The Atlanta Journal-Constitution
Closures produce glut of restaurant fixtures
As pandemic ravages industry, equipment piling up at suppliers.
SAN LEANDRO, CALIF. — The pandemic’s heavy toll on the restaurant industry can be seen in Jose Bonilla Jr.’s cavernous warehouse, which is packed with industrial ovens, grills, mixers, refrigerators, dining tables and chairs.
Bonilla’s family business, American Restaurant Supply in San Leandro, Calif., buys used appliances, furniture and other equipment when restaurants close in the San Francisco Bay Area.
“We have an overflow of equipment that’s been coming in,” said Bonilla, whose family started the company more than 40 years ago.
The COVID-19 pandemic has forced tens of thousands of restaurants to permanently shut their doors as dining restrictions keep
customers away. But it also has been a boon for com- mercial auctioneers that buy used equipment and sell it to restaurants that managed to stay afloat, particularly ones that have expanded their takeout business and are eager to snatch up supplies at bargain prices.
“As the pandemic has continued to impact busi- nesses, the auction industry has actually become busier and busier as the economy has weakened, especially in small businesses and in food service equipment,” said John Schultz, a board mem- ber of the National Associa- tion of Auctioneers.
Schultz is the chief marketing and technology officer at Grafe Auction, a company based in Rochester, Minnesota, that helps restaurants and other businesses nationwide sell their used assets when they shut down.
Auctions increase
The company conducted 289 auctions in 2020, a sharp increase over 2019, and had its most profitable month in August since the com- pany was founded in 1959, Schultz said.
“It’s a bittersweet thing for me as I see these busi- nesses closing,” Shultz said. “It’s sad for me, but for us it’s been actually a record year” in 2020.
A new re p ort by the National Restaurant Asso- ciation shows the pandemic’s devastating impact on the restaurant industry, which last year lost 110,000 busi- nesses — about 17% of the nation’s total.
“We’ve never seen that kind of loss,” said Sean Kennedy, executive vice president at the National Restau- rant Association. “This is as dire a situation for the restau- rant industry in this country as we’ve ever seen.”
The National Restaurant Association is calling on Congress to help the country’s beleaguered restaurants as they negotiate a COVID-19 relief package with President Joe Biden.
“We need specific funding targeted at restaurants or the nation’s second-largest private sector employer is not going to be around much longer,” Kennedy said.
Over the past year, Bonil- la’s been fielding a flurry of calls from restaurants that are shutting down and need to quickly sell their equip- ment before the next rent check is due.
Unfortunately, Bonilla said, he can’t help most of these restaurant owners because his warehouse is already stuffed with roughly 2,000 pieces of equipment. And he doesn’t have enough workers to pick up, inspect and fix the used appliances.
“It’s heartbreaking because people ... take their pride in the restaurants,” Bonilla said. “They’ve put every resource they could possibly put into their busi- ness to try to survive, and they just cannot survive.”
Restrictions hurt
Among the hardest hit are restaurants that relied on indoor dining, especially in states that have imposed the most severe restrictions, industry officials say.
Before the pandemic, Johnny Metheny ran four restaurants in San Francisco, which has had some of the nation’s strictest rules on dining. He temporarily closed two downtown restaurants and permanently shut down a third, Solstice, because it didn’t have a good setup for outdoor dining.
“Unfortunately, I had to give the keys back there because after 10 months of not being able to operate, you just can’t survive,” Metheny said. “We had 19 employees that unfortunately we had to lay off. And it’s devastating for them and it just crushes me.”
Metheny tried to sell the restaurant’s equipment, but his friend who runs a commercial auction business declined to buy it because he already has too much inventory he can’t sell.
“He told me, ‘I’ve taken in so much equipment and nobody wants it.’ So we just put it in storage,” said Metheny, who is considering opening a new restaurant when the pandemic ends.
A day after JPMorgan Chase & Co. announced it would freeze its political contributions in the wake of the Jan. 6 attack on the U.S. Capitol, the nation’s largest bank made a quiet move indicating it may not be eager to overhaul how it does business in Washington.
The company wrote the Securities and Exchange Commission asking the agency to block activist investors from forcing the bank to provide a fuller accounting of its political spending. Specifically, the shareholders, organized by social impact investment firm Rhia Ventures, want JPMorgan to report on how its campaign giving squares with its stated commitment to a lofty set of values.
The investors say the mob attack highlights the urgency of their cause. “This is the most extreme example of why companies need to dig deeper, articulate their values, then put their money where their mouths are,” said Shelley Alpern, director of shareholder advocacy for Rhia Ventures. “It’s not outrageous to ask companies to stay true to those values, so they not only do less collateral damage to society but suffer less blowback when contradictions are turned up and exposed.”
JPMorgan, in its letter to the SEC, argued the company already sufficiently explains its political advocacy, including through an annual report listing its contributions to state and federal candidates and its trade group memberships. And JPMorgan spokesman Michael Fusco, in a statement to The Washington Post, said the company discussed the shareholder proposal with Alpern at length “and explained it’s too early to commit to any type of proposal given we are only partially through a robust and thoughtful evaluation of our giving strategies.”
The squeeze facing JPMorgan is hardly unique. Last month’s deadly insurrection continues to reverberate for major corporations that pump hundreds of millions of dollars into the political system. Dozens of companies from Wall Street and beyond have frozen their giving — either across the board or limited to the 147 Republican lawmakers who opposed certifying President Joe Biden’s electoral victory — and pledged to rethink how they participate in the process.
But some left-leaning investors and clients aren’t satisfied. They are wary corporate interests are simply waiting for the dust to settle before resuming contributions to Republicans committed to deregulation and lower taxes despite those lawmakers also championing positions on environmental and social matters the companies say they oppose. So they are leveraging their commercial relationships with the companies to try to force them to act.
JPMorgan’s resistance to the activist push typifies the corporate response so far. The bank’s request to the SEC for help keeping shareholders at bay made no mention of the violent insurrection that had rocked the country five days earlier — or the company’s decision to halt all of its giving to politicians in both parties for six months as it took what CEO Jamie Dimon described as “a little bit of a deep breath, figuring out what we should change and how we should change it.”
The bank’s political action committee contributed $136,500 over the last election cycle to Republicans who opposed certifying Biden’s election, according to data from the Center for Responsive Politics.
The SEC will decide in the weeks ahead whether to allow the activist investors to put the matter to a vote at JPMorgan’s annual shareholder meeting later this year. This month, the agency approved a similar resolution targeting Pfizer.
“This is a moment of truth for companies,” says Bruce Freed, president of the nonprofit Center for Political Accountability, which scores companies on how transparent they are about political giving. “Is there a going to be
a change in their accountability policies?”
Freed, whose group also helps organize shareholder resolutions, said he expects more than 30 such votes on disclosure of corporate political giving in the spring proxy season, and another 10 or so by the end of the year. That’s an average number: He said his group helped file 40 shareholder resolutions aimed at political transparency last year, and they garnered 42% support from shareholders on average.
In the wake of the Capitol attack, companies are facing more acute pressure to act.
Public pension funds overseeing more than $1 trillion are turning up the heat on giant Wall Street asset managers both to better report on their own giving and support shareholder resolutions to force similar disclosures from companies in which they own significant stakes. In a letter to JPMorgan executives earlier this month, 28 decision-makers for such retirement funds asked what the bank is doing to reform its political giving and whether, as a top asset manager, it would throw its weight behind shareholders seeking more transparency from other companies.
“We believe that the events of January 6 add greater urgency to concerns and expectations regarding corporate political spending and lobbying transparency and practices,” the pension fund officials wrote. Fusco, the JPMorgan spokesman, declined to comment on the letter.
Versions of the missive — organized by the Service Employees International Union, the nation’s second-largest union, and Majority Action, a nonprofit that advocates on corporate governance issues — also went to BlackRock, Fidelity Investments, Vanguard Group, Bank of New York Mellon and State Street.
And at least one of the firms said it is taking heed. Last year, the pension fund officials noted, 48 shareholder proposals calling for greater disclosure of corporate political and lobbying activity gathered more than 20% support; Vanguard opposed all them. This year, Vanguard spokeswoman Alyssa Thornton said, “recent events in the U.S. political landscape have raised new questions about the potential risks associated with corporate political activity,” and the fund will take those into account in evaluating shareholder resolutions.