By Leo Shack (Guest Contributor ‘21)
COVID-19 has decimated America’s economy. Millions of people face unemployment and many businesses are on the brink of closure. One industry has unequivocally been hit hardest: restaurants. Due to the government shutdown, restaurants haven’t been able to operate regularly, and, because of that, 67% of all recent unemployment claims have been made by restaurant workers. I interviewed the chef/owners of three restaurants in Philadelphia to gain insight into the true effects of this pandemic on the restaurant industry, the many problems they face, and ways they are helping the community.
Matt Cahn, a Penn Charter graduate and chef of Middle Child, a sandwich shop in Center City, expressed concern about the future of the restaurant industry. Many restaurant owners have had to lay off workers. Some, through takeout, have been fortunate to remain busy enough to keep a large part of their staff. At Middle Child, Cahn has been able to keep all of his employees. Others such as Chip Roman of Blackfish BYOB in Conshohocken haven’t been so lucky. Chip Roman said, “We’ve laid mostly everybody off.”
In addition to having to let go of employees, other restaurant owners, such as Nok Suntaranon, chef and owner of Kalaya, a James Beard Award nominated restaurant that serves authentic Thai food, have faced different issues. She has been fortunate enough to retain about 80% of her staff, and since business has been strong, she wants to rehire some of her workers. However, because her restaurant is small, she is challenged by the limited working space.She identified this problem, saying, “because of the social distancing rules that everybody has to work 6 feet apart and my place is very small, I cannot have more people than what I have now.” Also, she pointed out issues revolving around the supply chain and mentioned that she has seen an increase in her food costs, specifically protein, causing her to increase the price of many of her dishes.
Another problem that these restaurants face is the obvious financial crisis. The restaurant industry has always been known to run on tight profit margins: “usually 10-20% is how much they make at the end of the day,” noted Cahn. At Middle Child, they rely on volume due to low profit margins. “If we can’t pack the restaurant like sardines, we can’t make money,” said Cahn. This shutdown is only tightening these margins, and it is estimated that 20% of restaurants in America will permanently close as a result of the pandemic! “A lot of restaurants are going to close, that’s just how it's going to be,” he said. Cahn also mentioned that even temporary closures could lead to drastic consequences: “Being even closed two weeks, three weeks, could be an entire year's worth of a restaurant’s profits.” The only way these restaurants can continue their operations is through delivery or takeout. Yet, many restaurants run this through third party delivery services such as Grubhub or Caviar. These services charge the restaurants between 15% and 30% commision on the items, creating problems for an industry that operates on such tight margins. “If I was a restaurant that was making 20% profits, and can only do something through delivery. [...] I’m now making zero dollars,” remarked Cahn. Although this is not sustainable for the majority of the industry, it's the only option for many.
To help out the restaurants and other businesses, the government created the Payment Protection Program (PPP), a loan given to small businesses to support them financially. This loan was intended to keep workers on payroll even through the pandemic. Unfortunately, for the restaurant industry, an industry that contributes over a trillion dollars and 11 million jobs to the economy, other industries have gotten the most attention. “At the end of the day, the restaurants just don’t have a lot of pull in terms of the government. It's not like the airplane economy,” said Cahn. In addition to a lack of attention, there were many other flaws in the PPP loans for restaurants. Foremost, large companies such as Ruth’s Chris Steak House and Shake Shack received millions of dollars, as they were eligible for this small business loan due to their average number of employees per location. These companies have since given back their loans after tremendous outrage by the community. Although this loan hasn’t done enough for the industry, restaurants are trying to stay afloat without it. “I think a lot of people are kind of just sitting back and waiting for the government to fix it, and maybe I’m wrong, but that’s not been our approach,” said Roman. “We’re trying to survive without it.”
At Blackfish, they have switched to serving takeout meals without the use of a third party delivery service. They designed their operations to fit their own staff and capabilities. “We do a lot of corporate catering, so I think our menus are now more like what our corporate catering clients get,” stated Roman. “For me having that experience, and even my staff, it didn’t really take us too long to figure out what to do.” This part of their regular operations has made it easy for Blackfish to adjust to the shut down. In fact, Roman even enjoys some aspects of this switch to takeout because he feels as though there is a lot less stress. Additionally, he doesn’t have people canceling reservations last minute and doesn’t have to worry about associated costs such as linens.
At Kalaya, Suntaranon took many precautionary measures to ensure that the shutdown didn’t pause operations. “I asked myself, ‘How are we going to create a safe zone in our workspace?’” Three weeks before the shutdown, she took every conceivable precaution: she reduced the number of people in the dining area, set up a hand washing station outside the restaurant, sainitized the place, and even got a thermometer to check the body temperatures of her employees. Additionally, she instituted a protocol which mandated that any of her employees who got sick were sent home and were not allowed to come back until after seven weeks. When the shutdown finally came on March 16th, Kalaya was ready and opened for takeout the next day. “You have to prepare for the worst case and not the best case,” said Suntaranon. “We were planning for the worst-case scenario, and it became real.”
Even though restaurants have been a victim to this pandemic, they have also done incredible things for the community, especially for health care workers. Many restaurants across the country have donated food to their local hospital workers. “I saw that every restaurant was just starting GoFundMes for their employees – which I totally understand – but that’s just not my way. I wanted to do something that was helping my employees but also helping the cause,” said Cahn. At Middle Child, he set up a fund to help raise money to give lunch to healthcare workers. He decided to do this while the restaurant was initially closed in the beginning of the shutdown in order to give people a chance to feel safe and to sanitize the place. He didn’t want to immediately sell sandwiches at this time but he figured out that if he sold sandwiches he could pay his employees. He settled on making lunches for healthcare workers. “We were able to feed them and keep my employees paid,” he noted. “Not only was this effort giving my employees work when there wasn’t work in a safe way, but it was also making sure that they weren’t making less money than they were before.”
At Kalaya, Suntaranon and her employees have also been donating meals to hospital workers. “One week we fed 130 people with our own fund, from the restaurant money, no donations,” she remarked. Additionally, she offered 30% off Kalaya’s entire menu for hospital workers. Since then, she has gotten more support from other organizations, such as Fuel the Fight and Off the Plate. In addition to serving meals to healthcare workers, Kalaya has been offering a family meal for those who have been laid off as a result of the pandemic. “Family meal in a restaurant is the time that all of the staff will sit down and eat together before service starts,” said Suntaranon. It all started when she began to think about those affected: “We were thinking ‘what about our friends that got laid off, why don’t we feed them?’” The restaurant began to make these meals on its own but soon received help from many others in the industry. “We have people donating the ingredients, we have people donating food, and we have people who give us money,” she said. Kalaya is still offering these meals to those who need it.
Even though we are approaching a reopening of the country, restaurants will still face problems even if they can open for regular service. ”Even when we go back, if social distancing measures return, the number of seats in a restaurant are cut in half and so are their profits,” said Cahn. He noted that restaurants calculate profit by the table, so when they must keep at least 6 feet apart, a restaurant could lose half of the usual profit. At Kalaya, Suntaranon doesn’t think she will even switch to dine-in once the shutdown is over, due to the size of the restaurant. “For me, the dine-in option is almost impossible because my restaurant is so small,” said Suntaranon. “I will continue takeout because, for me personally, I think people will not want to go out just yet. I don't think people will feel safe unless we all have access to more testing kits.”
Until we reach the point when we don’t have to worry about social distancing and the virus, the restaurant industry needs our help. There are many ways that everyone can help support their local restaurants. Cahn believes that if we don’t support them, “Everyone should just expect some of their favorite restaurants to disappear.” For now, you can buy gift cards or apparel from your favorite restaurants, but Cahn mentioned, “There is no amount of 25$ gift cards that I can sell to keep my restaurant afloat, when I have to do a couple thousand dollars a day to keep the lights on.” Ultimately, the best way to support any restaurant you love is to get their food. “If you pick your favorite restaurant once a week and take out, that means a lot to us because it means you are keeping us alive; we can stay open, we can keep people employed, and we can be here to feed you longer,” said Suntaranon. If you don’t want to see a place close, then support them, because currently the restaurant industry is not getting enough support from the government, and, as the customer, they need our support now more than ever.