The Lockdown Was Terrible for Restaurants. Can We Make ‘Reopening’ Any Better?

April 21, 2020 Admin 0 Comments

Without proper aid, restaurants will struggle through rolling lockdowns and half-capacity dining rooms

In Georgia, restaurant owners are in shock. At a press conference this week, the state’s governor Brian Kemp announced plans to allow the state’s restaurants to reopen to the public on April 27 — the first state in the nation to do so after sweeping shutdown measures closing public spaces in March. Some restaurateurs already know they will not be following suit. “JenChan’s will not put our staff or the rest of our community at risk by reopening to the public Monday,” restaurateur Emily Chan told Eater Atlanta. “We will continue takeout and delivering our Supper Club but we cannot risk a second wave when the first wave is still happening.” Restaurateurs in other states may soon find themselves making similar decisions as the president and local governments make louder and louder pushes to “reopen” for business.

The lockdown was a body blow to restaurants, but “reopening” poses a whole new set of terrifying, existential threats: Experts agree America would need widespread testing both for the virus and its antibodies, robust contact tracing, quarantine protocols for even the mildly sick, and treatment options as the country awaits a vaccine. We’re not even close yet.

More profoundly, the current thinking around “opening up” suggests that one key containment tool will be strategically putting the population back under lockdown whenever cases resurge. For restaurants, that means potentially opening for a few weeks, re-staffing and re-training, ordering new product, and getting the word out about letting customers into half-capacity dining... only to be forced to close again with little notice. Open. Close. Open. Close.

A rolling lockdown cycle — which some experts believe will last 18 months or longer — would be debilitating. Half-capacity dining rooms mean restaurants won’t be earning at pre-COVID rates in the first place. And when the restaurants are forced, once again, to close their dining rooms entirely, the familiar choices will come fast and hard as they did this time: Keep employees on payroll and hope for a quick reopening? Furlough staff? Lay them off? Meanwhile rent will still come due. Each return wave of customers that would follow each subsequent lockdown would be more economically depressed than the last. On top of that, there’d be money lost to wasted product, difficult-to-spin-up pivots to contactless delivery or grocery models again, and any other unexpected repairs or expenses due to having operated their dining room at all.

While Congress is likely to inject more money into the PPP, it’s hard to imagine many more $2 trillion stimulus plans forthcoming, even if we’re expecting to see multiple localized lockdowns over the next year and a half. The difficulty of resuming operations before the true end of the pandemic isn’t a problem that can be solved by any one restaurant; the aid the industry’s workers need can’t be addressed by any one relief fund. The only organization with any hope of achieving a solution at scale is the federal government, and so far it’s proven utterly unprepared if not utterly uninterested.

The only way forward for the small, independent restaurants that make dining out something special is large-scale government assistance that helps address the structural problems that have left restaurants (and restaurant workers) vulnerable to the current moment in the first place. The results so far do not inspire confidence. PPP is broken, and broken in exactly the way many of us expected: This is America, and big chains were allowed to reach hand over fist for limited resources ostensibly meant to save small businesses. Some $300 million of the $350 billion in available funding went to at least 75 publicly traded companies, some with market values of $100 million and above, according to an Associated Press investigation. Major restaurant chains like Potbelly, Ruth’s Chris Steakhouse, and Taco Cabana scored huge loans. So did Shake Shack — which, after a public backlash and, perhaps more importantly, securing additional capital, is “returning” its loan. Restaurants big and small also have to contend with the end-of-June deadline to rehire all full-time staff, which seems increasingly impossible. Meanwhile, the Independent Restaurant Coalition points out, airlines received specifically earmarked relief to the tune of $25,000,000,000 while zero dollars were specifically flagged to help restaurants.

But of all the failures, the biggest is that there just isn’t enough money — especially not enough money to cover the needs of publicly traded businesses, large chains, and small shops. Independent owners like Seattle’s Edouardo Jordan (Junebaby, Salare), Detroit’s Stephen Roginson (Batch Brewing Company), and Atlanta’s Jen and Emily Chan (JenChan’s Restaurant and Supper Club) are hearing that their banks can’t help them — the PPP money has long run out. When it comes to restaurants, the stimulus hasn’t done nearly enough. To protect restaurants going forward into the “reopening,” much more is needed.

A proper aid package for the restaurant industry, one that accounts for the consequences yet to be fully reckoned with, and with the ones yet to come — of rolling lockdowns, of lower demand in a ransacked economy — needs to be a part of the government-sanctioned “reopening.” It would actually prioritize the small, independent restaurants that form the cultural and economic lifeblood of neighborhoods, towns, and cities across the country in the form of a restaurant-specific stimulus.

In the fall of 2019, there were more than 657,000 food and drinking establishments in the U.S., per the Bureau of Labor Statistics, totaling 6 percent of all domestic businesses. Data from the National Restaurant Association suggest that the majority are what we’d consider “small business” (7 in 10 restaurants are single-unit). The things they needed in the first place would still be critical in the event of reopening and rolling lockdowns, like rent abatement and tax deferrals. The Independent Restaurant Coalition has called for Congress to require business interruption insurance to cover COVID-19 (which largely isn’t happening right now because of an exclusion many insurers added to avoid paying out business-interruption claims due to viruses). But most of all, they need money.

Aid money should not come with an impossible rehiring clause; the industry needs loans that are not only forgivable, but repayable at a realistic timeline, given the wildly uncertain future ahead. Payroll assistance should not be based on the ability to rehire at full capacity, and certainly not by an arbitrary deadline to hit such a goal — especially when businesses will likely be asked to temporarily shutter again in the future as lockdowns will likely be necessary again.

Independent restaurants need sweeping payroll assistance, closer to the Danish model. In Denmark, the government is covering 75 percent of payroll for the duration of the crisis to prevent the kind of mass layoffs America is already witnessing. With payroll burdens reduced with money that isn’t owed back, restaurant owners could more likely keep staff on board, even through rolling shutdowns. Workers could continue to earn, even as it might not be safe (or even necessary, staffing-wise) for them to come to work.

And given that millions of workers in the industry work at large chains, bigger restaurant companies (even those that are publicly traded) and their franchisees should also be eligible for aid — but their needs should be evaluated on different criteria, with relief coming from a separate fund so we don’t repeat the mistakes of PPP. A path to the restaurant sector surviving through waves of shutdowns just might be possible with the right aid.

The industry also needs concrete guidance on the practicalities of reopening amid the possibility of repeated lockdowns and a virus that hasn’t yet been contained. What are the risks to staff and what are the best safety and sanitation protocols to protect them? What are the rules for resuming business more generally, and how can they start planning around those? If additional safety equipment — whether it’s PPE or even plexiglass dividers to separate work stations in kitchens or seats in dining rooms — is required, will those resources be provided free or at reduced costs to restaurants? Data-driven safety guidelines and access to the right equipment to execute them should be a prerequisite of returning to any sort of business-as-usual.

I don’t know of anyone in the restaurant industry who expects this level of support. But there needs to be more — much more — than what’s currently on the table. For restaurants, not just reopening but surviving depends on it.