When the whistle blows, Dave Goodside knows he has just 15 minutes. He passes out free shots of Beach Blast to anyone at the Beach Cafhis restaurant on Second Avenue and East 70th Street.

The drink—cr de cassis, blue cura and sour mix—was concocted by Mr. Goodside’s bartender to assuage the intensity of a distressing event: A quarter of an hour passes, then … boom. The spot rattles from a construction detonation, and patrons toss back the shots.

“We’re trying to have a bit of fun with a bad situation,” the owner said. Mr. Goodside recently laid off four people and now employs 26 workers. He says revenues are 20% lower than they were in 2008, when building began outside his door.

The work is part of a multiyear project under which the Q train is being rerouted to run on the Upper East Side along Second Avenue and a new train, the T, is being added; it will run from Harlem to Hanover Square in the financial district.

The project’s first phase is taking its toll on the roughly 400 businesses on Second Avenue from East 63rd Street to East 96th Street. Many report double-digit revenue declines, which owners largely attribute to the construction. Sidewalks are carved up in certain spots, inhibiting foot traffic; merchants’ facades and windows are obscured by heavy equipment; and lane closures result in snarled traffic.

MTA’s drop in the bucket

“This is anything but business as usual,” said Nancy Ploeger, president of the Manhattan Chamber of Commerce, who estimates that 10 businesses have closed because of the subway project.

To assist owners, the Metropolitan Transportation Authority is requiring that contractors keep their work sites neat. It is putting signs on each affected block, listing all businesses in large type that can be seen by drivers and pedestrians. And the MTA has begun issuing 2 million MetroCards printed with the slogan “Shop 2nd Avenue … It’s Worth It!”

“Obviously, when you have a program of this magnitude, it’s bound to have some impact,” said Kevin Ortiz, an MTA spokesperson. “We’re working diligently to mitigate those impacts.”

Unfortunately, many merchants find that the agency’s efforts are no match for the disruption.

Construction has obliterated parking in front of Eneslow, at Second Avenue and East 79th Street. The store specializes in stock and custom shoes for people with foot problems.

The store had revenues of $800,000 in 2010, 20% off projections, according to owner Bob Schwartz, who expects sales to stay flat until parking is restored.

“Customers say it’s a challenge to get to us,” Mr. Schwartz said.

Of course, the chaos will end when the project moves into the next of its four phases and progresses further downtown.

According to the MTA, the rerouting of the Q will bring 200,000 additional pedestrians daily to that Second Avenue corridor. The extra crowds could be a boon for local businesses, but they must hold out until 2016, when phase one is scheduled to be finished.

More declines ahead

Ralph Schaller, owner of Schaller & Weber grocery at Second Avenue and East 86th Street, says that sales were down 15% last year, and he expects an additional 3% drop this year.

Mr. Schaller recently had to lay off one of his nine employees. The grocery, which sell items such as bratwurst, pickles and spicy mustards, opened in 1937. The operation is a vestige of Yorktown when it was a bustling German-immigrant community.

“I guess business will improve when it’s over,” Mr. Schaller said. “If we’re still around.”