Zero Zero’s demise bad sign for recovery
Beloved SoMa pizzeria seemed set to overcome pandemic woes
If any business owner was positioned to survive the pandemic’s devastating blows to downtown San Francisco, it was restaurateur and chef Bruce Hill. Finally forced to close this month, his Zero Zero restaurant is another sign that hopes of a return to normalcy are an illusion.
Since COVID-19 struck more than two years ago, numerous businesses shuttered while Hill and Zero Zero, an Italian restaurant specializing in Neapolitan-style pizza, held on in the South of Market neighborhood. Zero Zero had some crucial advantages. Pizza lent itself to to-go orders. Hill secured federal financial aid, much of which has been forgiven. His commercial landlord lowered the rent to help the restaurant. And his restaurant was well-situated for conventioneers when some events began returning. But it still wasn’t enough. After a dozen years in operation, Hill bid farewell to his final customers the night of Nov. 12.
Hill moved quickly to save the restaurant when the pandemic struck. At a team meeting in early 2020, he laid off about 80% of his staff.
“It was horrible,” Hill said, his voice breaking. “They didn’t feel like I had any bad motive or anything. They just knew that it was the reality.”
Without jobs, “many of them left the Bay Area altogether,” he said. That meeting was one of Hill’s lowest points. Another was when one of his staff tragically died of the virus.
“The final low point is now,” Hill said on the Wednesday after the closure, as a skeleton crew dismantled the space, the soft clinking of glass and metal echoing across the rows of empty booths. “After all that we’ve gone through, now it’s the quiet time” to pack everything and think about how to move on.
Zero Zero’s demise is the latest evidence of the dire circumstance that many small businesses face in San Francisco’s northeast, comprising the SoMa neighborhood and the city’s economic core. Tourism has recovered somewhat, but not enough to keep many businesses alive. And with the normalization of remote work, office workers are no longer sustaining the area’s restaurants and bars five days a week.
“I think it’s going to be changed forever,” Hill said.
The situation is so dire that massive government intervention is needed to save the area, said Laurie Thomas, executive director of the Golden Gate Restaurant Association, which represents hundreds of San Francisco businesses.
Downtown and SoMa are stuck in a catch-22, Thomas said. She recalled a recent meeting with local stakeholders about how to entice workers to return.
“They were saying, ‘Employees don’t want to come back because all the restaurants are closed.’ And we were like, ‘Well we don’t want to operate because the employees haven’t come back!’ ” she said. “It was a standoff.”
That’s where City Hall could step in, she said, by subsidizing restaurants — maybe for as long as 12 or 18 months.
“It’s dealing with the operating expenses for a certain period of time, so they don’t have to make money for that period. And then maybe you’re going to incentivize some people to come in and take a chance” to start a business, Thomas said.
The government would have to give the money to enough businesses, in an area designated for revitalization, to attract and gradually build a consistent clientele, Thomas said. Hopefully the businesses would be able to stand on their own when the government aid stopped.
“I know this is expensive, don’t get me wrong. I don’t know where we get the money,” said Thomas, adding that she didn’t see another way forward.
“There are bigger economic forces at play that are keeping people from our core and downtown than the lack of restaurants — one of them being the lack of foot traffic because of hybrid work schedules,” said Gloria Chan, spokesperson for the Office of Economic and Workforce Development, in a statement. “Subsidies going directly to property owners for new restaurants is a massive financial undertaking and likely not feasible without federal or state funding in addition to requiring significant resources and investments from the businesses themselves.”
According to the department, the city has given small businesses and entrepreneurs across the city more than $83 million in the form of grants, loans and tax relief. The city focused particularly on assistance for small businesses run by women and people of color who had trouble getting money from other sources.
But Zero Zero’s experience illustrates the limitations of the government’s assistance.
With foot traffic decimated, Hill and his accountant scoured various government programs for help. They got some money through the city and state, but not enough to keep them afloat. They got federal loans through the Paycheck Protection Program and Economic Injury Disaster Loan programs.
The Restaurant Revitalization Fund, another federal program that was part of President Biden’s American Rescue Plan in early 2021, offered gamechanging grants of up to $10 million per business. But even with $28.6 billion, it was woefully underfunded. Hill applied but was rejected. He called the program “unfair.”
“Some people in town got millions of dollars, and some like me got nothing,” he said. Its rollout was chaotic and marred by bureaucratic dysfunction — many applicants got stuck in the review process, and thousands were approved only to have their payments rescinded later.
Zero Zero outlasted many other SoMa businesses largely because Hill had 70% of his PPP loans forgiven. But by November, he still owed hundreds of thousands of dollars, while his sales were persistently about 60% below 2019 levels.
So, while he still had some cash reserves, he scheduled Zero Zero’s last day of operation in mid-November. That was when his devotees gave him a sendoff to remember.
“When we announced our closing, our reservations pretty much maxed out immediately, every day. There were friends I couldn’t even get in. I just physically couldn’t do it,” Hill said. It was almost as busy as the old days. His thinned staff, some hired only in the last month, did their best to keep up.
“It was, in so many ways, euphoric,” he said.
What kinds of restaurants can make it in the area now?
Neighborhood institutions still have a chance, Hill said, as do small restaurants that need fewer customers and can be more efficient with their staffing and resources. And restaurants that went dormant early in the pandemic — closing temporarily to save money for when the market was healthier — may now be able to survive if they reopen, depending on where they are.
But if the city’s northeast is to sustain more than today’s straggling businesses, it needs people to return, Hill said.
The city should target policies at making that happen, “much like they decided to bring tech on board,” Thomas said, referring to the 2011 tax break that drew Twitter and then other technology companies to establish themselves along Market Street.
“A lot of us hoped that the return to office would happen, but it didn’t. So we can’t just kind of hope, now, that these areas just organically create themselves,” Thomas said.
What’s next for Hill? That question requires some reflection. But the answer will probably include pizza, one of his passions.
“I would definitely make wood-fired pizza again, if I can,” he said. “I have all the contacts for all the best ingredients, I’m 61 years old. I wasn’t expecting to retire right now.”