What It's Like To Run A Restaurant In The Pandemic
AUDIE CORNISH, HOST:
A typical day for Russell Cross goes something like this. He's sitting in his warehouse office near the Cleveland airport, and the phone rings.
RUSSELL CROSS: And it'll be Mr. Jones (ph). And he's had a pizza shop, and COVID pretty much put him out of business.
CORNISH: A restaurant out of business is Cross' business. He runs an online auction company called Auction Factory that will work with a bistro owner or pizza shop guy to basically sell off what's left of their business.
CROSS: We come out there. We assess the situation. We look at what it's going to take to extract all that equipment off the property so we can hand over the keys to the landlord and get out from paying that rent. Chances are he doesn't have it anyways. If he can't afford to buy cheese, he's not going to be able to afford to pay the rent.
CORNISH: That is the situation thousands of restaurants are in right now. According to a November survey from the National Restaurant Association, 110,000 restaurants - over 1 in 6 - have closed their doors this year either permanently or on a long-term basis, which is why Russell Cross' Cleveland warehouse is packed.
CROSS: Charbroilers, griddles, ovens...
CORNISH: Cross' team collects it all.
CROSS: ...Convection ovens, ice machines, ice cream machines...
CORNISH: They repair it...
CROSS: ...Tables, chairs, booths, plates, dinnerware, stemware, plateware (ph)...
CORNISH: ...And eventually help the original owners sell it.
CROSS: ...Silverware, salt and pepper shaker - I mean, we sell everything because every dollar counts.
CORNISH: But until that happens, it sits in his warehouse - 30,000 square feet packed wall to wall with what's left of people's dreams.
CROSS: I mean, I've got a lady that was sitting there just bawling her eyes out. But I've got other couples that said, thank God you're here because we need to move on.
CORNISH: These days what Cross says he sees most of all is that a good number of restaurant owners can't make the math work even with the loans the government gave out earlier in the pandemic. Their rents are coming due.
CROSS: If you're paying $6,000 a month and you're seven months behind, you're 42 Gs in the hole. That's a lot of $10 pizzas to make $42,000. So they know that there's no end in sight for them.
CORNISH: There's finally traction for the bipartisan compromise relief bill in Congress with provisions for small businesses. But for thousands of smaller, independently run restaurants, it could be too little too late. At least that's what Andrew Genung is hearing. He's an American based in Hong Kong and writes a food industry newsletter. It's called Family Meal.
ANDREW GENUNG: I've stopped writing about closures altogether because they're coming at such an intense speed.
CORNISH: His readers are chefs, investors, waitstaff, real estate people. And Andrew Genung says his readers care a lot about that bipartisan COVID relief bill. The Senate decided not to take up the version passed by the House. That one would provide grants, not loans, with fewer strings attached and direct that aid to mostly smaller non-chain restaurants. Senator Susan Collins of Maine helped shape this part of the Senate relief bill, and her office claims that grants without conditions could be taken advantage of. Quote, "a celebrity chef who owns a restaurant could pocket the federal grant money or use it to settle old debts unrelated to the pandemic and not pay any of his or her staff."
Now, the House bill does require restaurants to spend some money on staff, just with fewer conditions. And many restaurants want more flexibility after the first round of support from Congress earlier this year, which included the Paycheck Protection Program.
GENUNG: It's called the Paycheck Protection Program for a reason. It has a good outcome in mind, which is that people will continue to be paid during this pandemic. But from the perspective of restaurateurs trying to run restaurants, labor is not the only cost.
CORNISH: Remember; restaurants have stumbled through nearly 10 months of public health closures, partial closures, partial reopenings. They pivoted to outdoor dining and delivery and takeout - all stuff that made it more expensive to run a restaurant, not less.
GENUNG: You become sort of a pass-through unemployment agency. But you're a pass-through unemployment agency that, at the same time, is slowly going out of business yourself.
CORNISH: Some Paycheck Protection Program funding the first time around was snapped up by franchises - Ruby Tuesday, TGI Fridays, P.F. Chang's. Black and brown restaurant owners, independent operators who didn't have the sway with the banks doing the lending, were at the back of the line. Nya Marshall owns Ivy Kitchen and Cocktails, a little place she opened late last year on the east side of Detroit. She lost 75% of her pre-pandemic revenue. Back in March, she was hoping the first coronavirus relief package would help her out.
NYA MARSHALL: You're hearing all this information about resources, capital resources that are available to you. And I literally did not hear from my bank until probably the end of April, when the second round came.
CORNISH: She was denied, and she heard a bunch of reasons why - that her business was too new, that the program was overwhelmed with requests. She ended up getting some money from a city grant program, but that only lasted so long before a recent state mandate shut down dining. For Nya Marshall, she couldn't afford to keep those employees and operate during a global pandemic. She still had to pay for insurance, utilities. And then there was the cost of doing everything she could to hold onto the customers she had.
MARSHALL: It's cleaning supplies. It's decontamination because you want to make sure that your customers know that you do understand that COVID is real. You take it very seriously, and you want to provide them with the most sanitized place that you possibly can. And so these things cost money - having gloves, masks for the guests because many guests still come in - or try to come in, I should say - without masks even though we are on a mask mandate. So these things cost money.
CORNISH: How have you changed your business model?
MARSHALL: We had to literally change the menu to more of a carryout style even though that wasn't the intent when the concept began.
CORNISH: What kinds of foods did that end up looking like?
MARSHALL: So it ended up looking like burgers, sandwiches, salads. Even though we had limited options for those on the menu, that became primary components of the menu - chicken, things of that nature. We did a fresh-smoked hen before.
CORNISH: You sound a little disappointed.
CORNISH: You said burger with a (laughter) - with a tone in your voice that said, not the plan.
MARSHALL: No, it wasn't.
CORNISH: Nya Marshall can laugh about changes to her menu. Small challenges like that would be manageable if the bigger challenges weren't so relentless.
MARSHALL: We had our mandate come right down before the holiday of Thanksgiving, and I had to let my staff go a week and a half before Thanksgiving - a week and a half before Thanksgiving. And now we're forced to do it again, likely a week before Christmas. That's unfair. It's cruel. And it's a tough thing for someone in my position to deal with and live with every single day.
CORNISH: The new relief deal emerging from Congress would still require that restaurants spend 60% of their PPP loans on payroll if they want the loan to be forgiven. The remaining 40% of the loan can be spent on things like rent or now equipment for outdoor dining and COVID precautions. Still, given the hit that most restaurants are taking, food industry writer Andrew Genung says the only thing that will really bail out the restaurant industry at this point is the COVID vaccine.
GENUNG: Whatever the federal government puts out next will just be another Band-Aid. Even if they give restaurants everything they want, it's just going to tide people over until hopefully we can get back to normal.
CORNISH: That is, a new normal.
GENUNG: My initial impression was that it would be like the roaring '20s. Everyone gets a vaccine. Everyone goes out. It's this big party on the streets. But I think a lot of people are still going to be wary and also just have a changed relationship to dining.
CORNISH: Meaning that the future of restaurants will have to do with more than just getting through this winter with or without government support.
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