” rather than a giant B or C because customers are still likely to come in an enjoy the establishment.

For customers, grades make a difference. If a restaurant has even a B-grade it could have a few critical violations under its belt, and no one really wants to risk eating at a place with critical violations because grades do not necessarily depict what exactly is going wrong in the restaurant. Multiple employees could not be washing their hands and maintaining personal hygiene or there could be a rat in the kitchen. This, for better or ill, is changing the way New Yorkers dine.

Since a restaurant’s grade now needs to be taken into account when choosing a place for date night on Friday or a coffee meeting with a work team, people’s tastes and preferences are changing in a way that is significantly decreasing the demand for any restaurant without an A-grade, making it harder for places with B and C grades to compete.

Now those who support the increased regulation would say it is a good thing because it is keeping the public safe from illnesses such as salmonella. Others claim it is an unfair and subjective process that can have negative effects on start-up restaurants, especially when one takes into consideration the hefty fines that must be paid to the DOH for violations. With the “Grade Pending” option, the DOH seems to be giving those who have a problem with the grading system a way around it.

Restaurants who now are given B and C grades are now posting their “Grade Pending” card to wait and argue for an A-grade at their Administrative Tribunal. While they wait, they can continue to compete with those earning an A-grade because their grade is pending. While the DOH wants every restaurant to achieve an A, it is effectively limiting the market by imposing the grade system. The “Grade Pending” option leaves some room for competition because it leaves room for the grade to be inflated, perhaps, then, not accurately reporting the status of the restaurant.