Consider This from NPR - With 100,000 Restaurants Already Closed, Owners Left Wondering If Help Is Coming

Episode Date: December 17, 2020

An emerging coronavirus relief package may not do enough to help restaurants hobbled by the pandemic, many of which have struggled to make ends meet all year — with 100,000 restaurants closed on a permanent or long-term basis, according to a survey from the National Restaurant Association.Andrew Genung, the writer behind the restaurant industry newsletter Family Meal, explains why so many restaurants did not get enough help in the first round of relief passed by Congress early in the pandemic. Nya Marshall, owner of Ivy Kitchen and Cocktails in Detroit, describes the adjustments necessary to run her restaurant this year. And at least one restaurant-adjacent business is doing well: Auction Factory, which repairs and sells liquidated restaurant equipment. Cleveland-based owner Russell Cross tells NPR his warehouse is full of equipment from shuttered restaurants.In participating regions, you'll also hear a local news segment that will help you make sense of what's going on in your community.Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

A typical day for Russell Cross goes something like this. He's sitting in his warehouse office in Cleveland, and the phone rings. And it'll be, you know, Mr. Jones, and he's had a pizza shop, we'll say, and COVID pretty much put him out of business. A restaurant out of business is Cross's business. He runs an online auction company called Auction Factory that will work with a diner owner or pizza shop guy to basically sell off what's left of their business. 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 he can hand over the keys to the landlord and get out from paying that rent any further because 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. If a pizza shop can't afford cheese, they can't afford rent. That is a situation so many restaurants are in right now. According to a September survey from the National Restaurant Association, 100,000 restaurants, nearly one in six, have closed their doors this year, either permanently or on a long-term basis,

which is why Russell Cross's Cleveland warehouse is packed full. Cross collects equipment from a dozen states where his business operates. He repairs it. And will eventually help the original He repairs it. Tables, chairs, booths, plates, dinnerware, stemware, plateware. And will eventually help the original owners sell it. Silverware, salt and pepper shake. I mean, we sell everything because every dollar counts. 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. I've had a lady that was literally sitting there just bawling her eyes out. And I've had other couples that said, thank God you're here, because what little money we can pull out of this equipment is all we have. 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 early in the pandemic, the rent is coming due. If you're paying $6,000 a month and you're seven months behind,

you're 42 cheese 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. Consider this. There's finally traction for the bipartisan compromise relief bill in Congress with provisions for small businesses. But for thousands of smaller restaurants, it could be too little, too late. From NPR, I'm Adi Cornish. It's Thursday, December 17th. Hey, it's Guy Raz here with Mindy Thomas from NPR's Wow in the World podcast for kids.

And when it comes to making sense of life in the COVID era, we're here to help. This week's all-new episode, Masking for a Friend, takes families on a scientific adventure into how masks work. And not just for humans, but for hamsters, too. Huh? Listen to Wow in the World from Tinkercast and NPR. It's Consider This from NPR. I'm Adi Cornish. One person who is watching the restaurant business struggle is Andrew Janung. He's an American based in Hong Kong and writes a food industry newsletter. It's called Family Meal. His readers are chefs, investors, waitstaff, real estate people. A lot of them sent him tips, gossip about hires and

industry squabbles, new openings, and these days, closings. He says it was getting depressing. I've stopped. I've stopped writing about closures altogether because they're coming at such an intense speed. There's no point. I mean, my newsletter could be just a list of all the closings. And now a lot of his American readers are focused on the bipartisan coronavirus relief package in Congress. In fact, there may even be a deal announced by the time you hear this. And while it's likely to extend unemployment benefits that will help people who've been laid off by restaurants, there are still questions about how much it will help restaurant owners themselves. Yeah, I mean, people are pretty angry. I can try to open up my emails, but I got some pretty choice words about Mitch McConnell earlier today.

Andrew did open up his emails. Let's see, this guy is the line cook in Columbus, Ohio. I won't give away his restaurant, but it comes from a famous chef. And he says, one thing I keep coming back to is that Mitch McConnell

is a truly garbage human being and it drives me crazy that people actually trust him. That's what he, that's what, that's just like one side note today. The context here is that Republicans in the Senate, led by Mitch McConnell, have refused to take up a restaurant industry-backed bill

passed by the House, one they say would help restaurant owners by providing more grants and loans with fewer strings attached and directing that help to mostly smaller, non-corporate restaurants. Fewer strings is what a lot of restaurant owners want. After the first round of support they got from Congress earlier this year, which included the Paycheck Protection

Program, or PPP. You know, 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, while it's a noble cause and a very important thing to pay, is not the only cost. The Paycheck Protection Program loaned money to businesses, including restaurants, to help them continue to pay their employees. But for many restaurants, paying their employees wasn't the only problem. Remember, restaurants have stumbled through nearly 10 months of public health-mandated closures, partial closures, partial reopenings, and all along had to rethink the way they operate to

comply with new rules and regulations. All stuff that made it more expensive to run a restaurant, not less. So every time the government says, okay, you're not allowed to serve anymore, you have to shut everything down. You have all this produce and stuff that you can't use anymore, you have to get rid of. And the next time they say, all right, start up, you have to buy that stuff all over again. So there are just tons of costs to keeping a business running. Here's the other thing. The situation Andrew is describing, where restaurants got money from the government that didn't fully cover their costs, well, some restaurants didn't get any money from the government at all.

A lot of Paycheck Protection Program funding the first time around was snapped up by big franchises. Ruby Tuesdays, TGI Fridays, P.F. Chang's, and Ted's Montana Grill, founded by media mogul Ted Turner. Black and brown restaurant owners, smaller operators, and metro neighborhoods who don't have the sway with the banks doing the lending were at the back of the line. And many missed out on that funding. I literally did not hear from my banks until probably the end of April. Naya Marshall owns Ivy Kitchen and Cocktails, a little place she started earlier this year on the east side of Detroit. She lost 75 percent of her revenue. Back in March, she was hoping the first coronavirus relief package would help her

out. You're hearing all this information about resources, capital resources that are available to you. However, you're not able to ascertain any information directly or indirectly about them other than what you're reading in, you know, the Times or the Journal. More than a month after that bill was passed, Naya finally got some help from her bank applying for a Paycheck Protection Program loan, and she was denied. She heard a bunch of reasons, 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 it only lasted so long before a recent state mandate shut down dining. I ended up letting go 24 people. That must have been so hard. I mean, your first year in business. It's devastating. It's devastating because, you know,

I make a point of hiring local people, people who look like me, people who come from the community that I come from. And I know how that is to lose a job. For Naya Marshall, she couldn't afford to keep those employees and operate during a global pandemic at the same time. She still had to pay for insurance, utilities, and then there was the cost of doing everything she could to keep customers coming. So it's masks, 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. So these things cost money. How have you changed your business model? I don't know if you've moved to delivery or the delivery apps or carry out kind of how did you move to it and how has that affected your finances? All of the above. So we did implement delivery, third-party delivery, which is something that I really wasn't for pre-COVID. Keep in mind, our food is, we are a fresh, healthy food option. And so it's really prepared, intended to be dined in. So we had to literally change the menu to more of a carryout style, even though that wasn't the intent when the concept began. What kinds of foods did that end up looking like?

So it ended up looking like burgers, to be honest. Sandwiches, salads, even though we had limited options for those on the menu, that became primary components of the menu, whereby, you know, we did a fresh smoked hen before brined it. You know, we had prep that was 24 to 48 hours, things of that nature. And now these things are just cooked within, you know, half hour to go primarily. You sound a little disappointed. You said burger with a tone in your voice that said not the plan. No, it wasn't. Naya Marshall can laugh through changes to her menu or rethinking what kind of food she can sell during a pandemic.

Small challenges like that would be manageable if she had help with the bigger challenge, making the math work. My outlook right now is a very bleak one, especially considering, you know, every single day there is a roller coaster ride where you're, you know, watching the news, you're reading the news, wondering if help is coming, not just from a federal perspective, but any help at all. Because I stress about my doors closing. 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.

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. There are some encouraging signs in the new relief deal emerging in Congress. That deal, still being negotiated, might prioritize loans for smaller businesses. It would allow a restaurant to spend up to 40 percent of its PPP loan on things like rent or pivoting to delivery or outdoor dining. But 60 percent would still need to be spent on payroll in order for the loan to be forgiven. Maine Senator Susan Collins helped shape this part of the relief bill. Her office wrote that if restaurants were to get grants without conditions,

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. But for restaurants like Naya Marshall's, who have had to close their in-person dining, they'd be hiring back their staff to do nothing. In the end, food industry writer Andrew Janung says he thinks the only thing that will really bail out the restaurant industry at this point is a vaccine.

Whatever the federal government puts out next will almost certainly 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. And my initial impression was that, you know, it'd be like the Roaring Twenties. 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. They're just not going to necessarily think about dining out in the same way and think about it as the thing that you do in the circumstances that they used to do it. Are your readers ready for that? Are they reconciling with that? Or are they reckoning with that now? I think it's hard for people still to get their mind

around what's already happened. And I think that at this point, everyone is holding on as best they can and are not really planning as much as maybe they used to in their business. I talked to a restaurateur here in Hong Kong a while ago and he said his financial planning system now is plan for one month of decent business,

maybe that means like 50% of what it used to be, and then a month of shutdown, and then a month of decent business, and then a month of shutdown. I don't think he plans to change that financial plan anytime soon. Even with vaccines coming out, you know, maybe everybody has sort of gotten used to chewing on their seed corn a little bit, and that's just what they're going to continue to do. Andrew Janung, writer of the newsletter Family Meal. It's Consider This from NPR.

I'm Audie Cornish.