McDonald’s Distributes Reopening Requirements To Franchisees
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.
Peet’s Coffee Owner Planning $2.2 Billion IPO
JAB Holding, the investment firm behind Peet’s Coffee, Panera Bread, and Pret A Manger, is pursuing an initial public offering of its coffee business in an attempt to raise as much as $2.2 billion. According to Dealogic, it is the largest European IPO of 2020 and among the top three globally. JDE Peet’s owns Peet’s Coffee, Jacobs Coffee, Douwe Egberts, Senseo and Tassimo, all of which sell coffee at cafes and grocery stores. Around 80% of JDE Peet’s coffee is sold for at-home consumption, a market that investors are betting will be last for many months due to the coronavirus pandemic. According to research firm Nielsen, single-serve coffee sales at grocery stores increased 16% during the four weeks prior to May 2, while ground coffee sales increased 11%. To capitalize on the growing demand for at-home coffee, Pret A Manger recently launched a range of ground and whole-bean coffees to sell in stores and online.
Cafe chains, on the other hand, have taken a hit due to lockdowns. Starbucks Corp. announced that global same-store sales fell 10% in its second quarter. The company has begun reopening numerous U.S. stores exclusively for drive-through, delivery, and pickup sales. Peet’s has also started reopening stores for pick-up at the door.
Restaurant Industry Urges White House To Increase Financial Aid
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.”
More Restaurants Enter The Grocery Business
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.
New Bills Could Help Some Independent Restaurants
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.”
How Shuttered Restaurants Shatter a City’s Economy
The coronavirus shutdowns have shed new light on the role of restaurants in the economic health of cities. “The benefit of having good restaurants outweighs just their tax benefits,” said Andrew Salkin, former member of New York City’s Finance Department and founding principal of the city-strengthening nonprofit Resilient Cities Catalyst. “They are the anchors of communities,” said Salkin. “They support tourism and the neighborhood they are in.”
For poverty-ridden cities, including areas of Indianapolis, Cleveland, and Detroit, restaurants have proven to be strong economic growth engines. In other well-known “food cities” such as Providence, Rhode Island and Asheville, North Carolina, restaurants form a key piece of the city’s identity. Restaurants also employ over 15 million people, according to the National Restaurant Association, and in some states, they are among the largest private-sector employers. Many cities rely on restaurants for both residential and commercial expansion, and without them, a city’s reputation and livelihood could be severely damaged. In Washington D.C. alone, restaurants and bars accumulated sales taxes of $1.3 billion last year, a significant revenue contribution.
In cities like Detroit, restaurants help attract residents who would otherwise choose the suburbs. In Providence, the tourism industry sometimes relies on the national reputation of its restaurants. “When we pitch Providence, whether for leisure tourism or meetings and conventions, we look at things that make us special, and a lot of that is you get meals you wouldn’t ordinarily get in a city of about 175,000,” said Kristen Adamo, president and chief executive of the Providence Warwick Convention and Visitors Bureau.
It remains to be seen how many restaurants will survive the pandemic and the ripple effects that shuttered restaurants will have on local economies. Many restaurateurs have not yet received federal relief, and insurers are unlikely to pay their business interruption claims. Most independent owners also say the Paycheck Protection Program is not useful to restaurants that will have to remain closed longer than other businesses. And when they reopen, they will have to operate at 50% or 25% capacity. “How do I make money if I have to bring back all my staff doing less volume and less sales?” asked award-winning chef Nina Compton, owner of Compère Lapin in New Orleans. When discussing the repayment of these federal loans, Compton added, “Getting forgiveness is going to be impossible.”
Restaurant In A Jar Is Popular In Moscow
Aleksander Khasanov launched his “Restaurant from a Jar” business just days before Moscow’s stay-at-home order went into effect. As the city’s restaurants and bars remain closed, residents have become accustomed to using food delivery services and now, buying restaurant meals packed and delivered in jars. Options include beef stroganoff, rabbit sausage in broth, and marinated pork cubes cooked over an open fire. Khasanov offers more than 100 different dishes from Russian, Indian, Armenian, Uzbek, and other cuisines. The bottled meals can be stored for up to a year and are certified by Russia’s food quality watchdog, Rosselkhoznadzor.
Khasanov has amassed more than 2,000 customers and expects demand to remain high or even increase at the end of the lockdown since people will work more and have less time and money to cook or eat out. The entrepreneur suspects that the convenience of delivery services will challenge restaurants far into the future.
Food & Wine Magazine Names Best New Chefs of 2020
Though the coronavirus pandemic has stalled restaurants and chefs across the country and around the world, Food & Wine Magazine shines a light on the brightest stars in the American culinary world with its annual list of Best New Chefs. “They are the people who not only will help rebuild their shattered industry, but also will eventually help it thrive in new ways—through their cooking, their resolve, and their vision for what a more equitable future in restaurants might look like,” editor Khushbu Shah writes.
Take chef Nick Bognar for example. At Indo in St. Louis, chef Bognar deftly combines Japanese and Thai traditions in a fusion cuisine that tastes completely natural. Chef Camille Cogswell masters the art of the bagel at K’Far in Philadelphia, and Eunjo Park is close to winning the world’s hearts with the rice cake at Kāwi in New York City. Since 1988, Food & Wine has helped fuel the careers of promising tastemakers with its top ten list, and this year is different only in that these chefs will become true trailblazers as they help us all navigate the brave new world of dining out. “The fallout from the pandemic has revealed new layers of strength and creativity, best embodied by this year’s class of Best New Chefs. With them at the helm, the future of dining looks brighter, fairer, and more delicious than ever before,” says Shah.
Must Restaurants Dumb Down To Survive?
Since the pandemic shutdown began in March, restaurant spending has decreased by 60 percent, and $3 out of every $4 is now going to chains. Head judge on Top Chef, Tom Colicchio says that to survive the reopening, “restaurants are going to have to change.” When asked how restaurants will adapt, Colicchio suggested that “restaurants will have to cobble together a business of delivery and community-supported agriculture.” The chef added that restaurants will be selling proteins, vegetables, and cheese, buying from their supply chain and selling products much like a grocery store. The independent restaurant of the future may operate very differently than it did just a few months ago.
Colicchio has been critical of the federal Paycheck Protection Program. He does not think the program protects independent restaurants, as most of the funds have gone to large restaurant chains and the loan repayment rules don’t make sense for smaller operations. As an alternative, Colicchio helped establish the Independent Restaurant Coalition to lobby Congress for financial relief, asking for $120 billion of replacement income to help independent restaurateurs pay rent and other expenses. This figure was derived from estimated revenue losses over a period of six months. Under the proposed program, publicly traded restaurants and those with over 20 locations would not have access to these funds, since the Paycheck Protection Program already covers them. Colicchio added that the plan will act “more like a countercyclical program to keep restaurants alive during the crisis, rather than a block grant where the money runs out long before the crisis ends.”
While some restaurants are now surviving on life support with delivery services, Colicchio says many of them can’t afford to keep paying delivery service fees, which run as high as 30 percent for processing, delivery, and commissions. By Colicchio’s estimates, all he can afford to pay is 11 percent. The chef agrees with the bill in New York City that aims to cap delivery charges at 10 percent of an order’s total amount. .
Chef Gabrielle Hamilton Reveals Longstanding Vulnerabilities In Independent Restaurant Industry
Gabrielle Hamilton, award-winning chef/owner of Prune restaurant in New York City, found herself in a tough spot this past March–10 days of inbox-clogging chaos among those in the food industry searching for answers on what actions to take in the face of COVID-19. With sales dwindling day by day, on March 15th, Hamilton decided to pull the plug on the operation just five hours before New York Mayor Bill De Blasio enacted the city’s shutdown, according to her article in the New York Times.
After closing Prune and watching many other restaurants on her street close, Hamilton had a realization. The independent “restaurant” we know and love today may not survive this turmoil. “You can’t buy a $3 can of cheap beer at a dive bar in the East Village if the ‘dive bar’ is actually paying $18,000 a month in rent, $30,000 a month in payroll; it would have to cost $10,” she said. Chef-owned restaurants already operate on razor-thin margins. Most have been struggling to keep the lights on for years, as food and labor costs have risen and staff seek adequate health insurance.
Takeout, delivery, and contactless transactions have given many restaurateurs a life raft during the coronavirus shutdown. But some are not excited about running such impersonal restaurants in the future. After all, the entire industry is built on person-to-person hospitality. “I started my restaurant as a place for people to talk to one another, with a very decent but affordable glass of wine and an expertly prepared plate of simply braised lamb shoulder on the table to keep the conversation flowing, and ran it as such as long as I could. If this kind of place is not relevant to society, then it — we — should become extinct.”
