Amid coronavirus pandemic, Detroit-area restaurant owners wonder when relief will come
With the future uncertain, many are concerned help won't come soon enough for small businesses hemorrhaging money in the wake of COVID-19
The local restaurant landscape as we knew it before the coronavirus hit may never fully recover.
Toward the end of week, a mandate forced Michigan bars and restaurants to close dining rooms, and independent business owners now wonder what the government can to do help them survive the crisis.
Fundraising pages have popped up by the dozens, with owners, and sometimes staff members themselves, asking the public for donations for out-of-work or underemployed bar and restaurant workers.
"It’s pretty much a disaster," said chef Brad Greenhill, who runs two popular Detroit restaurants — Takoi in Corktown and Magnet in Core City — both currently closed.
The payroll for Takoi and Magnet for two weeks is around $100,000, he said. At Magnet, staff is paid a higher wage than the average restaurant because a gratuity is included in the costs of the food and drink; guests don't tip.
"We’re going to work through it and, in a few weeks when sort of this new reality of the climate settles in, maybe we’ll bring in a small crew and try some carry-out," Greenhill said. "But for now, we’re just spending more time talking to politicians and legislatures than focusing on food, unfortunately."
"The story is really going to be about how devastating this will be to the national economy," he said, calling the trickle-down effect to other businesses "a major crisis."
"Over 15 million people work in restaurants in the country and in the coming days and weeks most of them are going to be closed," Greenhill said. "Hospitality is about a trillion dollar a year industry and it’s all shuttered. It’s going to be a lot of people out of work and it’s going to trickle down to all the people that supply restaurants, waste management, food (suppliers), across the board."
Greenhill said he and his team met with U.S. Sen. Gary Peters on Thursday to discuss what can be done to help the industry from disintegrating. He said Peters and a lot of politicians are listening.
"We’re just trying to give him information about what’s going on with our business, what’s happening and what sort of steps the legislatures are taking to try and help out small businesses during the crisis," Greenhill said. "In their minds (they think restaurants) can just offer carry-out. It will work for some restaurants, for sure, especially if they were carry-out before. A lot of people just don’t want to go out even to get carry-out, or to get delivery because there’s safety questions involved with that."
"Small businesses and their employees are the backbone of our economy. But right now they are being devastated by the Coronavirus pandemic," Peters said in a statement posted to social media over the weekend. "I spoke with Detroit small restaurant owners about their challenges. I’ll be working with them to ensure federal resources are there to help."
Greenhill calls this scenario "a natural disaster" and hopes that any fund supplied by the government doesn't just go to large corporations.
"A little bit of our concern is that any stimulus that goes out is going to go to McDonald's and Subway and not the little guys," he said. "Because we're a unique industry in that regard. There are big players but there's tens of thousands of smaller businesses."
Greenhill, who is working to create carry-out-friendly menus for Takoi and Magnet for the near future, is no stranger to devastation when it comes to his restaurant business.
A few years ago while on a trip to Thailand, the chef learned that his Takoi restaurant had been decimated by a fire.
"I hate to say that we've been through it before, but it's different (this time) because everyone is going through it now, it's a collective thing," he said. When Takoi was hit by arson in 2017, it had insurance and employees could get temporary jobs at other restaurants.
"We don't know how long we'll be closed," he said, regarding this time around with the COVID-19 pandemic. "This is a different scenario. Insurance companies are not accepting claims on business interruptions and if they are forced to, who knows how long that will get tied up and how long it will take."
Tom Colicchio, a celebrity chef with restaurants in New York, Los Angeles and Las Vegas, has been making the rounds this week on cable news and other outlets. His outlook on the restaurant industry nationwide is grim.
"We're talking about mom and pop operators all across the country right now who are just struggling to figure out how they're going to make this work," he said this week on MSNBC's "Morning Joe."
Colicchio echoed much of what Greenhill said regarding the trickle down to other businesses, which includes food suppliers and less-obvious examples like florists.
"What we're trying to get the public to understand is the size of the problem that we're looking at right now," he said, and suggested that the industry will need $150 billion from the government in order to stabilize. "We need some tax breaks, it's a total package."
"We don’t have cash reserves," Colicchio, the head judge on "Top Chef," told the Guardian. "The money that we make today, if we were open, goes to pay bills from 45 days ago. Margins are razor thin. This is not the business that people think it is."
New restaurants are in a vulnerable position
Kristen Calverley just opened Michigan & Trumbull in January. The new Detroit-style pizza restaurant in Corktown has a liquor license and was planning to host dine-in guests this spring. She calls this week "a roller coaster."
"In a lot of ways we're fortunate because we're doing pizza and that is something that is commonly take-out," she said, adding that she and husband Nate Peck are used to being restaurant owners who work all facets of the business, including the line. They also have their two young children in the pizzeria with them, since school is out.
"It's been a little hectic, which is wonderful," she said. "The downside is that we're falling behind. I keep going back and forth on whether or not we reopen at the end of this, or if we just can't catch up. There's a lot of bills to be paid."
Calverley said she was told she would have to continue to pay the principal on her FDA loan, but the interest would be deferred, and she was thankful that their landlord seems to be understanding.
"I'm just hoping that somebody steps in and does the right thing," she said regarding some kind of stimulus or monetary help for restaurants. "My worry is that the restaurants that survive are going to be restaurants with unlimited resources and the little guys are the ones that are going to have to go away. I think that's sad for our communities.
"I just hope someone helps us," she said.
Another new Detroit business owner, Omar Mitchell of Table No. 2, is feeling the stress of being responsible for his employees. The restaurant is doing some carry-out business and he's cut the menu prices in half to entice customers. He knows he can't wait for the state or federal government to get a stimulus package going, so he created a GoFundMe account for his employees.
"They don't have back-up plans or savings," he said. "Most of my staff is single mothers, ex-felons or people with no college backgrounds. I am their back-up plan."
He said while he's freaked out, he's not giving up. "They don't give up on me," he said.
Seasoned business owners are also not immune
It's not just newer restaurants feeling the stress. Tom Brady is a third-generation restaurant owner whose family has seen businesses through the Detroit Rebellion, H1N1 and the 2008 recession, to name a few. Now the owner and operator of Jim Brady's in Royal Oak and Ann Arbor, he says this is different.
"It's something that has never really been on my radar as a human," Brady said. "It's so devastating."
His Ann Arbor location is completely closed, but Friday he started daily carry-out and curbside service from his Royal Oak restaurant. With a parking lot and being in a neighborhood, this location is more equipped to operate as take-out only, he said. Customers can call the restaurant directly to place their pick-up order or get delivery through the Grubhub app.
"We feel like we had to be here for our community," he said, adding that the coronavirus pandemic has sent a "shock wave" through the entire industry. "Everybody is blindsided by this."
“We work with the Small Business Administration currently, we’re SBA loan guys, we’re working to see what that is … there is a role that the federal government needs to play and I think that is something that I would like to see us get more coordinated on the same page with a clearer picture of exactly what is going to be happening in this state," he said, adding that one thing the government is doing is pushing back the tax deadline from April 15 to July 15. "What is the SBA going to do for all the small businesses?
Brady pointed to the recent bailouts of other industries like automobiles, banking and airlines, something that has been on the mind of many in the hospitality industry this week.
"They're quick to bail out massive industries and I understand that from a certain extent ... we don't have that possibility, where is the government to say we're going to step back and provide some assistance, defer payments, whatever it is."
Brady said he doesn't know how long independent restaurants like his can hang on in the current climate.
"That's not a conversation I really want to have right now," he said. "The best thing I can do is proceed as calm, with a strong pretense for my team. All we can deal with is exactly what we know right now and play the hand that was dealt to us. That’s what we’re going to do.”