The victims were eating at the restaurant, located at 178 Broadway, at about 9:53 p.m. Thursday when a dispute between family members spilled outside. That's when a 24-year-old man pulled a gun and started shooting, according to cops.
The gunman missed his target and struck the victims, sending customers and staff running for cover.
A 30-year-old man was shot in the shoulder and a 57-year-old man was shot in the stomach. Both were taken to Bellevue Hospital in stable condition.
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Police officers who were monitoring a nearby anti-cop demonstration responded to a 911 call from inside the restaurant, reported the NY Post. They arrested the gunman who was pointed out by his cousin.
Charges were pending.
The gun was discovered in a garbage can around the block on South 10th Street, added the Post.
The restaurant traces its start to 1887. It earned a Michelin Star in 2012.
Workers there have gone on to start other restaurants across the city over the years. Peter Luger bacon and steak sauce are now even sold at grocery stores outside of New York.
It's been a rough period for the restaurant. The New York Times food critic gave the steak house zero stars in a harsh review last year that drew national attention.