Restaurants limp toward fall with little relief in sight
Large percentage of Colorado’s eateries will consider closing in the next six months
A national lobbying group established during the pandemic released a promotional video this month that describes in about 60 seconds just how bad coronavirus has turned out to be for local restaurants, and how it’s only getting worse.
The ad is playing now on cable channels in major markets. Its message focuses on the Independent Restaurant Coalition’s statistics of looming restaurant closures (up to 85%) and job losses (as many as 16 million) before providing a call to action for Congress to pass the Restaurants Act.
TV personality and chef Andrew Zimmern was behind its production, and actor Morgan Freeman narrates: “Neighborhood restaurants are the lifeblood of our communities,” Freeman starts. “They are where we come together and make lifelong memories. And right now they are facing extinction.”
It’s not too far of a stretch. The restaurant industry is currently leading all other sectors in terms of closures nationwide, according to data released last month by the customer review platform Yelp. It’s ahead of retail stores, beauty salons, bars and fitness studios.
As of July, more than 26,000 restaurants across the country have closed and 15,770 of them have shuttered permanently, according to Yelp. Sixty-two percent of Colorado restaurants say they will consider closing permanently in the next six months under current or worsened conditions, according to the Colorado Restaurant Association.
“I think there’s still a little bit of a false reality right now about all these restaurants that are surviving (the pandemic),” said Josh Wolkon, who at the end of July closed his 23-year-old downtown Denver restaurant Vesta while continuing to operate two more Denver restaurants with
another waiting in Arvada that hasn’t reopened since March.
“If there’s not a secondary stimulus package,” Wolkon said, “I think you’re going to see a major fallout when these (payroll protection) funds run out in October.”
Dwindling payroll protection loans, added safety measures, re-closures, business-hour reductions, staff health concerns, consumer confidence, even Colorado’s unpredictable weather — there are so many factors affecting their businesses, according to restaurant owners, that planning for the future is simultaneously essential and impossible to do.
“Every day I watch the weather like a psycho. I look every day, all day,” said Kendra Anderson, who owns the River North restaurant and lounge Bar Helix, which has become the outdoor-only Cabana X for the summer. “It makes you feel like you’re going crazy.”
Another thing that makes restaurateurs such as Anderson imagine they’re losing their minds is a constantly shifting set of rules for their businesses. When Colorado’s last call was moved to 10 p.m. at the end of July, for example, Anderson had to update all of her promotional materials, change staffing around and add on more daytime hours, including implementing a new brunch menu, to make up for lost nighttime sales.
“That was all because (last call) went to 10 o’clock,” Anderson said. “So now I’ve decided we’re on our sixth pivot. And we’re doing all that and not making money. We’re just not closed.”
On average, Colorado restaurants are down 40% in year-over-year sales, according to the latest July figures released by the Colorado Restaurant Association. One of the early concerns of restaurateurs who were reopening their spaces at the start of summer was capacity. After spending thousands of dollars to add on expanded patios and more outdoor seating, the concern moved somewhere else.
“Demand became more of an issue, because now we had these big expanded patios, but there just wasn’t anybody to sit on them,” said John Imbergamo, who has worked in Denver restaurant publicity for 30 years.
“Now it’s a matter of trying to fill those seats, and everybody’s scrambling to do interesting things to try to fill them,” he said.
Last week, The Denver Post’s food desk received four promotional emails about new fried chicken menus around town. Yelp reports that interest in categories such as “comfort food,” “wineries” and “seafood” is starting to “bounce back” after a steady decline at the start of the shutdown.
“I think the things that are selling like crazy in restaurants are things like oysters,” Imbergamo said. (He represents Stoic & Genuine at Union Station, where he says shucked oysters are flying off the shelves.) “The average person doesn’t want to risk cooking seafood at home.”
From oysters to fried chicken, sandwiches and burgers, there are clear themes on restaurants’ pandemic menus, across the board.
“And I think you reach for things that are comfortable and things that people know,” Imbergamo said. “You don’t necessarily have to have a server with a towel over their arm suggesting the newest riesling on the market to go with (these meals). It’s in part a simplification of the system … ”
Other experiments are underway in an attempt to simplify the system that restaurants have relied on for years prior to the novel coronavirus. They’re trying direct-to-consumer delivery, new point-of-sale platforms, more uniform pay structures for front- and back-of-house (kitchen) employees, different reservation companies, even menus made solely for takeout or delivery.
“We kind of don’t know what’s working,” Anderson of Bar Helix said. “So you do everything in case anything works.”
“Severely restricted”
Jim Gregory opened his first restaurant in 1992 on Sixth Avenue, Ranelle’s, at a time when you could still open a white tablecloth restaurant selling Italian food, and it would be something new, he said.
In the 2000s, Gregory ran two locations of the breakfast franchise The Egg & I, off Leetsdale Drive and in Arvada, which he then transitioned two years ago to independent operations called Morning Story. Now the tax attorney by trade is venturing into new territory — ghost kitchens — which eschew the traditional dining room model to focus on delivery. He says his breakfast and lunch revenues are down 40% to 50%.
“(The business) only works with this new addition,” Gregory told The Denver Post, “and (only) if the new addition makes up the lost volume. And I don’t know if it’s going to happen or not.”
The new addition is a dinner menu of fried chicken and housemade sauces, and it’s only available for delivery and takeout. Saucy Chix will utilize both Morning Story locations’ kitchens after the breakfast and lunch businesses have closed for the day.
Gregory says his 4,000square-foot restaurants are particularly hard-hit because of their size and their service hours. “Here’s the thing about breakfast and lunch: Half of our volume typically occurs on Saturday and Sunday and most of that happens between 10 a.m. and 1 p.m.,” he said. “The ability to produce that kind of volume in those time frames is severely restricted now.”
Severely restricted is one way to describe it. Anderson prefers a four-letter word when she thinks about what’s coming next. “I mean if we have to all be inside and the curfew’s still 10 p.m., we’re (expletive),” Anderson said.
As Laura Shunk with The Colorado Restaurant Association puts it, “(I) think the elephant in the room as we hit end of summer is, what happens in the winter when patios are closed?” As of the end of July, Denver had approved 300 patio expansions at restaurants across the city. Restaurants are allowed to operate them without any further additions (such as walls and space heaters) through Oct. 31.
Outdoor eating
At the West Wash Park location of his ramen restaurant Uncle, Tommy Lee has been taking full advantage of the eased outdoor dining restrictions this summer: He’s only letting his customers sit outside. In front of the restaurant, a section of Pennsylvania Street is closed to traffic, lined with tents and tables spread out beneath them.
Lee said he hopes business picks up as usual when the weather gets cold, and more people think of ramen for dinner. And he hopes his team will be somewhat more prepared for another shutdown or switch to takeout-only service after learning from what happened in March.
“(We’re) really not sure until it happens,” Lee said. “I think we’re still a long way from having diners inside our restaurants.”
Tabatha Knop, a co-owner of Larimer Street’s Work & Class and Super Mega Bien, agrees that diners aren’t ready to eat inside, for the most part. She also worries about another factor that’s hard to quantify: “Half of our (current) clientele is visiting from out of state,” she said, surprised. “So I’m not sure how many (Denverites) are really dining out at this point.”
By the time outdoor dining and tourism both drop off, “I think we’ll really reassess in September, for sure,” Knop said, “but we’ll definitely have some very hard conversations to come by beginning of October.”
And she’s most concerned for her staff. With the federal unemployment subsidy having ended in July, some workers are coming off of unemployment and asking about their future with the restaurant, Knop said. “I’m just wanting to give them a realistic picture.”
So she tells them: “You know it is possible that we may have to lay some of you off again … Just save all your money. I wish I could tell you what the end of the year looks like, but I really have no idea.”
On a typical Tuesday night in early August, Anderson picked up the phone for an interview as she worked. She’s struggling, she told The Denver Post, “and my employees are here, they can hear me.”
She often asks herself, “What am I not seeing?” regarding her options now and in the coming months. Anderson doesn’t see herself taking out another payroll protection loan, if it’s offered. Once it runs out again, she would not only have to return to her prepandemic revenues, she’d also have to do better than that to pay her bills now.
Her options are simple at this point: the pandemic ends (there’s a vaccine), or else there’s a bailout (this is where Freeman, Zimmern and the Restaurants Act come in).
“I don’t understand how any of us are considering taking on additional debt for an industry that’s teetering on the brink of full-on collapse,” Anderson said. “I think what’s hard for a lot of restaurateurs to acknowledge is how much of our egos are wrapped up in our business. I’m not a magical thinker, you know?”