On March 13, as New York City schools let out for what turned out to be their last official day and offices were telling their employees to work from home, I came down with an ominous fever and chills, and my business partner and I closed our two Brooklyn bar-restaurants. By the next week I would be diagnosed with Covid-19, and the week after that I would develop pneumonia. I spent four weeks bedridden, isolated from my family, at times immobilized with terror that I wouldn’t survive the night. When the virus released its grip and I could finally sit up in bed, my first impulse was to email my staff: We’re back in business!
We weren’t. Far from it.
I have worked in the restaurant industry for 41 years, as a server, a bartender and, for the past 22 years, an owner. We have weathered upheavals, 9/11, the downturn of 2008 and Hurricane Sandy. But the food and beverage service industry has been hit harder than almost any other in this pandemic, accounting for 60 percent of the jobs lost in March.
Those are unprecedented numbers, and none of us has ever seen anything like the troubles looming on the horizon for our industry, particularly for smaller, independent owners like me.
All of the many small bar and restaurant owners I know are desperately interrogating one another in daily calls and texts, trying to catch every seemingly germane webinar, to follow the dizzying array of acronyms of activist and support groups that have popped up, plaintively asking who’s doing what, who’s opening and who’s closing? Oh, so and so is doing takeout/delivery? And she’s selling a little curated selection of groceries and household goods out the side window? Is that working?
After closing, we committed to paying our staff for three weeks, which sapped our bank account. We went through a volley of calls and Zoom meetings with accountants, bankers and restaurant industry lawyers to try to determine what our liability would be if we took the Paycheck Protection Program loans and couldn’t then open and rehire our entire staff by our loan’s ending date of June 10. We took the loans despite the risk of being saddled with debilitating debt. Others on our staff came down with symptoms of Covid-19, while one of our former cooks died from the disease in mid-April, leaving behind a wife and two young daughters. It became a question of what we owed our employees, not just legally, but morally.
While pols from Chuck Schumer to Marco Rubio congratulate themselves for the bipartisan CARES Act, we in the trenches realize the P.P.P. loans and their kin are mere bandages on a gunshot wound, and for us the real struggle is going to begin when things open up. Those loans’ regulations as they’re currently written require them to be spent almost fully to reimburse employees for lost income and used entirely within eight weeks of their being granted. So that’s great for a short fix for our staff, but does pretty much nothing for the future viability of our business. In the two months in which we’ve been forced to be closed to the public by law, we’ve been paying full rent, utilities, whopping liability insurance and workers’ comp insurance, state and local sales taxes, payroll taxes and our share of the buildings’ real estate taxes, all while bringing in zero dollars. While most states have adjusted their liquor sales laws to allow for takeout or delivery of alcohol during this time, that’s merely planting an optimistic flag for most of us, a quivering promise, for those clearing $800 on nights they’re used to grossing $10,000, that they’ll be back, in some capacity … maybe?
In my home state of Wisconsin, following an ill-advised court-ordered opening on May 13, social media featured bars perilously packed with revelers. Here in New York, the epicenter of the country’s cases, every indication is that the scrutiny on bars and restaurants is going to be intense. Protocols already being readied in most states will limit indoor business to 50 percent of prior capacity — even down to 25 percent in some states — and restrict seating to safe distances of six feet. That would give me four lonely seats across the entire run of each of my bars, with guests dotted here and there slipping their masks down to sip at a drink, and perhaps three of our five booths permitted to be occupied. And all of this in a time of depressed economic activity, when most customers will already be leery of re-emerging and congregating, and have far less leisure income to spend. That is quite effectively a death sentence. It would result in revenues of 25 percent or less of our normal operation, which in this business, even given a popular spot doing quite well, yielded razor-thin margins to begin with. There is, quite simply, no possible way for anyone to make those numbers work.
Danny Meyer, the impresario whose Union Square Hospitality Group has shepherded many of New York’s most lauded dining spots into existence and whose empire once employed thousands here, has stated openly that with the limiting protocols the state is looking to put in place, he deems it pointless to open any of his fine dining restaurants until such time as there is a vaccine. I can’t fault him. Maybe we could in good faith struggle for the next couple of years in the red, my business partner and I chipping in out of pocket, slogging along in hopes of coming to the surface eventually. That is, if there’s not another order to shut down.
But what other industry is being handicapped with similar constraints? For all of its sanctimonious emails, United appears to have been packing flights to every last seat, with seemingly no oversight from anyone, and fielding $5 billion in federal aid while doing it. The grocery and liquor stores in Brooklyn where I’ve been shopping have customers milling their aisles cheek-by-jowl — six-foot measures be damned — with no one objecting. Offices and factories nationwide will open to suggestions and guidelines for safety galore, but nothing officially mandating that they must hobble their production. Why should we be singled out for delimiting?
To avoid an enormous die-off of our smaller independent restaurants and bars, and the subsequent financial crippling of the millions of workers they employ, four tectonic changes, in some combination, would have to be effectuated by federal and state governments.
Rent is obviously one of our biggest expenses, especially in larger cities. Rent easements are not voluntarily coming from landlords afraid that they will not be able to pay their taxes and other expenses. For commercial rent forgiveness to become a given, it would have to be mandated by state government, and for that to work the landlords would in turn have to be granted easements of property taxes. That might mean drawing a straight percentage line, cutting rents by law to 50 percent, say, or pegging easements to monthly gains against former revenue as shown by tax records.
The onerous payroll, sales and other taxes still being drawn out of our accounts, despite the bars being now over two months closed, would also have to be eased. When we pay out $16,000 of payroll to the staff, I’m adding another $8,500 in payroll taxes. Combined with state and local sales taxes among the highest in the country, and our typical share of building taxes, this surpasses the rent we pay.
As one might expect from the parasitic insurance industry, the business liability insurance we are obligated to carry, at a cost of hundreds of thousands over the course of the years we’ve been in operation, now denies us any remuneration for business interruption in this crisis — even as it issues us another $14,500 quarterly bill. The current federal administration seems unwilling to take any action to address insurance companies’ refusal to compensate their captive clients for business interruption, a position the insurance industry’s lobbyists are working frantically to cement in the wake of the havoc unleashed by the coronavirus.
Imagine if you found your car demolished in a parking lot, but your longstanding insurance company simply told you it’s not obligated to cover the damage. Now imagine that writ larger, as your entire living. This tells us what we already knew; this larcenous “cost of doing business” also needs to be at least temporarily abated by the government, to help owners free up money they need to pay their employees and struggle to their feet. And going forward, political pressure must be brought to bear on insurance companies that reap enormous profits while denying their obligations to contract holders.
What seems certain is that outdoor space on sidewalks and streets needs to be opened up by municipalities for bars and restaurants to expand their tables and seating, so that they are able to recoup some of their working footprint while keeping guests at safer distances from one another. Many cities globally are already testing out versions of this; Cleveland has delineated 25 blocks as emergency open zones to facilitate their restaurant industry. Is New York City likely to block off Atlantic Avenue, a major Brooklyn thoroughfare one of our bars happens to be situated on? Certainly not, but the sidewalks are wide there, and so to each business in need there could be concessions of space that wouldn’t hinder traffic, cyclists or pedestrians. If the city allowed us to place tables on the sidewalk, at least during the summer and autumn months, this one measure alone could prove a lifeline for us, as for so many smaller shops that will struggle to keep their doors open. Without it, we’re envisioning being forced to close both of our bars.
Contemplating what the landscape of my city could look like without help evokes a melancholic dread of what will be lost. What could replace my favorite reggae-themed Japanese izakaya, or the venerated Italian slice spot with the octogenarian pizzaiolo, the Malaysian cafe with superb French toast, or the lauded cocktail bar hidden behind the telephone booth door? These are not just whimsical indulgences for idle spending; independent restaurants and bars are a defining element of a city’s very identity. To envision New York as a moonscape of nothing but the few major franchises that can fund a long loss, a monotony of McDonald’s, Chipotles, Domino’s and Sweetgreens, is to shudder at an unrecognizably reduced city. Bereft of the smaller, idiosyncratic places that safeguard its lifesaving charm against the tussle and insult of big city life, would New York still be a place tourists would bother to flock to? Would it continue to be a city any of us would want to live in?
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By Toby Cecchini
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