Facing Coronavirus Crisis, Restaurants Shift from Shock to Survival Mode

With COVID-19 upending their business models, chefs and sommeliers look for assistance while helping those in need

Facing Coronavirus Crisis, Restaurants Shift from Shock to Survival Mode
Tom Colicchio opted to close down rather than offer takeout to shield his staff from the virus. He's also lobbying the government for relief. (Matt Furman)
Apr 2, 2020

"Takeout is never something that we're going to be able to pay our rent with," said chef Angie Mar, owner of the historic Beatrice Inn in New York, which pivoted to curbside pickup and delivery on March 20, as the rapid spread of COVID-19 led New York leaders to ban dine-in service. "This is purely to keep as many people employed as possible."

Like many restaurateurs, Mar had to dramatically reduce her staff—from 47 employees to six, including herself—and has been working to support laid-off individuals. She's donating 25 percent of net profits from her cookbook and the Beatrice Inn sweatshirts sold through her website to her team, in addition to a GoFundMe page. "I'm going to continue to do this until I run out of money or this is over," Mar said. "Because this is the right thing to do."

That's the outlook of countless restaurateurs across the country: To do what they can to support their teams and create revenue streams wherever possible, all while navigating the complex webs of grants, loans and unemployment.

It won't be easy. According to a National Restaurant Association survey released March 25, 3 percent of U.S. restaurants have already permanently closed, with another 11 percent expecting to permanently close in the next 30 days.

Though the figures are shocking, they shouldn't be surprising for a characteristically tight-margined industry confronted with sweeping orders to close dining rooms. From mom-and-pop diners in Massachusetts to all of the restaurants inside Las Vegas' resort casinos, the shutdowns have left chefs, waiters and restaurateurs facing the challenge of their lives.

Getting creative

As the crisis intensifies, so are restaurants' efforts to adapt business strategies. With the landscape changing so rapidly, industry leaders say it's crucial to try to stay ahead of the curve.

"If you're waiting for the headlines and have been adapting to the headlines, you're moving too late," Paul Coker of Wine Spectator Grand Award winner Canlis told fellow industry professionals during a virtual seminar hosted by SommCon on March 31. Coker's title recently changed from cellar master to general manager of special projects, reflecting his new focus on finding alternative revenue streams.

After transforming its fine-dining operation into a burger drive-through, pop-up bagel shop and delivery service two weeks ago, Canlis has already reinvented itself once again, closing the burger shop to protect staff from close contact with others and focusing solely on their to-go wine and food programs.

"Last week we had 1,800 plus people on a waitlist for enchiladas!" owner Mark Canlis told Wine Spectator via email. "Moving away from drive-thru offerings and to a delivery and pickup model is just a safer, smarter, more sustainable way for us to run our business at this time."

Caleb Ganzer, managing partner of La Compagnie des Vins Surnaturels, tried shifting the New York restaurant's focus to takeout, but is now reemphasizing delivery service because not enough customers lived close enough to come by. "Pickup [sales were] a lot less than deliveries," he said in a phone interview. "So I'm actually in a Zip car right now trying to get things back on track."

At Wine Spectator Best of Award of Excellence winner SingleThread Farms in Healdsburg, Calif., owners Kyle and Katina Connaughton have launched a rotating takeout menu. All tips from the orders are being distributed to SingleThread staffers who are not currently working. "It's been received very well," Katina told Wine Spectator. "Each night we have had a wait-list of 70 people."

The couple knew that they couldn't translate SingleThread's 11-course meal to a takeout format, so they are mixing up the menu, looking for inspiration from artisans they work with and from sources like Kyle's cookbook on Japanese clay pot cooking to create four-person meals. They are also offering their wine list at retail pricing "We are trying to have fun with it and give people something different," Kyle explained.

In several states, relaxed alcohol restrictions have presented new business opportunities for restaurants. Wine and to-go cocktails are now commonplace on pickup and delivery menus, often for discounted prices to compete with wine stores.

Mark Canlis estimates that nearly one-third of his customers are ordering wine from the restaurant's Grand Award–winning wine list, with many ordering from a short list curated by wine and spirits director Nelson Daquip. "Our full wine list is available for delivery and we have started to see an increase in demand for bottles outside of the dinner pairing options," Canlis said.

New York's Atrium DUMBO is auctioning off rare wines and spirits through its website. Marcello's La Sirena in West Palm Beach, Fla., has been selling out of its recently launched "Marcello-to-Go" dinner packages, which include two bottles of wine from their Grand Award–winning list. It's allowed them to keep some of their 15 employees onboard. The owners, chef Marcello Fiorentino and general manager Diane Fiorentino, are splitting some of the profits with the entire staff, even those who have been furloughed for now.

For Tim Moore, owner of Terra Terroir in Atlanta, being able to deliver wine has been "a godsend," with 35 to 40 percent of orders now including wine. Off-premise alcohol sales have been crucial in keeping the business afloat, combined with some creativity. Terra Terroir's team built a "Hollywood-style storefront" on the curb, 6 feet away from their actual storefront, where customers can pick up wine and food orders without leaving their cars.

Some states that still prohibit restaurants from selling wine to-go, such as Massachusetts, have legislation in the works to change that.

Wine can also provide fresh ways to reach customers. Alexis Fiorentino, owner and GM of Meritage Wine Bar on Long Island, just launched a new web video series. "We're doing a web series with myself and the chef where we're selling the bottle of wine for people to take home. And then we're going live on Instagram Live and Facebook Live, and basically reviewing it in front of the people, and then they're coming back with questions."

But hanging over all these innovative ideas is the reality that they're simply not sustainable, especially for those relying on third-party delivery platforms like UberEats and Postmates, which take about 20 to 30 percent of every sale.

Staff and suppliers

Numerous chefs said they were doing to-go food primarily to keep some staff employed. "We just started doing some deliveries and pickup," said Nick Vucetaj, general manager of Alba's Ristorante in Port Chester, N.Y. "I feel bad for all my guys that have been working here for the past 20 something years. I'm trying to help everybody, bring them in a couple days a week, just help them out. But the business, no. Terrible. No good."

Several restaurants that tried delivery, such as New Orleans stalwarts Commander's Palace and Herbsaint, stopped in less than two weeks. Others, such as Toups Meatery, also in New Orleans, are focusing on food for people in need, such as first responders and laid-off restaurant workers.

Others opted to cease operations immediately, often also with staff in mind. "I thought, well, if I'm not going to go to work because I'm afraid of bringing COVID home to my family, I can't ask my workers to do this," said chef Tom Colicchio, founder of Crafted Hospitality, which owns multiple restaurants in New York and Las Vegas. "I'm not going to ask my workers to do something that I'm not comfortable doing."

Both those doing to-go and those who shut down are facing tough choices on how many staffers to keep paying. "Right now, all my staff are at home," said Claudio Coronas, owner of D.O.C. Wine Bar in Brooklyn. "Just two people in the kitchen, my chef and my sous chef, they are working. And I'm working too. So we are really the minimum to operate the restaurant. Everybody's home."

Michael Dorf of City Winery says it's impossible to avoid layoffs. "When you're shut and you have zero income coming in, you struggle with paying any kind of bill. The margins of the restaurant industry, even the greatest … everyone's had to do the same thing, which is immediately and effectively lay off, suspend and stop paying your staff, hopefully temporarily. Certainly the hourly, so at the front of the house, kitchen. A huge number of people. In our case it was 1,400 humans who probably live paycheck to paycheck, that we had to suspend."

Like many chefs in the San Francisco Bay Area, chef-owner Chris Cosentino of Cockscomb in San Francisco decided to close Cockscomb indefinitely to protect the health and safety of the community and his staff. "It's impossible to keep staff 6 feet apart in a kitchen environment," said Cosentino, noting that many of his employees rely on public transportation. Cosentino has also closed Acacia House, in the Las Alcobas hotel in St. Helena, as well as Rosalie in Houston.

It was an extremely difficult decision for Cosentino to furlough his employees. "I don't have any means to support them," he said. Cosentino says chefs are problem-solvers who are supposed to adapt to different situations. But COVID-19 has left him and others uncertain of how to proceed. "There is no solid answer here."

The Ralph Brennan Restaurant Group, which owns Best of Award of Excellence winner Brennan's and several other New Orleans restaurants, is working to feed furloughed staff. Last week it launched curbside pickup of free family meals for four twice a week from its Red Fish Grill restaurant for all of the company's employees.

Restaurants are also looking for ways to help their suppliers and local farms that have also been impacted by the shelter in place order. Many are considered essential business and are still allowed to deliver goods. But their business has dried up.

Terra Terroir's new drive-thru
Atlanta's Terra Terroir built a new facade that reaches the curb so customers could pull right up and grab their order. (Photo courtesy of Terra Terroir)

"These guys will not deliver anywhere, if you don't pay cash on delivery," said Giuseppe Bruno of Caravaggio Ristorante in New York. "Maybe 40 or 50 percent of these people will never reopen, because a lot of them are already suffering."

Jim Rowe, president and CEO of E3 Restaurant Group, which includes the Grand Award–winning Metropolitan Grill in Seattle, considers his suppliers to be business partners. "We are working closely with them to ensure both our financial needs are being met as best as possible by ordering their products, paying our invoices as quickly as is possible given the circumstances and communicating regularly to be sure we're aligned in our wants and needs," Rowe said.

Best of Award of Excellence winner Selanne Steak Tavern in Laguna Beach, Calif., has launched several to-go options including curbside pickup as well as a pop-up mini market and butcher "shoppe." "We saw the grocery store shelves empty on the news and in real life, and we wanted to help," said general manager Chad Sisco. "Our supply vendors were ready to assist when we called them, so we quickly put together a basic grocery menu and a butcher menu for meats, poultry and seafood—and implemented safe ways to package everything to go."

Is help on the way?

As restaurants attempt to navigate the unprecedented path forward, they're hoping federal, state and local government agencies will recognize their contribution the economy and help. New York Gov. Andrew Cuomo suspended sales tax for restaurants, without penalty, for three months. Most notably, the $2 trillion stimulus package, the CARES Act, that Congress passed and President Donald Trump signed into law on March 27 offers aid to a broad range of American businesses, including restaurants.

In part, the package offers various stimulus checks to workers based on salary, and small-business loans for businesses with fewer than 500 employees. Those loans don't need to be paid back if they're used for expenses such as payroll, rent and utilities. But it significantly favors businesses that haven't laid off workers, an unavoidable move for many following mandatory shutdowns.

But with April's rent and utility bills looming, restaurateurs worry they won't receive money in time and it will prove insufficient.

"I think the CARES Act was a first good step, but a lot more needs to be done," said Colicchio. "It gives us two months of payroll, paying our rent. But it's not enough. I think more needs to be done in terms of paying our suppliers.

"It's certainly going to take more than two months to get through this, where our restaurants are seeing even 75 percent capacity, where we need to be or we can't make money. We need additional help with payroll, and we're going to need additional help with capitalization to reopen and stay open on an ongoing basis. Without that I'm afraid that 75 to 80 percent of the small businesses in this country could fail. And if they fail, soon after reopening we're going to be right back in the same unemployment mess that we're in now."

Jeremy Noye of Morrell Wine Bar & Cafe thinks the next four months will be crucial. "The restaurant world is gutted right now, and I think the numbers that we see floating around of only 25 percent of small and independent restaurants are going to reopen," he said. "That could be a reality, if we can't get the places open before July 1. We could see a lot of places close."

Many members of the industry shuddered when the president was asked about the restaurant industry at a press conference last week. "I've heard 3 percent could be lost, and you could go as high as 10 or 11 percent, but they'll all come back in one form of another," Trump said. "It may not be the same restaurant, it may not be the same ownership, but they'll all be back."

Yesterday the president said that Congress should restore a tax measure that gave corporations a tax break for the cost of food and entertainment for clients and potential customers to encourage business when they reopen. Experts argue it would only help some restaurants.

Meanwhile, the industry is clashing with insurance companies, and it's escalated to the courts. Restaurant owners trying to recover business losses resulting from the outbreak are being told a pandemic isn't covered as a "business interruption."

Some are taking an official stand against the policy, like culinary legend Thomas Keller. He's filed a lawsuit against his insurer. And he joined fellow chefs Wolfgang Puck, Daniel Boulud, Jean-Georges Vongerichten and Dominique Crenn in a plea to Trump to support Business Interruption Group (BIG), a lobbying group calling for the government to make insurers cover the pandemic.

Still, any resolution that may come from the lawsuit will happen much too late to help all the restaurants that are in immediate danger of closing for good. "We don't have the ability to wait," said Alex LaPratt, owner and wine director of New York's Beasts & Bottles and Atrium DUMBO, in the SommCon seminar.

Banding together

The restaurant industry has quickly flipped from a community dedicated to taking care of others to a community in desperate need of care. But owners and employees around the country report tremendous support, from both peers and customers.

On March 17, Cosentino and his staff worked with an organization called Frontline Foods to serve 125 meals to three emergency rooms in San Francisco.

"I basically emptied out everything I had," said Cosentino, who prepared the meals using the produce he had at the restaurant. He says one group received duck confit while another got grilled pork loin. Frontline is now teaming up with a rotating group of restaurants in San Francisco, and across the nation, including Lord Stanley, SPQR, and the Mina Group, with funding from private donors going directly to restaurants to cover the cost of the meals.

The Connaughtons have also launched an initiative with nonprofit Sonoma Family Meal with the goal of cooking 200 meals a day for the elderly and members of the agriculture and hospitality industries that are out of work. The couple is working with local wineries such as Kistler, Three Sticks and Colgin. Both projects will allow the Connaughtons to keep a large group of their staff working by cooking meals for the initiative during the day and takeout meals at night. "It will allow us to pay the staff and keep the lights on," said Kyle.

Yesterday, chef Daniel Humm announced that he'll be turning Grand Award-winner Eleven Madison Park into a kitchen for Rethink Food, a New York nonprofit. The restaurant's staff will produce meals for New Yorkers in need, thanks to funding from American Express.

And customers are reaching out to help their favorite restaurants. In addition to ordering takeout, they're buying gift certificates and donating to employee-relief funds.

"My customers, they don't forget about me," said Vucetaj of Alba Ristorante. "They call on the phone a lot of the time. I have a customer who's been loyal to us for the past 10 to 15 years, who's taking food home every night."

—With reporting by Mitch Frank.

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