In light of a new restaurant stabilization bill, which would consist of a $120 billion grant program called the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive Act, or simply, the Restaurants Act., well known chef Rick Bayless is urging voters to champion the cause and help get the bill passed.
The Restaurants Act is designed independent restaurants cope with long-term challenges facing the industry due to COVID-19, and would provide grants to cover the difference between revenues from 2019 and projected revenues for 2020. “We’re not looking for a handout,” Bayless says. “We’re just asking for people everywhere to recognize us for who we are and what we contribute to Illinois communities. Let your legislators know that when they’re voting on the restaurant stimulus bill that you think we’re too important to let fail.”
In 2020, ninety-eight bankruptcies were filed by companies with at least $50 million in liabilities year-to-date, the highest bankruptcy rate since 2009. The U.S. arm of Le Pain Quotidien bakery-cafes filed for bankruptcy in Delaware, intending to sell itself for $3 million. The Chapter 11 petition lets Le Pain Quotidien rework debts and execute a sale, with court approval, to Aurify Brands LLC. In late March, the chain closed all of its U.S. locations, and according to chief restructuring officer Steven Flemin, if it wasn’t for the sale, Le Pain Quotidien would have to liquidate its 98 U.S. stores.
Another corporation, FoodFirst Global Restaurants, parent company of the Brio Italian Mediterranean and Bravo Fresh Italian restaurant chains, filed for Chapter 11 bankruptcy in April. According to the company, 71 of its 92 restaurants temporarily closed during the coronavirus pandemic.
Ruby Tuesday, while not filing for bankruptcy, has also reportedly shuttered nearly 150 restaurants since January 2020. As states encourage restaurants to reopen, the pace and volume of sales will determine if those locations remain closed permanently. TGI Fridays has also announced that it will permanently close many of its locations, as the chain suffers its own sales declines related to COVID-19. Toward the start of the crisis, TGI Fridays sales fell quickly, by roughly 80 percent, according to CEO Ray Blanchette. Revenue somewhat recovered after the transition to pickup and delivery. However, revenue is still down about 50%. Most likely, up to 20% of TFI Fridays 386 U.S. locations will be forced to permanently close, according to Blanchette. .
Social distancing requirements have prompted many cities to close public roads and allow both residents and restaurants to use the streets for business and recreation. In Washington D.C., Mayor Muriel E. Bowser announced last week that the city will permit restaurants to set up tables in public streets and parking spaces and on sidewalks after filling out a simple application. The city also plans to close some streets to ease pedestrian travel.
Authorities in Oakland, California, have also been closing some streets to through-traffic. “The streets are 25 to 30 percent of any city’s land,” said Ryan Russo, Oakland’s director of transportation. “We need to manage the public realm in a way that meets people’s needs in this moment and in the future.” Similarly, in Tampa, Florida, Mayor Jane Castor has advocated for a “Lift Up Local” campaign that would permit restaurants to set up tables in certain public streets.
Minneapolis protestors took to the streets last week to demand justice for George Floyd, a local black man unlawfully killed while in custody by police last week. In cities around the country, Mr. Floyd’s death has sparked similar protests, many of which have resulted in violent clashes between police, civilians, and journalists. In Minneapolis, rioting has continued for nearly a week straight, damaging several popular restaurants, including Addis Ababa, Gandhi Mahal and El Nuevo Rodeo. Restaurateurs are already facing steep financial losses due to forced closures during the pandemic, but some believe strongly that even the total loss of their business pales in comparison to the value of racial justice. Ruhel Islam, the owner of Gandhi Mahal, said “let my building burn.” In a Facebook post, Islam’s daughter Hafsa wrote, “We won’t loose hope though, I am so grateful for our neighbors who did their best to stand guard and protect Gandhi Mahal, Youre efforts won’t go unrecognized. Don’t worry about us, we will rebuild and we will recover.” She added, “As I am sitting next to my dad watching the news, I hear him say on the phone; ‘let my building burn, Justice needs to be served, put those officers in jail.’ Gandhi Mahal may have felt the flames last night, but our firey drive to help protect and stand with our community will never die! Peace be with everyone. #JusticeforGeorgeFloyd #BLM.”
The top three U.S. restaurant food delivery services are DoorDash, GrubHub, and UberEats. Together, they dominate about 80 percent of the market, while Postmates, Caviar, and smaller third-party delivery companies make up the rest. While DoorDash is currently the market leader, #3 Uber has made an offer to buy #2 GrubHub, a merger that would dominate 55 percent of the market, leaving DoorDash with only about 35 percent of the market, according to research firm Wedbush Securities.
Shortly after the news of a possible merger broke, GrubHub stock soared 35 percent. Negotiations between the two companies may have been accelerated as a result of Uber’s ride-sharing business choking up due to decreased travel amid the coronavirus. Currently, UberEats is the company’s only service experiencing higher sales year-over-year with a 53 percent increase in the first quarter of 2020. Get the full story at The Wall Street Journal here (subscription required) or at CNN here.
Prior to reopening its restaurant, McDonald’s Corp. sent hundreds of its U.S. franchisees requirements for enforcing cleaning and social distancing rules. Changes to current procedures include mandates to clean digital kiosks after every order, clean bathrooms every half-hour, and either close public soda fountains or have a staff member monitor them. The company’s 59-page dine-in reopening guide also includes new equipment recommendations, such as a $310 automatic towel dispenser and a $718 touchless sink. The guide even mentions foot-pulls that let customers open bathroom doors without using their hands.
McDonald’s employees are required to wear masks and gloves, and according to the guide, face shields in any jurisdiction that requires them. According to hundreds of U.S. owners, the new expenses could create logistical problems, but McDonald’s management stated that it will wait for franchisees to be ready before reopening all 14,000 of its U.S. locations. Reopening will happen slowly in collaboration with local authorities, and so far only some U.S. locations have resumed dine-in service.
When it comes to the long-lasting financial effects of the coronavirus, independent restaurants are in a uniquely vulnerable position. Safety restrictions such as social distancing of six feet, limited-size gatherings, and wearing masks cut to heart of the dining business model as they restrict sales volume and compromise the enjoyment of eating out. Although Congress passed the $670 billion Paycheck Protection Program (PPP), it contains mandates that could hurt, rather than help, independent restaurants, which make up 70% of all U.S. restaurants and are defined as those that operate 20 or fewer locations under one name.
For relief, two restaurant lobby groups, the National Restaurant Association and the Independent Restaurant Coalition, have lobbied Congress for weeks. Their efforts have resulted in two new bills in the House, which could be voted on next week. One is the Paycheck Protection Flexibility Act, which extends the period businesses can use their funds past the eight-week restriction the PPP demands and also eases restrictions on non-payroll use. The other bill, called Real Economic Support That Acknowledges Unique Restaurant Assistance Needed (the Restaurant Act), offers $120 million and targets small restaurants.
These bills offer a lifeline to owners of popular restaurants like Naomi Pomeroy, James Beard–Award winning chef at Beast in Portland, Oregon. The extra money and flexibility in using it, says Pomeroy, will allow her to re-invent her fine-dining bistro and allow her to weather the downturn until she “can start to really figure out a game plan that’s going to make sense and push us forward.”
Ten chefs and executives from chain restaurants like Burger King and upscale restaurants like Per Se met with President Trump and other cabinet members this week to seek increased economic aid for the nation’s 650,000 restaurants. The Independent Restaurant Coalition (IRC) promoted a stabilization fund for getting independent restaurants (those with less than 20 locations, accounting for about 70% of restaurants overall) back on their feet. Co-founder chef Tom Colicchio expects independent restaurants to earn only 20 to 30 percent of their usual income due to reopening restrictions and the public’s uncertainty about dining out again. “We’re opening up into a severely depressed market, and we need capital to kind of float the restaurants until business comes back,” Colicchio said.
According to the National Restaurant Association, the industry is expected to lose a staggering $240 billion in 2020. The group explained why the Paycheck Protection Program didn’t work for restaurants, yet after statistics were shared and strategies discussed, no firm commitments were made. “We’ve saved and we’ll continue to save the restaurant business,” said President Trump, “and ultimately we’ll be paid back many, many times.”
Acclaimed Boston restaurateurs Jody Adams, Jamie Bissonnette, and Ken Oringer participated in a case study with the MASS Design Group, an architecture firm that has previously designed socially distant dining rooms in Haiti and Liberia. MASS released a set of open source design plans that show restaurateurs how to reconfigure their dining rooms to comply with social distancing requirements. The diagrams depict the flow of staff, guests, food, and air, incorporating design ideas for key “exchange zones” such as delivery, storage, cooking, customer hand-off, and disposal. According to executive director, Michael Murphy, the goal of reconfiguration is to show how “restaurants can reclaim their role in the public realm.”
Without a playbook, restaurants are taking several approaches to safe and profitable reopening. Most restaurants are considering thermal cameras and plexiglass as part of the plan, and many are stepping up their takeout game by selling groceries. New York restaurant Il Buco Alimentari e Vineria already has a built-in grocery store that’s becoming a model for other restaurants struggling to make it financially viable to reopen at reduced capacity. Fort Defiance bar and café in Red Hook, Brooklyn, recently remade itself into Fort Defiance General Store, and owner St. John Frizell has reduced the 42-seat dining room to just one or two tables inside as well as expanded outdoor seating.
Chef-owner Greg Baxtrom of Brooklyn’s Olmsted repurposed his private dining room into the Olmsted Trading Post, which now stocks around 120 grocery items. Many were served at Baxtrom’s restaurant and some are new products such as mushroom-growing kits. Café Cancale is another example in Chicago, where the dining room has become a new French market called Café Cancale Marche. The market features fresh seafood like shrimp and halibut as well as oyster-shucking kits and high-end pantry items rose vinegar and truffled Dijon mustard. Café Cancale Marche also sells martini kits from its neighboring bar, the Violet Hour.