On the menu: Economic disarray, caused by coronavirus

On the menu: Economic disarray, caused by coronavirus

Restaurants are working to revive business after the unprecedented COVID-19 shutdown. File photo

Shortly after the March 16 lockdown in Maryland, Brian Boston began takeout service at his fine dining restaurant in Sparks. Thanks to loyal customers who frequented the establishment, the restaurant broke even.

But by week two, Boston was losing $1,000 a day.

In the weeks since, Boston, the chef and owner of The Milton Inn, shut down all takeout operations and furloughed his 38-worker team. He’s lost $150,000 in the last two months, and amid a stream of uncertainties, he’s questioning what the business will look like once he reopens and whether doing so is even financially viable.

Restaurants across the region are preparing to reopen, eager to get back to serving patrons. But the economic effects of the outbreak could take months to play out for an industry already littered with casualties.

The Maryland Restaurant Association estimates that roughly 45% of Maryland restaurants have closed since the pandemic, 25% of whom will likely close permanently. The industry statewide lost $1.4 billion in March and April alone, a figure that will likely continue to increase as the lockdown lingers.

Although some landlords are offering delayed rent, and the federal government has offered relief through the Paycheck Protection Program, the aid is only temporary. Many restaurants will restart operations despite losses, but without their regular flow of customers — now deterred by the spread of disease — many will struggle financially.

“There are those restaurants that have done a nice job over the years and maybe have the savings that will allow them to reopen sooner than others,” said Marshall Weston Jr., president and CEO of the Restaurant Association of Maryland. “That would be across all segments, whether you’re a chain or an independent or a fast casual. The main concern is having the cash on hand in order to reopen right now.”

Some restaurants are operating curbside delivery and takeout services, but none are making the revenue they pulled in during the time they operated at full capacity. After a monthslong closure, many will struggle to maintain the available cash to order food, and rehire, pay and retrain employees.

“The real concern is how long is it going to take for consumer confidence to come back where the public feels comfortable dining out on a regular basis,” Weston said, adding that some restaurateurs believe it could take up to 18 months.

Staying afloat

Earlier this year, Justin Windle, managing partner of Pappas Restaurant & Sports Bar in Cockeysville, experienced record-breaking February sales — what he called the “greatest” in the brand’s 50-year history. In the weeks since the lockdown, Pappas cut 70% of its 270-employee team across its three restaurants, although the company continues to bring in about 50% of its regular revenue through takeout.

“With that 50% we’re able to pay our staff, we’re able to pay the bills, we’re able to stay afloat as a restaurant because you know, there’s a lot of expenses that come down,” Windle said.

For companies like Glory Days Grill, a casual dining chain with 21 locations in Maryland, Virginia and West Virginia, sales are down roughly 75% over the past two months

“There are going to be companies much more than what is normal, that will probably fail and go out of business,” said Bob Garner, the company’s co-founder. “We do have some weak stores in that 21 count, ones that companies like us can carry for a period of time, even though they lose money even under normal circumstances.”

But as restaurants prepare to reopen dining rooms, customers should brace for an entirely different dining experience.

For example, Ledo Pizza, a Maryland-based pizza chain with nearly 100 stores regionwide, will implement a variety of precautions: Booth barriers will increase in length; menus will transition to one-time use; tabletop items will disappear; sanitizing guns will be stocked; and high touch-items will be cleaned every 20 minutes, said Jamie Beall, the company’s president.

“We are quite frankly ready,” he said. “Once told we need about three days, after it’s announced and the system can get back up to 100%.”

Once restaurants reopen, hiring back employees who have been relying on unemployment benefits may be tricky. Many furloughed workers are earning more money from unemployment benefits from their regular salary; the CARES Act offers an extra $600 weekly stipend in addition to the standard benefits.

Earlier this month Hogan initiated phase one of the Maryland’s “Roadmap to Recovery,” a three-part plan designed to slowly reopen the state. However, while many retail stores have been permitted to reopen, restaurants remain closed for the foreseeable future.

Opening safely

The Restaurant Association of Maryland and restaurateurs like Windle — who sent a letter to multiple government leaders including the Maryland State Secretary of Commerce — have advocated for the reopening of patios and outdoor seating service and the inclusion of restaurants in phase one. Many are concerned by the lack of information given by the state.

“I just don’t understand why restaurants aren’t included in phase one,” said Windle. “I know opening up our doors to 100% occupancy is probably not realistic, I get that. I don’t understand why the restaurants can’t open up in some shape or form.”

The restaurant association also has launched a campaign called “Restaurants are Ready.” The goal, Weston said, is to let Hogan and other elected officials know eateries are ready to resume business as part of the second phase of the governor’s plan to reopen the state.

“Restaurants have a plan in place to open safely,” Weston said.

Eateries will adopt protective measures including all health screenings for employees, requiring workers interacting with customers to wear masks, or to separate tables by six-feet or provide a barrier between other tables. Restaurants deal with issues of cleanliness and sanitation every day, he said, whether there’s a pandemic or not.

Weston said he’s confident restaurants are prepared to sanitize trouble spots like bathrooms. If big box stores can keep those areas safe, he said, so can restaurants.

No current COVID-19 studies have indicated the virus can spread through food.

“We have a pretty controlled environment,” Garner said. “We can really control the door, control the seating, space the seating out. We actually might be able to control that better than a retail environment where people kind of voluntarily walk along aisles.”

But even if the state relaxes its restrictions on restaurants, industry veterans say it will be a long time before there is a return to normalcy.

For restaurateurs like Boston, opening alone isn’t a simple solution, especially if it only means making a fraction of previous sales.

“It’s not as simple as reopening and that makes everything OK,” Boston said. “It doesn’t make everything OK, that actually accelerates the bleed, and until people come back to restaurants with a more normal pace it’s not going to work for any of us.”