Restaurants say new restrictions create ‘catastrophic’ situation
Like many in the restaurant industry, it went into survival mode, first laying off its 50 employees, then re-hiring most of them, setting up take-out orders and investing $ 10,000 in seats at. outside.
Nine months later, things don’t get any easier, with the rise in Covid-19 infections and the state’s recent stay-at-home order and Los Angeles County’s much contested ban on eating in the open. stifling business in person for the rest of the year.
But Gough, who named his restaurant The 908 after the first three digits of the restaurant’s Long Beach zip code, is looking beyond 2020 and bracing for new battles.
“You’re going to do whatever you can to make sure you get through this storm and come out the other side, and then it’s just another phase to find out,” he said.
“What if we get back to being able to accommodate full restaurants, maybe in two, three, four, five, six months,” he said. “I don’t know how long it’s going to take, but at this point the restaurant industry is disposable income. … We saw it in 2008, when the economy turned around, people started to stop eating because it’s something you don’t absolutely need. It is a dig of two to three years before returning to any normality. “
The National Restaurant Association shares Gough’s gloomy outlook. The Washington, DC-based nonprofit, which advocates for some 1 million restaurants and food outlets, sent a letter to congressional leaders last week, urging lawmakers to adopt a back-up plan and provide changes to the second cycle of the CARES Act Paycheck Protection Program that reflect the restaurant industry’s unique business model.
The association’s survey of 6,000 restaurateurs and 250 companies in the supply chain, conducted from November 17 to 30, shows that 17% of restaurants – more than 110,000 – have closed. About 87% of full-service restaurants, like the 908, reported an average 36% drop in turnover, and 82% expect sales to be even worse in the next three months.
Jot Condie, president and CEO of the California Restaurant Association, defined the situation locally as “an unmitigated tragedy for our industry.”
“In San Francisco almost 50% of the restaurants won’t reopen, and I think in Los Angeles it’s definitely north of 30%, but it could be 30% to 45%,” Condie said. “It is so terrible.”
Closures to date include a number of popular restaurants – Yours Truly in Venice, Aburiya Raku in West Hollywood and Dialogue in Santa Monica, to name a few.
Condie, like many local restaurateurs, questioned the county’s recent decision to ban alfresco dining; this ban has since been suspended by the courts.
“Even with outdoor meals, they are not cost effective,” he said. “It’s just a matter of how much money can they bleed and go over to the other side. For every restaurant you see with 10 sidewalk tables, there are 20-30 tables inside that are unused and empty. … But when you take those 10 tables away, the health department tied an anchor around the ankles of every restaurant owner in LA County and said “good luck walking on the water.”
He also hopes lawmakers will allow restaurants to deduct expenses even if there is a “reasonable expectation” that the loans used to cover those expenses will be canceled.
In addition, the association is advocating for a one-page loan cancellation request for borrowers with loans of $ 150,000 or less, and for non-forgiven parties to the PPP to have a repayment plan on it. five years.
Other demands include the removal of a limit on the amount that companies majority owned by a common parent could obtain under the PPP and the granting of an allowance of $ 50,000 to cover expenses related to protection. of workers against Covid-19 infections.
Gough said he hoped Congress would pass the Real Economic Support measure that recognizes the unique restaurant aid needed to survive, or RESTAURANTS, Act. The measure would provide $ 120 billion in relief through a subsidy program administered by the Treasury Department to make up the difference in income between 2019 and 2020.
“It basically replaces the sales that we lost for (what we achieved in) 2019,” he said. “It would really put the industry back on a solid footing to be able to say, ‘Okay, we’ve been through this crappy year, but now we’re in a situation where we’re able to pay off a lot of our debt. ‘And with the uncertainty of the economy for years to come, at least you would be able to be on a level playing field.
He also hopes that the rent arrears will be resolved.
“I understand where the owners are. They also have bills; they can’t just give up their mortgages, ”Gough said. “We’ve been in negotiations with our landlord to try to find something that really helps us survive, because the reality is that if we have to pay all the rent we owe, it wouldn’t be worth staying in business. “
He added that deferring rent isn’t much of a solution, as patio and take-out sales only cover running expenses, and don’t pay off debt incurred by business owners during shutdowns.
“I think for a lot of restaurateurs it’s really a question of, ‘Am I throwing good money after bad, or am I just shutting it down because I’m never going to get out of this hole? ‘”said Gough.
“The one that’s located in Studio City is near Universal Studios and a lot of corporate offices (and has) been really hit hard, just because there isn’t that much traffic, not enough people passing by. “Sinaiko said.
“The one in Marina del Rey, which is much more residential, has a lot more foot traffic and people, a lot more deliveries – this one is doing well compared to last year. (The Inglewood Restaurant) is doing better than last year in terms of sales.
Andy Wiederhorn, Managing Director of FAT Brands Inc., provided the 20,000-foot perspective.
The Beverly Hills-based company, whose franchise list includes Johnny Rockets, Fatburger, Buffalo’s Cafe, Buffalo’s Express, Hurricane Grill & Wings, Ponderosa and Bonanza steakhouses, Elevation Burger and Yalla Mediterranean, has approximately 50 restaurants in LA County. and 650 others around the world. .
“As a company, our performance is probably 75% of normal, for all of our brands,” said Wiederhorn. “Our franchisees need help. The PPP loans of last April and May were very useful, but they were loans to get them until March, April and May, which is three months. Now we’re going over nine months, and it’s going to be 12 months. They don’t need a single extra PPP round, but probably two or three times the amount to be able to survive. … Honestly, Congress has no excuse for taking so long.
Cathy Riboli, general manager of San Antonio Winery’s Maddalena family restaurant at San Antonio Winery in Lincoln Heights, relied on her late father’s words to keep things in perspective during the closings.
“He always said: ‘Andiamo semper avanti’, and that means: ‘you go forward, you don’t stop,’ said Riboli.
The restaurant employed 55 workers who served some 1,000 meals on a fine weekend before the pandemic. When statewide closures were implemented in March, instead of layoffs, Riboli reassigned staff to other tasks in the 103-year-old winery.
Some have made the switch to e-commerce while others have started helping sales staff. When the restrictions were lifted, the winery expanded its take-out service and invested around $ 100,000 to expand the restaurant’s outdoor seating.
The latest shutdown, which took effect on November 24, prompted Riboli to develop special menus for families under $ 100 and including several types of pasta dishes and a bottle of wine. His team also sells wine and food gift baskets for Christmas.
“We are resilient,” said Riboli. “We are a very hard working family. And I know we’ll still be in business six months from now. “
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