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Can Restaurants Survive COVID-19?

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The bar and dining room are eerily empty at Katonah’s The Whitlock, which closed for seven weeks during the COVID-19 pandemic.
Photo by Ricky Restiano

The numbers are staggering. Since Governor Andrew Cuomo closed restaurants and bars statewide on March 16 to all but takeout and delivery, the industry has been in free fall.

In a survey of more than 6,500 restaurant operators nationwide in mid-April, the National Restaurant Association found that in New York State, more than 500,000 restaurant employees had been laid off or furloughed; sales were down 79% compared with the previous year; and the food-service industry would lose an estimated $3.6 billion in April sales alone.

And while many restaurants have remained open, offering takeout, delivery, family-style meal kits, grocery boxes, and more, the revenue stream is nowhere near enough to sustain the cost of doing business in Westchester.

“We never did a lot of takeout,” says Chris Vergara, chef-owner of Saint George in Hastings-on-Hudson and Harper’s in Dobbs Ferry, where sales are down more than 75%. “Between the two restaurants and the tortilleria [Yonkers’ La Milpa de Rosa], we had 35 or 40 employees. We’ve kept eight or nine, but we’ve been hustling. I’m working more now than I did when the restaurants were open.”

Part of that workload stems from On the Line, Vergara’s fundraising campaign, which, in April, provided roughly 7,000 meals to out-of-work food-industry employees and others in need. “Every new donation is that many meals that I can pay to Dave [DiBari] at The Cookery, Michael Cutney at The Twisted Oak, or Tommy [Calandrucci] at Sunset Cove, so these guys can turn their ovens on and get their staffs in,” says Vergara.

In Larchmont, La La Taqueria was better positioned to transition to a takeout-only model. “We were fortunate to already be doing about 30 percent takeout. We ramped up our systems [to make them] more efficient and contactless,” says owner Kyle Inserra. “For two weeks, we did as well or slightly better than before. But everyone started getting really tired, so we [decided to] cool off for two weeks, talk to our landlord, talk to our insurance company, and position ourselves to reopen. The cost to reopen was pretty astronomical. It cost our little 900-square-foot taqueria $10,000.”

Staff at Harper’s in Dobbs Ferry prepare meals to donate as part of chef-owner Chris Vergara’s GoFundMe campaign, On the Line. Photo courtesy of Chris Vergara

Other restaurants, like Katonah’s The Whitlock and Jay Street Café, chose to shutter entirely for the time being. “We decided not to do takeout because we have a few people on staff who have health issues,” explains Christina Drake  Safarowic, who co-operates the restaurants with her husband, Matt. “The biggest thing for us is that our landlords are compassionate, individual proprietors. They aren’t a management company. We’re not just a number on a spreadsheet of properties they own.”

Within a week, Safarowic made the difficult decision to lay off the entire staff at the restaurants. “Unemployment is sustaining most of our employees at this time,” she says, but not all employees are eligible. “We have somebody who has been in this country for years, working and paying taxes. He’s 100 percent legally here, but he doesn’t have a Social Security number” and thus doesn’t qualify for unemployment. A GoFundMe page organized by Safarowic helps provide some financial relief for employees. “We connect with them every couple days,” she says. “Are they fed? Are their lights on? Do they have basic needs?”

On April 29, The Whitlock reopened with a short takeout menu. “With more guidance from the CDC and county health department, we feel comfortable offering a limited menu with a small team,” says Safarowic, noting that Jay Street Café will remain closed for the time being.

Open or not, all restaurants are finding that money is tight. “There isn’t a single restaurant I know of that was sitting on a pile of cash for an event like this,” says Vergara. “We’re all on 30- to 45-day terms, and once the cash flow stops, everything stops. We’re not unique. Tom Colicchio and Danny Meyer couldn’t pay their bills after two weeks, and these are the top guys in the industry. It’s just the way it is.”

Federal stimulus packages are one ray of hope to help restaurateurs bridge the gap until the industry can reopen in a meaningful way, but the first round of the Paycheck Protection Program (PPP) found independently owned restaurants getting rejection letters, while big chains received assistance. And even as a second wave of PPP loans has since reached small restaurants, owners were left with troublesome concerns.

“I think it’s going to be a completely new way of dining out, whether it’s state-mandated or implemented by owners.”
— Kyle Inserra

“I got approved [for a PPP loan, but] the issue I’m having now is that I have an eight-week clock to pay my employees the average of our 2019 weekly payroll. If I’m mandated to operate at [reduced capacity], there’s no way I can expect to do the same amount of sales,” says Inserra. “It converts to a low-interest loan for two years [if I can’t make payroll], but God forbid things go south; the last thing I want is federal debt.”

At RiverMarket in Tarrytown, owner Glenn Vogt echoes that sentiment. “I think we are all looking to the government for some financial assistance that will be more specifically designed for restaurants,” he says. “The failure rate of restaurants [is high] when times are good. This is an unprecedented crisis, and many will not have the ability, financially or otherwise, to weather the storm.”

For those who do make it, what’s waiting on the other side is equally unclear. “The ideas about reopening are scarier than being closed,” says Vergara. “I think it’s likely there will be some attempt to open within the next three or four months, and then we can pretty much count on a spike of [coronavirus] cases in the fall. Nothing will happen in a meaningful way until there’s a vaccine.”

In addition to increased food safety and disinfecting measures, reopening guidance from the National Restaurant Association includes updated floor plans for social distancing, the use of staff PPE, disposable menus, and single-use utensils.

“I think it’s going to be a completely new way of dining out, whether it’s state-mandated or implemented by owners,” says Inserra. “The conversation pre-COVID was that dining habits were changing anyway. Sit-down restaurants were falling by the wayside. Maybe this is just a bump in that direction.”

Kyle Inserra of La La Taqueria in Larchmont advocates restaurant-focused aid. Photo courtesy of Kyle Inserra

With attention focused on the economics of the restaurant industry, Vergara also hopes policymakers will institute other overdue changes. “Now is the time to push for changes for when things get back to normal,” he says. “I would like to see progress made on capping credit card processing fees or the amount of insurance, workers’ comp, and payroll taxes. If we can get some relief when we open, we can get back to 10 or 15 percent profit margin, and we won’t need to be bailed out the next time the s–t hits the fan.”

Still, one question looms above all others: How many of our favorite Westchester restaurants won’t be able to reopen? “I recently read that the National Restaurant Association predicts 75 percent of all independent restaurants will not reopen,” says Vogt. “With all the wonderful restaurants that dot the Main Streets throughout Westchester, that is a very sad, very scary prediction.”

“I see a lot of people in Larchmont spreading the wealth — getting chips and guac from us, pizza from Villa Maria, and ice cream from Longford’s — and that’s exactly what you should do,” says Inserra. But restaurateurs also have to make savvy decisions. “Restaurant people who are good at what they do have internal fortitude. This is going to devastate the lives of a lot of people. Restaurants need to think outside the box, get creative, and figure out a way to sell food.”

Says Safarowic: “These are vital components to the communities. It’s bad enough that there are shuttered doors [right now], but what would communities look like without restaurants?”