Restaurant businesses and food businesses are very tenuous.
They don't have a lot of cash reserves and they go from week to week,
and that's the fact of the matter.
I've been in the business my whole life.
Restaurants in the U.S.
are reeling from social distancing measures aimed to slow the spread
of the coronavirus pandemic.
The industry employs more than 15 million people in the United
States, and many of them have either already lost their jobs or are
worried about losing their jobs.
Restaurants, large and small, are doing the best they can to navigate
the economic shock brought on by the pandemic containment
initiatives. So the COVID shutdowns are probably the biggest
existential crisis that this industry has ever faced.
The National Restaurant Association estimates that between March,
April and May of 2020, sales will decline by $225 billion.
But beyond just lost sales, many smaller and independently owned
restaurants are focused simply on survival, and owners are worried
about being forced to close their doors permanently.
In March 2020, as coronavirus cases surged in the U.S.
state governors began shutting down many markers of American life,
including bars and restaurants.
All bars in the state and all restaurants will close at 9:00.
Any bar or restaurant closes at 8 o'clock tonight.
These stay-at-home initiatives closed restaurant dining rooms
essentially overnight.
A worst case scenario for many owners.
Seventy five percent of all small businesses have already reported
some sort of hit or interruption from the COVID-19 pandemic.
For smaller and independent restaurants, this is simply a tidal wave.
We've never seen anything like this where you're seeing a nationwide
shutdown, targeting one particular industry that's been going on for
weeks now. For smaller restaurants and the independents, they measure
their cash flow in days, maybe weeks.
This is not something that's sustainable for them any time soon.
Jen Withrow was working for a year and a half at Common Market in
Charlotte, North Carolina, a specialty market that included a deli
and a full bar. When she got an email from her bosses, Governor Roy
Cooper had ordered the store to close, it could only offer takeout
and delivery options and Jen had been laid off along with five of her
eight co-workers. Well, we're considered a grocer, so we are
considered essential as a business.
I didn't think that my job was going to be at stake.
Jen's story isn't the only one.
According to the National Restaurant Association, more than 3 million
industry employees have already lost their jobs.
Peter Sherman is the owner of Bar Bacon, a restaurant and bar with
two locations in New York City.
Each location has 40 employees, including cooks, bartenders and
waitstaff. Peter laid off all 80 of them on March 16th, the same day
Gov. Andrew Cuomo closed the city's bars and restaurants.
It was easily the lowest point of my professional career.
I mean, I just spent seven years with people, people that I have been
with me for that long, too, and have trusted me, that I brought up.
And then in their toughest moments, in all of our toughest moments,
being the guy that was exactly as bad as everybody else before me.
And I couldn't shake that for anything.
And some restaurants are getting hit from another angle.
The government ordered shutdowns are part of a larger effort to
enforce social distancing and limit large gatherings of people in
order to tamp down on the coronavirus spread and that sudden
disappearance of large gatherings of people?
It's a huge blow to restaurant owners who do a large catering
business. Fred Kaskowitz owns two restaurants in the New York City
suburbs and Connecticut Woods End Deli and Fred's 06825 each with
deli offerings and prepared foods.
Catering makes up 25 percent of his business, especially during the
time of year when those shutdown orders came.
Passover seders and Easter brunches were just around the corner.
So for like Passover and Easter, we did a big business.
We we had six seders that canceled, that we were actually going to
be working a good sized pieces of business, 50 people or more.
So they all canceled.
Easter, the phone is not ringing at all.
Basically, we've gone to a dead stop in regards to catering.
And catering is more profitable part of our business and we need that
to survive. In March 2020, national restaurant chain The Cheesecake
Factory said it wouldn't be able to pay April rent for its nearly 300
locations. Independently-owned restaurants are feeling the same pain,
but are uncertain about what the future may bring.
I contacted my landlord via e-mail and let them know that I'm not
paying rent and they've been forthright in understanding why.
But they're not in a position yet, as none of us really in a
position, to understand what that conversation really looks.
Despite the empty tables, restaurants were deemed essential businesses
and allowed to stay open for takeout and delivery in order to serve
communities. But restaurants have had a somewhat fraught relationship
with delivery in recent years.
Mobile delivery has exploded in popularity.
Consumers spent $10.2 billion on meals through third-party delivery
apps like DoorDash, GrubHub or Uber Eats in 2018.
And 38 million people used one of those mobile delivery apps in 2019.
At the same time, the number of people dining inside restaurants was
on a decade-long downward trajectory.
Casual dining as a whole has been in trouble long before coronavirus
began to spread around the country.
Traffic has been kind of a sore spot starting in 2006.
And the surge in delivery orders wasn't exactly boosting restaurants
bottom lines. Third, party delivery apps charge restaurants pricey
commission fees to use the service up to 25 or 30 percent in some
cases. Those cut into restaurants already thin profit margins.
So you look at most full service restaurants and for them, delivery is
never been something that makes a lot of money, a lot of revenue for
them. The food is a pretty low profit cost right there.
And when you add to it the cost for working with the third-party
delivery company, they really could do it only to keep their brand
out there and to continue serving the community.
During the coronavirus pandemic, some restaurants have shifted focus
to take out and delivery in the interest of feeding communities and
to bring in at least some cash.
Fred Kaskowitz had to lay off two of his 13 employees, so he's making
delivery runs himself.
Yes. So where were you offering the curbside pickup and delivery.
I'm out every day in my car, we're making ourselves
available to older people who don't want to go out of the house.
Madelyn Alfano, who owns a chain of Italian restaurants in Los
Angeles, switched gears to delivery as well.
What we've done with our servers in our bussers, and our cashiers is
we've afforded them the opportunity to to sign up to drive, to be
delivery drivers, so that we were trying to help all of our employees
maintain their earning capacity.
And for what it's worth, during the coronavirus outbreak, some third
-party apps like GrubHub and Postmates are waiving some of those
commission fees. But regardless, how long can restaurants afford to
just do takeout and delivery.
For Peter Schurmann from Bar Bacon?
It wasn't sustainable at all.
He temporarily closed his two New York City restaurants instead of
keeping them open for delivery.
Having them say, okay, we have to close everything down and you can
just be open for delivery was almost laughable, you know,
particularly someone that's a full-service restaurant with 100 seats.
You know, I can't just all of a sudden convert to grab and go, much
less compete in that market.
Even when we sort of rebound from this calamity right now, the jobs
are going to be there unless unless there is a major influx of
capital and not loans, because loans which need the influx of capital
to small businesses, especially restaurants.
Money is coming.
At the end of March 2020.
President Trump signed a $2 trillion stimulus package meant to help
soften the blow of the economic fallout from the coronavirus
outbreak. The massive bill includes a $349 billion lifeline for small
businesses in the shape of loans guaranteed by the Small Business
Administration. You can take out a loan for up to eight weeks of
payroll as well as overhead.
You hire the people back.
As long as you hire the people back, the loan is forgiven.
But it's unclear if this relief is enough to keep those independent
restaurants open. And for many owners who may be able to survive the
shutdown orders, there's still so much uncertainty remaining about
what happens once those orders are lifted.
It may not be as simple as simply unlocking their doors.
I'm sitting on almost $400,000 of debt right now just to open the door
up. And let's just say a miracle happens and I get $400,000.
That's per property, by the way.
All right. I can open the doors.
You are opening a restaurant.
Anyone that knows anything about restaurants, opening a restaurant is
one of the toughest things you could possibly do.
And you're doing it with the staff now that is shaken.
You're doing it with a, you know, customer appetite and clientele
appetite that you've no idea what you're walking into.
That may be the biggest source of anxiety for restaurant owners in the
midst of this crisis.
Will the customers ever come back?
The big challenge is, is there going to be enough demand when we're
able to turn the lights on?
Restaurants in particular are incredibly capital intensive businesses,
meaning it costs a lot of money just to keep them running.
And it's hard to budget for an environment where everyone is allowed
to leave their homes again because nobody knows how people will feel
about being in public with a still present threat from COVID-19.
That's an unknown quantity when when things when things are gonna come
back and how they're going to come back.
And everybody just speculates over that.
If you think it's going to be a straight shot.
To me, I don't see that because is still going to be a lot of
backlash from this whole thing.
But then when I really am concerned about is the go-forward cost of
after I open.
I need to expect a certain run rate of loss as the country gets back
into a rhythm and we all sort of figure out what that looks like.
I mean, just because everybody wants to go out doesn't mean it'll
happen, doesn't mean it will sustain itself, doesn't mean the entire
world didn't just change.