Restaurateurs Torn As Landlords Demand Rent
While the coronavirus shutdown continues, delivery and takeout sales are not paying the rent for many restaurateurs. In February, the owners of Urban Bar-B-Que in Rockville, MD unsuccessfully requested rent relief from White Flint Express Realty Group. Owners David Calkins and Lee Howard were forced to close the location, but they still owe rent on their lease, which doesn’t expire until August. Calkins and Howard and Calkins offered their landlord all the equipment inside and their security deposit in exchange for being released from the lease. But in a written response from White Flint Express’s attorney, the landlord threatened to sue Calkins and Howard for the full amount of the least through August.
Other realtor-restaurateur relationships are less contentious. On March 13th, the owner of Buffalo & Bergen in Washington, D.C., Gina Chersevani, received an email from her landlord, Eric Korsvall of Massachusetts Avenue Properties. “You probably have a lot of pressing concerns with respect to your operations, staff, guests,” Korsvall wrote. “Paying your rent at 3<sup>rd</sup> & Mass might be a concern, and we want to help you by taking that off the table for a few months. We want you to take care of your people first, and to help you do that, we will forgo any rent due.” The offer released Chersevani from paying potentially tens of thousands of dollars in rent while under the economic pressure brought on by the outbreak.
These are just two examples on opposite ends of the spectrum. Even if some landlords grant temporary rent relief to restaurateurs, many owners face mounting expenses and reduced business prospects as the pandemic lockdowns are extended.
Restaurant Worker Relief Fund Hits $20 million
The Restaurant Employee Relief Fund (RERF), founded by Guy Fieri and the National Restaurant Association Educational Foundation (NRAEF), has recently reached a new milestone of $20 million after PepsiCo chipped in with a $3 million donation.
Initially opened for applications on April 2, the fund was set up as a one-time $500 payment for restaurant workers, operated on a “first-come, first-serve” basis. However, the fund site immediately shut down due to the overwhelming number of applications. After another try just one week later, the site was taken down again for similar reasons. By the third week of April, RERF was able to send their first award notice and the fund has since approved and notified over 10,000 hospitality employees.
To be eligible, restaurant workers are required to have been employed in the industry for at least 90 days, had significant loss of income as a result of COVID-19, and have documentation of these circumstances. Income loss includes cuts in hours and at least a 50% reduction in pay. RERF has been processing grants and delivering much needed cash to former restaurant workers for over two weeks now, said Rob Gifford, NRAEF president. Applications are being judged on eligibility and “not all 63,000 people who apply for the fund are going to be proved eligible,” said Gifford.
Some Restaurateurs Configure Pandemic-Friendly Dining Rooms
Gov. Brian Kemp gave permission to restaurants in Georgia to start table service again on Monday, April 27th, allowing many to dip their toes back into business. Gov. Kemp’s decision came after health data suggested the state’s death toll had peaked. The idea of reopening a dining room still seems unthinkable to many American restaurateurs, considering the nation’s death toll has exceeded 60,000 and the majority of U.S. states have remained locked down.
“There is no fancy meal right now that is worth my people’s health and the health of other people who come into a restaurant,” said award-winning chef Hugh Acheson, who runs restaurants in Atlanta and Athens, Georgia. While some restaurateurs remain opposed to the idea, others are finding ways to reopen safely. Yardbird, a popular restaurant in Hong Kong, China, has installed plexiglass partitions between diners so they can still see and interact with each other and the restaurant staff safely. The dining rooms in China must follow strict regulations, including a table distance of 1.5 meters, customer temperature checks, health declaration form signatures, and a requirement for both workers and customers to wear masks at all times. Masks may only be removed to eat or drink with an envelope for mask storage provided by the restaurant. “You don’t have that huge vibe,” said co-owner Lindsay Jang, who opened Yardbird in 2011 with chef Matt Abergel, “but it’s still good. It’s still a restaurant.”
European Restaurants Navigate Reopening Post-Lockdown
European countries are beginning to set dates and regulations for reopening restaurants, such as Austria’s date of May 15 and Italy’s target date of June 1. Socially distanced dining will make restaurants quite a different experience across the continent. In Austria, staff must wear face masks, no more than four adults may be seated per table, and there must be a minimum of 1 meter (about 3 1/4 feet) between patrons. In Madrid, Spain, the city council may require the installation of screens that separate diners at outdoor tables.
The French government has not set a specific date for reopening its 240,000 restaurants and cafés, but mid-June has been suggested. Other countries have begun various initiatives to help the restaurant industry recover. It Italy, where as many as 50,000 restaurants may close for good, the businesses can claim €600 ($655.69) for every month closed and tax payments have been postponed. Italian restaurateurs can also apply for subsidized bank loans to be paid back after two years. In Germany, to help jumpstart the restaurant industry recovery, economy minister Peter Altmaier announced the government would cut VAT taxes from 19% to 7% starting July 1.
Table For One In A Swedish Meadow
Linda Karlsson and her husband Rasmus Persson are opening a one-table, contactless restaurant at their home in Ransäter, Sweden. Set to open May 10, the restaurant will be named Bord för En, Swedish for “Table for One.” The idea was born after Karlsson’s parents, who are over 70 and at high risk for the coronavirus, visited their home unannounced. Persson and Karlsson simply sat them down at a table outside their home and served them food through the window, completely contact-free.
From opening day until August, one of their home’s two kitchens will be used solely for the restaurant. Reservations can be booked for one person a day anytime from 10 a.m. to 10:45 p.m. Bord för En offers guests a three-course breakfast, lunch, or dinner sent down a rope in a picnic basket. According to Persson, who grew up in Ransäter, Bord för En is possibly the first and only restaurant in Ransäter. The couple has received reservations from throughout Sweden and even Japan.
The entire menu is vegetarian, as the couple only occasionally eats meat that is humanely raised and locally sourced. Each course will feature a non-alcoholic beverage crafted by Persson’s childhood friend, Joel Söderbäck, who owns several upscale bars in Stockholm. Guests leave used plates and utensils in a bucket alongside the table between courses. When guests have finished their meal, the cost is up to them. Karlsson says, “There shouldn’t be a price tag that is too high for anyone to enjoy this” and believes that one-person meals will be here long after the pandemic subsides. .
Kansas City BBQ Now Comes From A Vending Machine
The vending machine outside Jones Bar-B-Q in Kansas City was originally going to be filled with chips and soda. Since the pandemic lockdown, owner Deborah Jones began looking at the machine with new eyes. It’s a takeout opportunity, she thought: let’s fill it with barbecue.
As small barbecue restaurants like hers struggle to survive, Jones feels the vending machine couldn’t have come at a better time. While the machine isn’t completely contactless, it allows Jones to keep serving her barbecue while keeping her customers safe. “You’ve got to try everything once in your life,” Jones says.
Restaurateurs Demand Business Interruption Payments From Insurers
President Donald Trump is in the middle of an intense lobbying fight between businesses and insurers over hundreds of billions of dollars in claims sparked by the coronavirus shutdowns. Stay-at-home orders have forced restaurants and other businesses to close, so those businesses began filing business interruption claims to help withstand the economic pressure. But the claims were rejected.
While the coronavirus has certainly caused business interruptions, insurers argue that this event is not one they ever pledged to cover. “Unlike a hurricane or an earthquake, a pandemic is not limited by geography or time. It’s everywhere geographically and for extended periods of time. So the loss potential in practical terms is almost infinite,” said Evan Greenberg, CEO of insurance company Chubb.
Celebrity chefs Wolfgang Puck and Thomas Keller have launched their own advocacy group to pressure insurers to pay, making their case on Fox News in an attempt to catch the president’s attention. President Trump has shown sympathy to restaurants, having overseen his own hospitality business before being elected. However, the White House has made no decisions in the debate. “As President Trump has said, we are ensuring that we take care of all Americans, including affected industries and small businesses, and that we emerge from this challenge stronger and with a prosperous and growing economy,” White House spokesman Judd Deere said. .
Amid COVID-19, Restaurant Workers Find Employment Elsewhere
According to U.S. Department of Labor data, more than 700,000 Americans lost their jobs in March, and 60% of those were in the restaurant industry. As food jobs become scarce, other industries are hiring unemployed restaurant workers wherever they can. Divurgent, a healthcare consulting company in Virginia Beach, VA employed 250 former restaurant workers in a call center the company was tasked with creating to help overburdened hospitals enroll patients in the telehealth system. In Miami, the Hispanic grocery chain Sedano’s needed 400 additional employees to keep up with increased traffic to its 35 stores. Sedano’s turned to local cuban restaurants, Versailles and La Carreta, which recently laid off many of its workers to focus solely on takeout and delivery. Many of the former employees from those restaurants now work at Sedano’s.
In the grocery industry, the Food Marketing Institute (FMI) has teamed up with tech company Eightfold.ai. They developed a nationwide job board that matches former restaurant workers’ experience and skills with open positions in the grocery business. And in New York City, which has the highest number of coronavirus cases in the country, the nonprofit organization Rethink Food has hired former employees of the fine-dining restaurant Eleven Madison Park. The shuttered three-Michelin-star restaurant was turned into a commissary, where former Eleven Madison Park staff now work in teams of three across multiple kitchens to produce produce 2,000 meals a day for healthcare workers and New Yorkers in need.
A similar initiative was undertaken by World Central Kitchen (WCK), the nonprofit disaster relief organization run by celebrity chef Jos Andres. WCK’s “Chefs for America” operation aims to reopen more than 400 restaurants across the U.S. and produce 1 million meals for communities in need. The organization pays restaurants $10 to $20 per meal so restaurateurs can re-hire staff and purchase ingredients.
How COVID-19 Will Change Restaurants Forever
As predictions of how and when businesses will reopen begin to surface, analysts predict a significant alteration of the restaurant industry.
Coronavirus impacts caused a loss of an estimated $25 billion in sales and more than 3 million jobs in the restaurant industry in the first 3 weeks of March. According to the National Restaurant Association, approximately 30,000 restaurants have closed for good, and more than 110,000 are expected to do so throughout April. On April 14th, California Governor Gavin Newson announced a regional planning effort between California, Oregon and Washington that would lift restrictions on businesses. Throughout the press conference, Newson acknowledged that restaurants would be seeing a new normal. “You may be having dinner with a waiter wearing gloves, maybe a face mask… Dinner where the menu is disposable… where your temperature is checked before you walk in the establishment.”
Jeff Chandler, CEO of the 35-unit fast-casual Hopdoddy Burger Bar, says curbside delivery “is here to stay” in restaurants. “People aren’t going to want to touch a kiosk,” Chandler said, referencing the contagious nature of the virus. Jose Dueñas, President of Coffee & Bagel Brands, which has 1,100 units of Einstein Bros. Bagels, Bruegger’s Bagels, Caribou Coffee, Noah’s New York Bagels and Manhattan Bagel, says the consumer will come out of the pandemic with a heightened demand for convenience. As the hospitality industry gradually reopens, consumers will come to expect and demand food service that accommodates social-distancing protocols, and restaurants will see a dramatic change in how they do business. .
Fine Dining Faces Long Road to Recovery
Restaurant reopenings in China offer a glimpse into the future of fine dining in America. In March, chef Jean-Georges Vongerichten reopened his restaurants in Shanghai and Guangzhou, following extensive government rules such as regular temperature checks for both staff and customers, no more than four guests per table, mandatory space of six to eight feet between tables, and app-based ordering so that no cash changes hands. As America adjusts to its pandemic restrictions, a similar business model will likely govern the chef’s dine-in restaurants in the U.S. American restaurateurs are planning now for a three-phase approach to resuming business in dining rooms, following the White House “Guidelines for Opening America Again.”
These guidelines urge U.S. restaurateurs to operate at lower capacity with fewer tables and fewer dine-in guests, at least during phases one and two. Within this limited-capacity business model, mobile ordering, takeout, and delivery may be the only way for fine dining restaurants to pay the rent. Restaurateurs may also need to invest in new personal protective equipment for staff and, possibly, health insurance. It remains to be seen whether guests will perceive a decreased public health risk in frequenting restaurants that provide health insurance to staff in the post-COVID-19 era. If so, the expense may be more than most restaurants can bear. Depending on how many months the lockdown continues and how quickly cities proceed through all three phases of reopening, some restaurants simply may not survive. Many public health officials predict waves of rolling, temporary lockdowns that will last until a new coronavirus vaccine is available, which could be at least a year or more. As a result, by some estimates, about 30% of fine-dining restaurants will close permanently.
These are sobering times for the hospitality industry and for the tourism industry in general. It could be years before destination dining fully recovers. When it does, new dining guidelines and restrictions will almost certainly be in place. Be prepared for a new normal that minimizes the public health effects of a single person on a larger group of people, as in a restaurant or public market.
