New normal brings new challenges
Businesses able to adapt during pandemic, but now struggle with inflation, staffing
In July 2020, the Bartolotta Restaurants group cautiously unlocked the doors of Ristorante Bartolotta in Wauwatosa. ● It was the first of the group’s properties to open after the coronavirus pandemic shut down dining rooms across Wisconsin four months earlier. ● Two years later, Bartolotta is still settling into what restaurant operators across Wisconsin are calling a new kind of normal. Bartolotta’s Rumpus Room in downtown Milwaukee and Pizzeria Piccola in Wauwatosa remain closed. And the group’s remaining 17 restaurants and catering sites haven’t reopened seven days a week.
When the pandemic hit, many feared small businesses would be wiped out by the shutdown. The hospitality industry — restaurants, bars, hotels — was considered particularly vulnerable.
A new report by the the Milwaukee Area Project at Marquette University Law School’s Lubar Center for Public Policy Research and Civic Education shows the number of businesses in the county actually grew from 2019 to 2021. But that growth, the report said, was only part of the story.
Across the economy, many businesses evolved and adapted to stay afloat, but now struggle with a combination of rising inflation and inadequate staffing. Others shed positions and have not restored them, for any number of reasons.
John Johnson, research fellow with the Lubar Center, found manufacturing and the professional and business service sectors had not recovered to pre-pandemic levels by the end of 2021. Indeed, overall, the U.S. Bureau of Labor Statistics estimates unemployment to be
“We simply do not have enough employees. We’re as full as we can be. And we’re going to fill to the capacity that we can to give our guests the journey they expect – great ambiance and great service.” Keith Trafton, CEO and managing partner of the Bartolotta Restaurants group
higher in Milwaukee now than in 2019.
The hospitality industry has been one of the most visible and talked-about sector because it affects virtually everyone and often involves emotional attachments. Restaurants carry with them family legacies and memories of special events; they can provide comfort food and shelter from the day’s storms.
There were 6% more restaurants in Milwaukee at the end of 2021 than in 2019, according to the Lubar Center report.
But much of the growth has been in new types of food-delivery venues. Further, inflation, supply chain disruptions and fewer workers are presenting new challenges, despite the tenacity and innovation of restaurateurs over the last two years.
Keith Trafton, Bartolotta’s CEO and managing partner, said limiting the hours of the restaurants was a reflection of those challenges.
“We simply do not have enough employees,” Trafton said. “We’re as full as we can be. And we’re going to fill to the capacity that we can to give our guests the journey they expect – great ambiance and great service.”
Research from the Lubar Center found full-service restaurants shed slightly less than one-third of their workforce in the first year of the pandemic, and hasn’t come close to adding back all those positions.
“Full-service restaurants got absolutely hammered in the initial shutdown,” Johnson said. “If the ‘help wanted’ signs in many restaurant windows are to be believed, demand for these employees may exceed supply.”
While full-service restaurants took the biggest hit, other hospitality-related fields — event promoters; bars, taverns and nightclubs; food service contractors that serve institutions — also shed significant percentages of employees.
The Lubar report shows a surge in federal stimulus payments appears to have saved many businesses. The Paycheck Protection Program (PPP) paid out $2.3 billion dollars to Milwaukee County businesses and non-profits.
Of that, $1.9 billion went to entities in the City of Milwaukee, including 2,595 loans made to leisure and hospitality businesses totaling $224 million, according to the report. Some businesses received multiple loans.
But a survey released in April by the Wisconsin Restaurant Association of 15,000 members at 7,000 locations found more money is needed to survive.
According to the restaurant association survey:
● 68% of Wisconsin restaurant operators said their sales volume in 2021 was lower than it was in 2019.
● 75% of Wisconsin operators said their customer traffic in 2021 was lower than it was in 2019. At the same time, 46% of restaurants reduced hours of operation on days that it is open.
● 59% of Wisconsin operators said their restaurant accumulated additional debt since the beginning of the COVID-19 outbreak in March 2020 and 49 percent said their restaurant fell behind on expenses.
● 72% of Wisconsin operators said their restaurant is less profitable now than it was before the beginning of the COVID-19 outbreak in March 2020.
Kristine Hillmer, president and CEO of the restaurant association, said many restaurant owners are conflicted about when to open. More people are working back in an office, for example, but is the lunch crowd large enough to justify calling in an already short staff?
“It’s a catch-22, especially since many offices aren’t at full capacity or are hybrid,” Hillmer said.
The Packing House was open 365 days a year since it opened in 1974 on Milwaukee’s south side. But since reopening after the pandemic shut it down in 2020, general manager Chris Wiken said hours are now limited to Wednesday through Sunday, with lunch hours during those weekdays, but not on weekends.
“We’re seeing a lot of people willing to come back out to eat — demand is definitely there — but most days, we’re understaffed,” Wiken said.
Wiken said he’s willing pay people much higher wages to remain competitive, but he still needs more servers, bartenders and staff in the kitchen.
“Other prices have gone up too,” Wilken said. “Anyone who goes grocery shopping can see that. Between staffing challenges, costs and supply chain, it’s tough. And it’s tough to keep pricing at a point where the dining public is willing to pay.”
Getting creative to stay in business
On March 16, 2020, when the City of Milwaukee ordered bars and restaurants to close except for carryout, delivery and curbside service, brothers Peter and Louis Liapis quickly shifted gears at Grassroots Salad Co.
With restaurants located in a downtown Milwaukee office tower and a suburban shopping mall, the brothers had to become more creative to stay afloat.
“We did everything from selling buns to vegetables to try to make up for the loss in revenue,” Louis Liapis said. “If you would have asked me a few months ago, I wasn’t sure we would make it.”
Over the last year, office employees have slowly trickled back to work, but not in a way that has been reliable for restaurant owners.
For example, Northwestern Mutual, one of downtown Milwaukee’s largest employers, has been phasing back employees. That was expected to completed by early June. Other businesses are allowing workers to stay home at least one or two days a week, especially if it improves their work-life balance. Some Fridays, in particular, have been noticeably quiet downtown.
With so much uncertainty and limited staff, many restaurant owners have chosen to stay closed for lunch. Others, like Grassroots, depend on lunch business to stay alive.
The Liapis brothers reopened Grassroots on the ground floor of the Chase Tower at E. Wisconsin Ave. and N. Water St., in June 2020. The location at Brookfield Square Mall stayed closed until fall 2021.
“Even today, I heard Chase Tower was at about 40 percent occupancy, so (revenue) has gone up, but it’s still not where it was,” Louis Liapis said.
When Grassroots did reopen it was very lean with a small staff working few shifts. But despite the struggle, Louis Liapis said he never thought of closing.
“It’s not in our blood, it’s not in our make-up,” Liapis said. “We knew it would be temporary and we could get through it, whatever it would take.”
Liapis added that he has been able to keep Grassroots open because of neighboring businesses.
“I felt like the surrounding stores wanted to make sure we didn’t go out of business,” Liapis said. “I think it’s easier in a place like Milwaukee than in Chicago or on the coasts, where people don’t know each other.”
Community support throughout the pandemic is what kept many restaurants alive.
Chef Caitlin Cullen, of the late north side restaurant The Tandem, organized a meal program and ultimately gave away 115,000 meals between March 2020 and December 2021.
Cullen created a system where chefs and caterers were given money and ingredients so wholesome dinners could be made for the community. She’s credited with keeping about 60 restaurants in business.
Cullen said she didn’t want her friends close down.
“The industry is really tough,” Cullen said. “We were always teetering on the edge of going out of business, the entire three-and-a-half years we were open. It was interesting to see the entire restaurant community feel that way. This money kept restaurants lights on and helped pay the electric bills.”
Taking a leap of faith
The pandemic forced change upon everyone — how they shopped, how they worshiped and where they worked.
Johnson, from Marquette’s Lubar Center, worked with the Milwaukee City Clerk’s office to match business license recipients for tavern, restaurant and grocery activities in the city.
He found the city’s growth in restaurants from 2019 to 2021 was fueled strongly by food trucks and catering businesses. These two categories grew 47% since the pandemic began. Bars and coffee shops struggled with closures in 2020 and no recovery in 2021.
Johnson said the most remarkable increase was in district 7, which includes the Sherman Park neighborhood. The 7th district added 31 new business.
Much of this activity can be attributed to Upstart Kitchen, a food business incubator at 4323 W. Fond du Lac Ave.
Upstart Kitchen launched in March 2020 with about 30 members who loved creating food, but were unfamiliar with the inner workings of business.
Member chefs, who each filed for a business license, have access to a shared commercial-grade kitchen 24hours a day. Upstart Kitchen, which was started by PRISM, Sherman Park’s economic development group, takes care of marketing and other business needs.
Early in the pandemic, the member chefs were making community meals. Now, they’re selling their food at farmers markets, grocery stores and elsewhere. The idea has caught on. There now are more than 400 people on Upstart Kitchen’s waiting list.
“A lot of people have been cooking for five to 10 years but they’ve never been in business,” said Ariam Kesete, a PRISM board member and local developer. “We have a lot of people who have a true passion, but there is a difference between a person who loves cooking and being a person who owns a business.”
Back in downtown Milwaukee, restaurateur Omar Shaikh, a primary owner of 3rd Street Market Hall in The Avenue MKE development, described the process of getting his project off the ground as “incredibly challenging.”
At one point, 3rd Street Market Hall had 18 vendors signed up. Then it was down to three. Now there are about 15, with the number growing, Shaikh said.
“I think pandemic-wise, we are out of the danger zone,” Shaikh said. “Our big issue is the labor shortage. We have a lot of great restaurants interested, but that’s the reason they can’t commit. They can’t find enough people to work.”
The first tenant that signed on was taking its own leap of faith. Three chefs with fine-dining backgrounds — Kurt and Katie Fogle and Joe McCormick — and Brent Fogle, who spent years working at restaurants, signed on with the idea of opening a smash-burger and custard stand called Dairyland and an offshoot, Mid-Way Bakery.
Dairyland, got its start selling burgers at the shared kitchen space Common Cookhouse in Oak Creek and out of a food truck at Zócalo Food Truck Park in Walker’s Point.
The group planned to open in time for the Democratic National Convention. But the pandemic pushed the opening back several months to January 2022, and the convention didn’t materialize as expected in Milwaukee.
McCormick said he and his partners were anxious to get the business up and running.
“I haven’t had a paycheck in almost two years,” McCormick said. “My wife stays at home full-time with the kids, pretty much all the savings are gone and there’s more debt on the credit cards than I’d like.”
The partnership knew opening a restaurant would be a gamble. But six months into 3rd Street Market Hall being open, Dairyland is busy during lunch and on the weekends. We Energies, Graef and other surrounding businesses have employees back at work. Downtown hotels are filling up.
“The light at the end of the tunnel is there, we can see what we were working for,” McCormick said.
This project is supported by a grant from Marquette University Law School’s Lubar Center for Public Policy Research and Civic Education to make possible journalism on issues of importance to the Milwaukee area. All the work was done under the guidance of Journal Sentinel editors.
“The industry is really tough. We were always teetering on the edge of going out of business, the entire three-and-a-half years we were open. It was interesting to see the entire restaurant community feel that way. This money kept restaurants lights on and helped pay the electric bills.”
Caitlin Cullen chef