Instead of tables, restaurants are delivering food to diners’ cars.
In the past two months since Pennsylvania Gov. Tom Wolf ordered the shutdown of non-essential businesses due to COVID-19, the restaurant industry has taken a blow. Overnight, a switch flipped, placing one of the most highly-employed industries in limbo.
Now, as restaurant owners navigate new ways of serving guests, layoff employees and apply for financial assistance, they are gazing into a crystal ball clouded with uncertainty.
The long-term damage, they say, is uncertain.
“It’s devastating. The industry is decimated,” said John Longstreet, president and CEO of the Pennsylvania Restaurant & Lodging Association.
In fact, he said nearly 1,000 restaurants out of 26,000 operating in Pennsylvania have permanently closed due to he virus. The industry is hemorrhaging jobs and revenue.
Sales alone at Pennsylvania’s establishments in the first 10 days of April dropped by 82 percent, with losses projected at more than $1.8 billion by the end of the month, according to the association.
Pennsylvania’s hospitality industry employs more than 700,000 people, and about 96 percent of the state’s restaurants have reported layoffs and furloughs since the beginning of the pandemic. Nationally, the National Restaurant Association estimates 8 million restaurant employees have been laid off.
The association also reports the industry lost $30 billion in March and was projected to lose $50 billion by the end of April. Overall, restaurant losses could top $240 billion by the end of the year, assuming restaurants gradually start to reopen by June.
“I think we are all worried. It’s a mild feeling of helplessness because you want everyone safe and healthy, but you wish your business was up and running again,” said Donny Brown, owner of Black n’ Bleu Restaurant in Hampden Township.
Early on as the new coronavirus swept into central Pennsylvania, Brown shut the restaurant so employees could tend to families and stay safe. It gave him time to redesign the business website for online ordering and stock up on takeout supplies.
Recently, he reopened and converted the dining room into a to-go facility stacked with containers, napkins and plastic silverware. Drivers call in or order online, drive up to the restaurant for pickups.
So far, Brown said the takeout model is working with exception to a few issues, mostly customers flooding the restaurant with orders during the same two-hour window over dinner. Still, he said business is down compared to pre-pandemic days when Black n Bleu’s dining room buzzed with activity.
At the start of 2020, the restaurant forecast looked bright.
Diners packed craft breweries, restaurants and neighborhood bars. A pipeline of new establishments was on the cusp of opening. Nationwide, restaurant sales grew 2.3 percent in January, the best posted by the industry in four years, according to Nation’s Restaurant News.
“Things were terrific. We were on record pace,” Brown said, adding the months from November to early February were among the best in the restaurant’s 10-year run.
At Tavern on the Hill in East Pennsboro Township, owner Laki Daskalaki is taking a similar approach and preparing to open on Mother’s Day weekend for the first time since March.
Last year, the fine dining restaurant served more than 575 diners on the biggest dining out day of the year. This year, Daskalaki said he’ll be lucky to sell a few dozen to-go meals.
“What you do is you try and cope with the situation,” Daskalaki said. “You have to change how you do business in order to just survive, to keep your doors open.”
Never before have restaurants had to turn to such drastic and creative measures. They are offering dining specials and slimmed down menus, advertising on social media and connecting with delivery platforms such as GrubHub or DoorDash.
Several restaurants are donating to feed health care workers through sites such as Grub for Scrubs.
Other initiatives designed to help the industry include CarryOutPA.com, an effort launched by the state to encourage Pennsylvanians to support local restaurants. Also, in the near future, restaurants could temporarily sell 64-ounce cocktails to go under a bill awaiting a Senate vote.
The measure is intended to be a lifeline to the hard-hit restaurant and tavern industry.
Anything helps as very few independent restaurant owners sit on extra cash reserves, Longstreet noted, adding in order to survive they need to be aggressive and act quickly about generating revenue. It’s going to be difficult for those who can’t figure it out, he added.
The coronavirus has taken a toll on some restaurants. In central Pa., Isaac’s Restaurant & Deli in Hummelstown is permanently closing May 10 due to the coronavirus.
CEO and President Mike Weaver told PennLive under normal circumstances they would have left the restaurant open, but now with a closed dining room there has been a 70 percent reduction in sales.
“Once you have reduced seating requirement restrictions [when dining rooms reopen] you’ll still have a significant loss in sales. For us it’s not enough to justify keeping it open,” Weaver said.
More restaurants will likely join Isaac’s. Longstreet said he has heard extreme quotes as high as 90 percent of restaurants nationwide are projected to close. Realistically, he said he wouldn’t be surprised if about 30 percent don’t reopen.
The National Restaurant Association said operators of quick service restaurants reported an average sales decline of 57 percent during the first 10 days of April. Meanwhile, fast casual sales were down 64 percent on average, while operators in the coffee and snack segment reported an average sales decline of 73 percent.
Fine dining sales have dropped off by as much as 90 percent.
One segment faring well as people shelter at home? Pizza delivery. Domino’s reported same store sales climbed 7.1% compared with last year from March 23-April 19.
But for most establishments, Longstreet said navigating the crisis compares to flying 35,000 feet in the air inside an airplane plane that is not fully built. While he said Wolf is doing the right thing and protecting residents, the difficulties rest in how the guidance changes almost weekly, if not daily.
The Wolf administration announced a phased COVID-19 reopening plan for the state. Beginning Friday, 24 counties in northcentral and northwestern Pennsylvania will be lifted from the stay-at-home order and enter the yellow phase. Even in those counties, restaurants will still be limited to takeout and delivery.
Under the plan, restaurants would not be allowed to resume dining room service until a region or county reaches the final green phase.
Even then, how restaurants will be allowed to reopen has yet to be announced.
To cover lost business restaurant owners are taking out personal loans to make payroll, and waiting on state and federal loans. In April, the restaurant industry called on Congress to enact a “Blueprint for Recovery” targeted on providing relief in the form of $240 billion to authorize a temporary emergency $240 billion restaurant recovery fund.
It’s still not likely to be enough. About 60% of restaurant owners nationwide say the federal relief programs, including the CARES Act, which allocated nearly $350 billion in relief for small businesses under the Paycheck Protection Program, won’t be enough to keep employees on payroll, according to the National Restaurant Association.
Joe Ressler, owner of Ressler’s Bagel & Deli in Lower Allen Township said he’s waiting on assistance from the Paycheck Protection Program to cover rent, utilities and payroll. In the meantime, he’s watching spending by cutting back on items such potato chips and drinks and using the money for other expenses.
Ressler’s has operated for 26 years and along with takeout and sit-down service, it caters business lunches and other events. Those have all but disappeared due to the pandemic as business is down by about 50 percent, he said.
“Me and my wife have talked about it. If this going on for a few months, I don’t know how we will survive. It’s tough for a small business, whether you’ve been in business a month, a year or decade,” Ressler said.
Giuseppe Aiello, owner of Joe’s Original Pizza at the Pennsboro Commons shopping center in East Pennsboro Township, fears a similar outcome. For the time being, he’s the only business open at the plaza where Planet Fitness, a dentist office and chiropractor are temporarily closed.
He has laid off three employees and stopped delivery out of fear of getting sick because he has a heart condition. Unfortunately, Aiello said he doesn’t qualify for government help because he has only owned the shop for eight months.
“It’s a very bad situation for me, for my family, for the people who work here for me,” Aiello said.
What makes it harder is the pandemic arrived when most in the industry were doing well. Finding enough help and increased competition as more restaurants opened were the biggest problems.
“I wasn’t getting rich. I paid my bills with no trouble. Now, I have to watch the pennies,” Aiello added.
About 74 percent of restaurant operators surveyed in April by the National Restaurant Association estimate their sales volume in six months will be lower than the same period from last year.
When this started, Longstreet said nobody imagined anything like this ever happening.
“There is no light at the end of the tunnel on how they come back,” he said.
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