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Can Restaurants Survive Shutting Down Again?

Closing dining rooms once cost a lot of money, but closing twice could be even worse

A closed sign on a storefront behind a metal gate
Restaurants may close again
Ben Gabbe/Getty Images

At Twisted Soul Cookhouse and Pours in Atlanta, masked servers whisk plates draped in plastic to socially distanced tables separated by plastic screens, all beneath the hum of a ventilation system upgraded with UV filtration. Excess tables and chairs, including all bar seating, have been removed. An employee at the door provides complimentary masks to customers who arrive without them.

Twisted Soul chef and owner Deborah VanTrece has gone above and beyond recommended safety measures, a stark contrast to leadership in Georgia. Gov. Brian Kemp allowed restaurants to return to full indoor capacity on June 16, and the state has since seen surges in COVID-19 cases. VanTrece has provided a safer space at Twisted Soul, but it’s come at a cost: $5,000 to sanitize the building and install filtration systems, over $3,000 on partitions, daily costs for masks and hand sanitizer, and the emotional burden of dealing with combative customers who refuse to wear masks.

Those costs have forced VanTrece to consider closing the dining room and returning entirely to carryout, but sacrificing dine-in business doesn’t seem financially feasible either. The longer she and the team can hold out, the better the restaurant’s chances of surviving in the coming months, no matter how the health crisis unfolds.

“We’re praying we can keep going with the dining room open, but we’re also trying to prepare ourselves for the possibility that that might not be the reality,” VanTrece says. While daily costs of operating a COVID-era restaurant are significant, she describes dining room service as a financial Band-Aid. “It doesn’t cover the whole wound, but we’re not bleeding as quickly.”

VanTrece is just one of many chefs and restaurant owners across the country facing a second closure, either by choice or government mandate, amid rebounding cases of COVID-19. Officials in some areas have rolled back reopening plans and closed dining rooms. Other cities and states could follow if the pandemic continues unchecked.

In New York, where Mayor Bill de Blasio nixed plans to allow indoor dining in June, Popina co-owner James O’Brien fears a second closure could be a death knell. After closing the restaurant’s dining room on March 25, he says the team tried focusing on takeout for about a week. But delivery didn’t provide enough business for the pasta-heavy outfit, especially since the restaurant operates delivery through its own website rather than a third-party platform. Like other restaurateurs turned grocers, the Popina team shifted toward offering pantry goods (including a cook-at-home pasta kit) and wine from their closed dining room.

Since the restaurant’s backyard reopened on June 24, 90 percent of business has come from outdoor dining, providing a glimmer of hope that the business can survive. If the restaurant can make enough money during the summer, before shutting down the patio sometime in the fall or winter, O’Brien says he might take a pay cut, reduce staff, and offer takeout through third parties to keep the restaurant going. But if an order to shut down comes sooner, he says Popina might close completely.

“The reality is, if we could bank enough money in the summer, when October and November come around, one of our options is close again until March of next year,” O’Brien says, though he admits that’s an emergency scenario since it would be incredibly difficult for staff laid off in the middle of winter. He considered asking his landlord to defer rent, but ultimately decided against it, since the deferred payments could land on the restaurant during an even worse period later in the year. For now, he’s maximizing profits while the sun is shining.

The situation is even bleaker for bars that drive business through drinks, like Cuban-inspired cocktail bar Palomar in Portland, Oregon. Owner Ricky Gomez began seating guests on the building’s rooftop on June 2, but for him, the economics don’t make sense for takeout. Unlike Oregon’s neighboring states, a state statute prohibits bars from selling to-go cocktails, and the Oregon Liquor Commission can’t override the law with a temporary measure. A solution would have to come from the state legislature in a special session, followed by Gov. Kate Brown’s signature.

“We do only 35 percent food revenue compared to alcohol revenue,” Gomez says. “With third-party vendors taking a large portion, we didn’t think it was financially viable for us to open up for to-go food solely.”

He’s currently relying on a PPP loan, which will see the business through until August. “If we’re shut down after that time, we would have to go back to our landlords to see about having them waive rent. If they did not, we would close for good,” he says. He points out that if he had spent his loan money immediately, the bar would already be closed. Like O’Brien, Gomez fears winter will be especially devastating without further assistance. “You’re going to see a second wave of closures in January and February. There’s a lot right now, but I think the second wave is actually going to be much worse because there isn’t the buffer of the PPP as well.”

Sunset over a rooftop deck with a single large table and distanced stools
Palomar rooftop seating
Courtesy of Palmoar

That fear is already guiding Gomez’s decisions, including about how many staff members to employ. With limited capacity on the rooftop, he could only bring back a fraction of his workers in order to remain profitable and build a financial buffer against closing outdoor seating in the future.

“I basically had to call staff members a second time and tell them we did not have a position for them. It felt like we had to lay them off twice,” he says. “Personally that’s the biggest gut-wrencher: laying people off twice that have done nothing wrong.” That experience could foreshadow what’s to come for many managers and owners if they have to shut dining rooms or outdoor dining.

Across town, the situation looks significantly different for Deepak Kaul, chef-owner at Bhuna. Pre-COVID, much of the Indian restaurant’s business came from downtown office workers during lunch. That business has dried up completely, Kaul says, and the restaurant hasn’t seen much interest since opening an outdoor dining area in late June.

“We’re not seeing any massive change here on our revenue. Maybe it’s too soon to tell, but there’s no ‘Holy smoke, we’re back in the game.’ We’re still down 50 percent if not more,” Kaul says. His customers remain wary about dining out, and he blames a few cavalier people who refuse to wear masks for scaring off would-be diners.

“I’m kind of hoping they do shut us down again, honestly. It’s a waste of my money and my time [to offer outdoor dining],” Kaul says. He would rather focus on delivery, where the restaurant has always had a strong presence.

Takeout is murkier for a restaurant like Riel in Houston, where Gov. Greg Abbott recently scaled back reopening following a virus surge. Following COVID-19 outbreaks at nearby restaurants, Riel recently closed temporarily to test the entire staff. (All the tests came back negative.) Yet even for a team willing to close to ensure customer and staff safety, shuttering the dining room for months isn’t an option as long as other businesses remain open to seat guests.

Ryan LaChaine, executive chef and partner, says Riel saw booming takeout business right after the state shut dining rooms in March. But as more restaurants pivoted to delivery, competition increased and sales dropped. When Gov. Abbott allowed restaurants to reopen at 25 percent indoor capacity, the Riel team held off, waiting until they could seat 50 percent inside. Others leapt to open as soon as they could.

“A lot of restaurants did open at 25 percent and then that hurt the to-go business even more because people could go out,” LaChaine says. “We don’t have the luxury of shutting down and waiting this out. We have rent. We have taxes. I have a staff that depends on a paycheck.”

The recent temporary closure at least proved the Riel team could shut down safely and quickly without too much waste, since the restaurant has operated with tighter inventory since reopening. Other owners also feel better positioned to close should they need to do so. O’Brien admits that when the team was cleaning out the Popina dining room during the first shutdown, he threw away a lot of inventory that could have been sanitized, a mistake he won’t make again.

A wooden table with cardboard boxes open to reveal packaged dry pasta alongside bottles of wine
Popina take-home pasta kits
Courtesy of Popina

Still, shutting down again could be just as frenetic as the first time if the order comes suddenly, as it did in California, or is complicated by conflicting statements, as happened in Miami-Dade County. Owners can monitor news to stay ready, but it’s ultimately impossible to fully prepare.

“We’re trying to be proactive, but it’s tough when there’s not a lot of leadership and a lot of guidance,” LaChaine says. “You want to know how to cook something? I can tell you that. You want to know what to do in a pandemic? I really have no idea.”

That unpredictability is causing a lot of anxiety for restaurant owners, even those like Mashelle Sykes, who foresaw the possibility of closing down again after reopening for indoor dining. Sykes runs Fusion Flare Kitchen and Cocktails in Detroit, where rising numbers of COVID-19 cases make it tough to plan for the future.

“People are a little afraid now because the numbers have gone back up,” she says. “They are confused. A lot of them are choosing not to eat in because of the risks.” Businesses may lose even more customers to confusion as cities and states rapidly announce new changes to public health policy.

That foreboding atmosphere only adds pressure to make the most of indoor and outdoor dining while they’re still available. As O’Brien puts it, “With all this uncertainty, how do we make the most money right now in the most responsible way?”

Rather than wait for the situation to change further, Kaul is considering getting ahead of the devastation. He doubts many downtown Portland offices will ever return, with employees working remotely for years to come, so he may drop lunch service altogether and stick to takeout in the evenings. “If you run lean, you survive. If you can’t run lean, you’re done,” he says. Gomez also foresees long-term problems for restaurant business. While the PPP program provides a short-term fix, he’s hoping government officials can get together on long-term tax breaks and other financial aid, as well as loosening regulations like those on to-go alcohol that prevent the industry from evolving.

As restaurants stare down a winter season that could foster another wave of COVID-19 cases, which may force even the most unwilling states to close dining rooms, most owners and chefs focus on the day-to-day. They need to squeeze the summer season for all the revenue they can.

“Right now, I can see the light at the end of the tunnel if I can keep the dining room open,” VanTrece says. “With each day, with each month we’re still here, we consider ourselves blessed we’ve done the right thing.”

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