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Updated: April 20, 2020

Restaurateurs worry about long-term impact of COVID-19 shutdown

Photo | Contributed Restaurateur Billy Grant said he worries about a slow recovery when restaurants do reopen, which won’t be solvable via a government-assistance program.
By Sean Teehan
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Steve Yung filed for unemployment three days after Restaurant Bricco in West Hartford closed its doors amid statewide bar and restaurant bans due to the coronavirus.

The 64-year-old longtime server who’s been working at Bricco for a decade isn’t too worried about his own finances — between his wife’s income, their savings and a combination of unemployment and stimulus funds available, he says he’ll be fine.

But he worries about some of his co-workers.

Photo | Contributed
Bricco has been offering free food to laid-off workers.

“They’re living paycheck to paycheck, week to week. I am older so I have a little financial security. It’s devastating,” Yung said.

It’s not just the effect the shutdown is having on the more than 154,000 people like Yung who work in Connecticut restaurants that have restaurateurs nervous. The way eateries pay employees and their business model in general is almost incomparable to most other sectors, and they operate on razor-thin margins.

Gov. Ned Lamont’s COVID-19 shut down order, which has been in place since March 16 and will last until at least May 20, disrupted the restaurant sector more than any event in living memory, and industry leaders in Connecticut collectively wonder how they will bounce back, and whether some legislative remedies even apply to them.

Scott Dolch, Executive Director, Connecticut Restaurant Association

While Lamont’s order allows restaurants to operate takeout only, that service usually only accounts for about 15% of an eatery’s revenue, said Scott Dolch, executive director of the Connecticut Restaurant Association (CRA).

“Unfortunately, what we’ve seen recently is the full-service restaurants have tried to make it work for a couple weeks, and now they’ve shuttered,” Dolch said. “The sales decrease is 80% or worse.”

So far, four restaurant owners who responded to a CRA survey said the shutdown closed their doors permanently. Dolch has been in constant contact with state officials throughout the crisis, and believes everyone wants to see restaurants succeed. But he’s not sure the state and federal stimulus measures being taken will help the industry much.

For example, the $350-billion Paycheck Protection Program, which is part of the larger federal $2-trillion stimulus package and provides potentially forgivable loans to small businesses, requires companies to keep employees on payroll, but restaurants have already laid off most of their workers, many of whom earn more from tips than a salary. As a result, many restaurants have been unclear whether they are eligible for funding, Dolch said.

(Restaurants that have laid off workers can still apply for PPP funds, but they would need to rehire employees after their application is approved and the federal money is in-hand. Nationally, restaurants have complained that the loan amount — 2.5 times a company’s average 2019 monthly payroll — and eight-week window to spend the funds won’t be enough to help the industry deal with a longer-term downturn.)

The state launched a $50-million bridge loan program, but Dolch said many restaurants are worried about taking on debt because they may stay closed permanently, or may not recover sales quickly. The CRA has asked state lawmakers for other help, including to fund a state-backed business interruption insurance program and forgive sales tax payments for three months, Dolch said.

Meantime, when it’s time to reopen, restaurants can’t just flip on a lightswitch. They’ll need cash for a lot of upfront costs, like restocking kitchens with food and bars with alcohol and paying workers to prep for opening, among others, Dolch said. Added to that, nobody’s sure whether restaurants will have to operate under social-distancing guidelines that could require them to host fewer customers indoors than normal.

“These are bridge loans, … at some point they’re going to have to pay them off, and with what revenue?” Dolch asked. “It’s going to be a slow start, and it’s probably going to be a slow progression over the next six to eight months.”

Billy Grant, who owns Bricco in West Hartford and Bricco Trattoria in Glastonbury, said both restaurants are making less than half the revenue they were before switching to all takeout and laid off about 80% of employees.

Grant said he worries a potentially slow recovery that leads to sluggish sales when restaurants do re-open will be a problem likely not solvable via government fiat.

“I think customers are still going to be scared,” Grant said. “And if there’s heavy social distancing — which there should be — I don’t know how many people I’ll be able to have in the building.”

Grant said his brother, a partner in the business, is applying for federal stimulus money, but they’re not sure they will qualify.

HBJ Photo | Bill Morgan
Chef Tyler Anderson in the kitchen of Millwright's in Simsbury.

Industry support

Tyler Anderson has been serving takeout orders at his restaurants — Millwrights in Simsbury and Square Peg Pizzeria in Glastonbury — since the closures began. The two eateries he owns in hotels (Terreno in Hartford’s Goodwin Hotel and Hamilton Park at the Blake Hotel in New Haven) are temporarily closed.

Anderson, who is also seeking stimulus funds for his businesses, is a bit more optimistic about customers returning to restaurants when they reopen. But his concern for front-of-house workers currently laid off led him to organize with Grant weekly “family meals” for restaurant workers.

Restaurant workers currently out of work can get a free takeout meal at Millwrights, Tuesdays between 3 p.m. and 4:30 p.m., and at Bricco on Sundays starting at 2 p.m. Since they started, each restaurant has made up to 75 meals that serve two people each for family dinner, costing them about $300 for food (which is why Anderson started the Venmo account @familymealfund to receive donations).

“When you talk about the effect on tipped employees, this started weeks and weeks [before other industries], because volume at restaurants started going down” before they were ordered to close, Anderson said.

Yung, the currently out-of-work server at Bricco, has pitched in for the family meals by making cookies for dessert. He will always respect Anderson and Grant for doing everything they can to support restaurant workers in a difficult time, and knows people who need any help they can get.

“I miss work tremendously; I miss the noise, I miss my regular customers, I miss everyone I work with,” Yung said. “It’s just part of who I am.”

Help Wanted

The Connecticut Restaurant Association has urged state lawmakers and Gov. Ned Lamont to adopt the following measures/programs to help the industry survive the coronavirus shutdown:

• Immediate and significant capital injections: Grants, lines of credit, or zero-interest loans from the state “will determine whether most restaurants can survive this storm,” it said.

• Forgive sales tax payments for at least three months. “Connecticut restaurants are absorbing drastic cost increases for the good of the public health, and forgiving sales-tax payments is one way to recognize that sacrifice,” it said.

• Fund a state-backed business interruption insurance program.

• Address unemployment compensation issues. “As the number of filings increases daily, the state needs to be prepared now for insolvency and look for avenues to address the problem other than burdening employers down the line,” the association said.

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1 Comments

Anonymous
April 22, 2020

Restaurants should be allowed to reopen as long as "social distancing"can be observed,
Even 3 or 4 tables could keep the kitchen open and a server or 2 occupied.

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