Forget the ripple effect. Tsunami effect is more like it. Almost every segment of the American economy has been hurt by the coronavirus pandemic, but few have been as devastated as the restaurant industry. In Texas, 1.3 million people had jobs in the industry as of 2019. Nationally it employs some 15 million people, making it the second-largest private employer in the country.
The damage has been not only widespread but also breathtakingly rapid. Just three weeks ago, we were speculating how restaurants would cope if events like South by Southwest were canceled. That almost seems quaint in retrospect.
Since last week’s state order by Governor Greg Abbott to close all bars and restaurant dining rooms, the industry has been in a state of controlled panic. Owners are revamping business plans in a matter of days, a process that normally takes weeks or months. Chefs and managers are throwing out long-established menus and redoing them for pickup. Hourly workers are taking the biggest hit. The so-called lucky ones are looking at pay cuts. The unlucky ones are out of a job altogether, with few prospects for finding similar work any time soon. Their survival will depend on government and private assistance and help from friends and family.
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Looming over the altered landscape is an existential question: Can the industry survive in any meaningful way, particularly independently owned local restaurants and bars? Those without a financial buffer have closed already. Even more will follow in the weeks to come. The ones that limp through will face a vastly different economic future, as collateral damage from the coronavirus alters the restaurant and bar industry for years to come.
Last week marked the beginning of that new reality. Here are the stories of three people in the industry and how the crisis is affecting their lives. (For how to help, we’ve compiled a list here.)
Dublin, 31, was a bartender and assistant manager at Small Victory, an intimate cocktail bar in downtown Austin, until March 14, when it closed indefinitely, putting all eight employees out of work:
I’ve been making myself shower and get dressed, because for me, it’s important to have a normal day. It’s better for my mental space not to stay in my pajamas all day. Today I woke up between 11 and noon. I’m still on bar time—I haven’t adjusted out of that yet. I love to cook, so I’ll usually start something simple. Then I’ll come in and check the news and social media.
My biggest concern is that rent is coming up April 1, no matter what. My partner—we’ve been together twelve years—has a job, but our income is still slashed.
I check the Instagram and Twitter accounts of major bartenders. They have been sharing so much about what can be done. For instance, the United States Bartenders’ Guild has a grant program. The Southern Smoke Foundation in Houston provides relief for people in the restaurant service industry. And there is another nonprofit called Another Round Another Rally that is offering $500 grants. I spend a good portion of my day researching and then sharing information with my former coworkers.
It’s frustrating: waiting, checking, waiting some more, seeing what I need to do. It’s so uncertain right now.
If there’s a good side, it’s that I’m catching up on reading, housework, personal projects, things like that. I’m reading The Grapes of Wrath [which is set during the Great Depression]. Somehow, I never read it in school. Also some incredible Shirley Jackson short stories—she wrote “The Lottery.” I’ve also been watching Werner Herzog movies. Nosferatu the Vampyre is a good one—more weird than scary. Oddly, it mentions the bubonic plague.
I loved working at Small Victory. I was there more than three years, and it had become part of my life. But we could see what was coming, watching other cities. The owners closed it before it was mandated, and honestly it felt like the socially responsible thing to do [because] the place was so small. And part of our clientele was older, conference attendees, people like that.
Still, everything got ripped out from under us.
I don’t begrudge them for not keeping us on the payroll. There is no way that they could have done that. The public might not realize how low the profit margins are for bars and restaurants. Plus, sales tax payments are looming at the end of the month. It’s horrendously bad timing. They did handle unemployment applications for us through the Texas Workforce Commission.
I’ve spent quite a bit of time the last four days cleaning my house. It’s amazing the things you notice when you’re home all day. I’ve been dusting the walls, the ceilings. To keep my spirits up I listen to music—New Order, while I was cleaning. Lots of Kate Bush. Classic country. Oh, and I’m actually organizing my record collection.
I’m also taking advantage of all the downtime to sign up for Massive Open Online Courses; there are a lot of free college courses for online, you can follow along.
It’s really hard not to think all about the what-ifs and the ripple effect of so many bars and restaurants closing. What about all the distributors and suppliers? The employees who work in the warehouse at Twin Liquors? What about the people who clean restaurants and bars—what happens to them? Some might not apply for relief because of their immigration status.
Who ever thought it could all evaporate overnight?
Dyer is the president and CEO of the Mesero Restaurant Group in Dallas and Fort Worth.
This is a bloodbath.
I’ve been sleeping like an hour a night trying to figure out the numbers and what to do and how to make this work while protecting my most important people, my family and my employees.
Things have moved so fast. In a week, it went from “We’re all cool, don’t worry” to “Batten down the hatches, this is going to be bad.” Nobody can prepare for that.
Just keeping up is overwhelming. A few minutes ago I was watching Governor Abbott on one TV screen at my office, and Trump and Pence on another screen, both on closed captioning, and when they got to something that was important to me I would turn up the volume.
Mesero pivoted to takeout two weeks ago. I wanted to keep our people at full pay as long as possible—from the dishwashers to the managers—but now that Abbott has extended the disaster declaration through April 29, I have no choice but to cut back on hours.
The larger reality is that this is going to change the restaurant industry as we know it. The only places that are going to come out of this thing are big operations and chains, those with large cash reserves or lines of credit. I know people will look at Mesero and say, you’re not a little guy, you’re a six-unit chain that does healthy numbers. But in the grand scheme of things, we’re as exposed as the place down the street where Mom works the kitchen, Dad does the front of the house, and their son is the bartender.
Here’s what the general public doesn’t know: local restaurant margins are dangerously small. I don’t care if you’re doing thousands or millions a month, you are barely breaking even after everything is said and done.
No matter how busy they are, most places only have a three-day supply of cash; the luckier ones have seven days. All of them are existing on their weekend business. Last weekend, before the governor’s disaster order came out, everyone I know was already off 50 to 60 percent for weekend business. Then it got worse. From Sunday, March 15, to Thursday, March 19, Mesero was down 80 to 90 percent.
If you do everything perfectly, and I mean perfectly—you schedule perfectly, you order perfectly, you waste nothing—most profit margins are under 10 percent. And you’re using that 10 percent to satisfy the bills coming due from 21 days ago. You’re kind of rolling, and the second you have a serious hiccup, there’s not a reserve for that.
For now, everyone is going to work with you, your landlord, vendors, they’re going to let you stretch out your terms. But once you’re ready to turn the pump back on, the first thing they’ll want is a good-faith payment. And you’ll have to have investors or some serious financial wherewithal to provide that.
Business interruption insurance won’t help—it has an exclusion for viruses and bacteria and things of that nature. I think that will be litigated for years [on the grounds that a pandemic does not apply], but by the time there is a settlement and all the attorneys are paid and all that fun stuff, I would be surprised if people even get a thousand bucks.
This is all unprecedented. Eating out is a national pastime, but weeks or months from now, there may not be restaurants left to bail out or enough money to bail them out with. Locally owned restaurants and chef-driven restaurants could be gone by the time the pandemic is under control. People who have fought so long to keep their dream going may just have to throw in the towel.
Edwards is the concept chef for Hai Hospitality, which includes the well-known Japanese restaurant Uchi. The Austin, Dallas, and Houston locations have transitioned to pickup. Denver remains closed at this time.
The whole experience has been beyond stressful. I mean, it’s an unknown, uncertain, high-anxiety, surreal situation like nothing that any of us have experienced in our lifetimes. It’s just crazy.
I come into work and have conversations with all these different people at all these different levels and in different cities, trying to organize it all, every day. We’re just getting beat up because things are changing all the time and we’re trying to roll with the punches. It makes it almost impossible to plan.
So you just do the best you can and push forward. I’m trying to take the stress in stride. As a leader, you need to stay positive for your staff. You want them to have a rock to lean on, to be there for them, but it’s not easy.
And then there’s a whole other, extremely stressful side to this, and that’s the employees. We’ve been trying to take care of the staff to the extent we can because they’re incredibly loyal. Some have been here as long as I have, and that’s sixteen years.
We have no idea how the pickup business will go. In the restaurants, we were doing 250- to 400-plus covers a night, depending on the city. But sales will undoubtedly be down, and the harsh reality is that servers will not be needed. We will keep as many salaried employees as we can. It’s the hourly employees who have taken the biggest hit.
Another unknown is whether customers will like the menu we’ve come up with. It’s shorter, just things that will hold. There are appetizers like grilled edamame, and brussels sprouts with lemon. Then five things from Cold Tastings, which are more like entrées, such as yellowtail with ponzu sauce, and five from Hot Tastings, like pork belly with kimchi broccolini and green apple. Finally, we will have sushi and sashimi and four or five rolls, like the spicy crunchy tuna with avocado. And we’ve lowered the price some. We don’t do cocktails, but there will be bottles of beer, wine, and sake at 25 percent off regular prices. If takeout doesn’t work, well, we’ll try something else.
Home life has been pretty nuts too. There’s no school for now, and our kids are driving my wife insane. I have been trying to help her with shopping, but by three o’clock, the grocery stores are bought out. The other day, I had this brilliant idea to get delivery from H-E-B, because it was only a $5 charge. But less than half of what I ordered arrived. So, then I had to go to all these different little markets, stores, and gas stations to fill in the gaps, from dog food to baby wipes.
But shopping at different stores sparked an idea about how to help our staff. Most of Uchi’s produce purveyors only sell to restaurants, so of course their business is way down too—stuff is sitting there, going bad. I’ve had several of them say to me, “Hey, we will do deliveries to homes, we will do FedEx, pickups at the store. Please tell people.” So we’re trying to set up a way to get some of that produce to the staff.
Going through this, I’ve learned that we have to figure out new ways to work together. We have to help each other. Whatever the government does or doesn’t do, if we don’t come together—not just a restaurant community but a community at large—we are facing losses of epic proportions. I know I’m repeating myself but working together is the only thing that is going to get us through this. We will do what we can to weather this storm and hopefully reopen somewhere down the line.
As we cover the novel coronavirus in Texas, we’d like to hear from you. Share with us your tips or stories about how the outbreak is affecting you. Email us at [email protected].