Ask most New Yorkers why they like living in the Big Apple and you'll likely hear a something about the diversity of its denizens and variety of activities. And don't even get them started about the food.

West Indian? Tibetan? Norwegian? Yep, they've got it. And just about everywhere delivers. While this diversity of options is an obvious selling point, constant (even head-spinning) change is also a fact of life here--and in most desirable locations across the U.S. When one door closes, another one opens, as the saying goes.

The restaurant business in New York City can be especially dog-eat-dog.

Even so, when Gray's Papaya--the more than 40-year-old NYC-based chain of hotdog eateries--yesterday shuttered one of its two remaining locations due to a $10,000 a month rent hike, people still took the news hard.

"It's a shame," says Manhattan Borough Historian Michael Miscione. "I love their hot dogs, and I love their papaya drinks."

Echoing the sentiment is Romy Villanueva, Gray's general manager of the shuttered location in Manhattan's Greenwich Village: "Everybody feels bad--especially me because I've worked here all my life. For 28 years, this was my second home." 

Like many retailers and restaurants that cater to budget-conscious consumers, Gray's is also feeling the sting of rising costs and dwindling revenues in the wake of the Great Recession.

After 28 years in the location, Gray's landlord wanted $40,000 a month, up from $30,000, according to Villanueva.

"I feel sad," says Gray's Papaya founder Nicholas Gray. "It makes it difficult now when you're working for the landlord. There's not much you can do about it. It's just the reality of the situation." The property's owner, Solil Management Corp., didn't immediately return a request for comment.

Still, the Big Apple has always been a tough city for small business, says Gray. After breaking with the owners of another NYC hotdog haunt Papaya King, Gray launched the first of his eponymous shops on Broadway and 72nd Street in 1973. "I just happened to get lucky with the uptown store. It cost me just $20,000 to $40,000 to get started," he says.

At its height, Gray's operated three NYC-based locations and served as a backdrop for countless feature films and TV shows like You've Got Mail and Anthony Bourdain's Travel Channel program No Reservations. Villanueva's favorite memory of working at Gray's? When Jennifer Lopez filmed the movie The Back-up Plan at the location. "When she was chatting with us, that was pretty amazing. That would never have happened normally," he says.

The silver screen aside, Gray's would first become a sensation with its "Recession Special," which remained on the eatery's menu amid several recessions. For $1.95, cash-strapped families could purchase "two franks and a medium drink."

"When I started, hotdogs went for 50 cents a piece," says Gray. "I kept them at 50 cents for about 14 years."

Yet as overhead costs rose, so too did the company's prices. The Recession Special, for instance, did eventually tick up to $4.95. With fast-food competitors peddling menu items for as little as $1, customers also began to reconsider the hotdog haven. "They got a little pricey in the end," says Miscione. "I don't think it was such a good deal anymore."

What's coming into the shop next you ask? A high-priced juice bar.