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Poverty

Features, Musings

NEVER HAVE YOU HAD A CATASTROPHIC SHIFT LIKE THIS

April 24, 2020

By Jabriel Donohue

We are weeks, it’s hard to tell how many, into the COVID-19 stay-at-home order in Seattle. My pour-over coffee skills have improved. I’m listening to albums I haven’t heard in years. I’m writing a book. I’m smoking too much blessedly legal weed. I’m taking this stretch of forced unemployment in the most White-Guy-From-Seattle way possible. As a fresh mug of coffee finishes steeping, I reach out to an old friend of mine who works in local tech. We talk about how he, already a work-from-home employee before this started, hasn’t experienced a big lifestyle change in the face of COVID-19. Sure, he can’t go out to the bars or enjoy his favorite restaurants but really? Not a catastrophic shift.

The bar I manage looked desolate with all the liquor taken off the shelf. We locked it up and walked out of the building. The hotel where we’re located wrapped their own front doors in chains and went home too. I’d been watching this virus spread in China since January, when we were still unaware that it had already reached Seattle. Like many of my generation I have a mild obsession with doomsday scenarios and what I saw out of China was not generating what felt like the proper anxiety on our shores.

Now here I was two months later, helping to close my place of business and the source of income for nearly fifty people. Meanwhile, Donald Trump was holding press conferences saying we had this thing licked. The incongruity was staggering.

I make an offhand statement to my friend on the phone, one echoed among many of my colleagues, that this is laying bare the unsustainable nature of our modern restaurant business. “I expect when they start to open stuff again, restaurants will run at half capacity.” he says, and I feel a rage well up inside me.
I’m not mad at him. My anger is at the entire collapsing system. We can’t, I tell him, run restaurants at half capacity. That is not how restaurants today work. You don’t have to be full every day to break-even, but you also can’t be at half-or-less capacity every day either; especially after incurring the costs of closing and reopening. It would be suicide and not even a slow one. In the local news I see that another couple of restaurants have decided to close their doors for good.

In our last days of business several of our employees came to me in the hope that I might have some answers for them. I’ve been in the restaurant industry in some capacity or another for almost sixteen years. I have seen some shit. They were right to think that I had a better idea of what is coming than they did. But I didn’t. I don’t. I told them to file for unemployment as quickly as possible and to stock up on staple foods at the grocery store; to not blow too much on beer. I tried to sound authoritative. I told them to call me for anything. That in the worst-case scenario I could drive to them; then a piston seized in my truck’s engine on my way home.

I’m trying to explain the struggle within the struggle to my buddy and to his credit he’s being as receptive as he can but the whole conversation is underlining just how fundamentally disconnected our nation’s workforce is as whole. Every successful restaurateur from Danny Meyer to Tom Douglas to the guy who owns the brasserie down the street have just had their businesses collapse underneath them in the span of weeks. Insurance companies are refusing to cover losses, citing virus provisions they quietly added after SARS. Unemployment Insurance, for many, is woefully inadequate. The practice of under-reporting or not-reporting tips, a common if foolish practice in the restaurant industry, means that many unemployment checks are practically nonexistent no matter how badly they are needed. “COVID-19,” I tell my friend, “is going to change the restaurant industry forever.”

To understand this, you need to understand some rudimentary restaurant economics. The restaurant industry is a high cash flow business model. That means much of the money that comes in through our doors goes right back out those doors almost immediately. If we do well over the course of a month, we’ll have money left over as profit. If we don’t do well, we’ll be dipping into our reserves. A well-resourced and managed restaurant will have six to nine months of reserves in case something like a market downturn or an emergency event saw you operating at a moderate loss for a couple months. A less well-resourced establishment might only have three months in the bank. In my experience, the actual majority have even less than that. There are no restaurants that have a model for having zero revenue, even for a short period.

In management a big part of our job is controlling the restaurant or bar’s costs. We typically do this by using margin guidelines. That you should only spend 20% of what you sell for liquor, wine and beer, is an example of a common cost control. That you should only spend 30% of what you make in total on labor is another example. There are ways to make it more complicated (and hopefully more profitable) but for the most part when all is said and done the majority of restaurants hope to make 5%-10% in profit at the end of the fiscal year. For decades, before the bar and restaurant explosion of the late aughts, when drinking fine cocktails and eating inventive meals went from an aspirational hobby to a national fad, this was all you needed to be successful.

Working as a bartender or server in this environment was simple. You essentially ran your life as an independent contractor. Job interviews may have been full of bullshit artists who claimed to make the best drinks you’d ever tasted but if you made a name for yourself in town as a skilled, reliable and mostly sober bartender you’d never go without work. And because nearly everybody paid minimum wage plus tips there was rarely an incentive to stay in one place. The exception came if you were looking for a job that offered higher minimum wages or health insurance. Those jobs could almost exclusively, only be found only at fancy hotels where you were competing with most of the city for the gig. And if you wanted things like sick pay, a reliable schedule, a dedicated group of coworkers and any recognition for your hard work beyond your wage and a pat on the back, you were better off trying your chops at the Laugh Factory.

This was the national standard of food and beverage operations for a very long time. The kind of business done, encouraged and lobbied for by the National Restaurant Association and adhered to by nearly every establishment in the country. Under this standard a national lack of worker protections and investment in employees continued with few exceptions for so long that the lack became institutional. The new gig workers of America, rideshare and app-based delivery drivers are experiencing the same thing right now.

The model began to change as America fell back in love with restaurants and bars. Every major city and many minor ones were growing exciting restaurant cultures. As competition grew, bar and restaurant owners began to place renewed value on things like employee retention. Wages increased and worker protections began to be mandated in at least some cities. And as health insurance took a gasping, sputtering, woefully insufficient step towards universal coverage, so did the costs of operation. But while the obvious answer to rising operation costs would have been to raise prices until these things were affordable, the unrestricted nature of competition kept prices down. Meanwhile costs of living were on the rise.

To make matters worse, as new waves of investors, developers and aspirational businesspeople packed our cities with more and more first-time concepts, they began strangling established, well run operations with a glut of new openings. The hype of five new “must try” establishments a week devastated regular business while diluting the available pool of experienced workers until it seemed the only requirement to be a bar manager was owning a stack of cocktail books and having a year or two of experience changing kegs. Many places would open and shutter within the same quarter, but the damage they did to the economy of food and beverage operations in their cities was severe and lasting.

We are a creative people by nature, restaurant people, and we take pride in it. So, if the cost of labor doubles we find ways to make it work. If we’re paying the highest liquor tax in the country for the privilege of serving the people of Seattle, we make it work. If we’re losing good cooks to construction jobs as opportunistic developers turn our cities into lands of cranes, we find ways to be competitive employers. I’ve worked with multiple restaurants in Seattle to institute insurance for full time staff. I have learned to manage my staffing levels to account for last minute absences without using on-call shifts. I have used almost every tool in the kit, myself included, to outwork, outsmart and outlast the prevailing conditions of the industry. I have also gone home so tired that all I could do is sit in a chair and whimper as my partner helped me take my boots off my swollen feet on more occasions than either of us care to count. But there is a limit to what bootstrapping can accomplish without aid from legislation. When the cost of living has risen so high in a city that your average bartender cannot afford a one bedroom apartment without spending half their income on rent, that is not the fault of bars and restaurants, nor can their owners be expected to enact the solution from thin air. My tool kit does not contain a torque wrench that can be used on local and federal tax codes.

Those of us in the upper levels of management and our owners have had a clear picture of this for a while now. We know things need to change. Surely none of us have settled yet on exactly how they should change. I am in favor of aggressive solutions such as doing away with tips and hourly pay for as many employees as possible, perhaps entirely. There is no logical reason that anybody’s wage should be tied to the inexpert opinion and mood of a person they are required to serve. But this step, which a month ago would have been dangerously controversial now seems positively tepid. The truth is that we must go much further.

I want to train my floor staff to work multiple positions which they will rotate through in order to expand their skills and knowledge while reducing boredom and repetitive stress injuries. I want to pay each employee a salary based on their experience and contribution, rather than the role they perform. I want to see “bar keeper” as a career again. I want to do away with the idea that serving food is something you do to get through college or grad school. I want our general economic structure, even more than our general population to recognize that great food and great drinks are a service rather than an entitlement. I believe this is a viable possibility, but I also know it will require a reimagining of our state and national corporate tax structures in order to be possible. I believe job-providing businesses should receive tax credits based on the number of full-time, living wage workers they employ. I believe that we need a legal definition of a living wage. I propose that definition should be based on cost of living calculations done by the Economic Policy Institute and managed on a county-to-county basis. I believe that the living wage definition should assume single income, two-person, two-child homes so we can begin to get away from what Elizabeth Warren defined as the “Two-Income Trap”. A city where one-bedroom apartments cost $1,500 should mandate that employers pay a $100,000 a year wage to its employees. If that wage seems outrageous to you, I agree, but so does that rent.

I believe that if you want to employ a large number of people who can reliably pay their bills, seek healthcare without fear and contribute to the modern economy without suffering by it, our country should make it easier rather than harder for you to do so. And if you operate a publicly traded company, be it in tech, manufacturing, hospitality or anything else, every one of your stakeholders should be a shareholder and stakeholders should by law always make up a majority voting bloc of the company’s interests. The bevy of labor lawsuits against CKE Restaurants (Carl’s Jr, Hardee’s) and the over 13,000 child labor law violations for which Chipotle restaurants were just fined for , while their CEO’s continue to pocket staggering payouts should be proof of that need.

If these seem like extreme suggestions to you, it is only because of how far to the opposite side we have become inured in this country. In the 1950’s, during the boom which would make the United States the world’s foremost economic power, a CEO at a company made twenty times what their typical worker took home. That’s a lot of money, and a fine incentive for the rat race and economic growth if you want it. The fact that the modern CEO makes 120 times their average worker’s salary has nothing to do with value or incentive and everything to do with avarice. The COVID-19 crisis has laid bare how appallingly inadequate our modern economy has become at serving the citizens of the United States, ostensibly the people whom it exists to support. We need bold, perhaps terrifying reforms to bring ourselves back to a place of sanity and some modicum of equality.

I will tell you this much, though: After watching nearly every one of my colleagues lose their job or close their business with no certainty of reopening them, we aren’t going to allow ourselves to be this vulnerable again. Most of us, owners, chefs, managers, on down the line aren’t going to continue to operate in an environment where we watch companies like Boeing commit corporate malfeasance only to receive an apparently endless supply of bail outs. We aren’t going to watch companies like Amazon use financial loopholes that they wrote on their own behalf to continue to avoid paying taxes. Not if it means that our bars, restaurants and our employees, bellwethers of our city’s successes and chips in every bidding war for new corporate headquarters, are the first to have the rug pulled out from under them each time our government or our banks engage in a new round of intolerable negligence and criminal mismanagement.

The rule used to be that you don’t talk politics at the bar. I believe that has kept us out of the conversation for too long. Bars and restaurants used to be places of community discussion. They were forces in their neighborhoods, their cities and their states. And if you think when this is all over, we’re just going to open the doors back up and tell Sam to play it without having our say, you are out of your f**king minds.

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Features

Hospitality Industry Feels 86’d

April 21, 2020

By Paul Samberg

Photo courtesy of Buffalo & Bergen/Photo by Rey Lopez

As COVID-19 continues to control the country, businesses are on life support, scrambling to pay the bills and employees. The allocation of $2.2 trillion in the Coronavirus Aid, Relief and Economic Security (CARES) Act neglected most of the hospitality industry, many of which are struggling to keep their doors open while Americans stay home.

In particular, the portion of the CARES Act known as the Paycheck Protection Program (PPP) designed to support small business seems to be failing most independent bar owners and restaurateurs. All too quickly the $349 billion provided for this program dissipated, and the few businesses that received support from the program do not find themselves in a much better position than they previously were in.

Which is exactly what concerns the Food & Wine Best New Chef and James Beard Award-winning chef Andrew Carmellini as he sees the financial aid programs roll out and restaurant operations severely restricted or closed altogether. This seasoned operator, whose restaurant group includes such NYC favorites as Locanda Verde, The Dutch, Lafayette, Bar Primi, and The Library at The Public, shares, “The PPP doesn’t put us as operators in a better position than we were, and I’m not sure it will put employees in a better position.”

A recent survey conducted by the James Beard Foundation reflects that Carmellini’s colleagues are equally concerned. More than 60% of respondents cannot sustain a closure for one month and 75% do not believe they will be able to reopen after two months of government mandated closure.

For those 75% of respondents who are not confident they will be able to reopen in June— which marks the eight-week usage term set out by the PPP guidelines—this program would not help keep their businesses afloat.

Staying afloat once COVID-19 hit wasn’t even a question for Wake the Dead, a popular breakfast spot in Lawrence, Kansas, which closed its doors on March 20. Fearful about her underlying health conditions, owner Rachel Ulbrick did not want to endanger herself by coming to work, and the PPP did not offer a feasible solution to temporarily closing. “I already have a fair amount of debt. Even though [the loan] was like zero percent, in three years it wouldn’t be. And that would add $20,000 on top of whatever debt I already have; I can’t do that,” Ulbrick said.

The remaining 25% of respondents who believe they could reopen in June face a secondary issue, though: actually receiving the initial loan. The CARES Act provides close to $349 billion in aid to small businesses through the PPP, but was designed to be distributed on a first-come-first-serve application basis.

On the first day applications could be submitted, April 3, $4.3 billion of the $349 billion available in loans was immediately allocated and banks began limiting applications. Wells Fargo was the first; they announced they would not consider loan requests submitted after April 5.

With the early April dates behind us, and PPP filings not a possibility for some, there are other avenues within the CARES Act to pursue, such as new unemployment benefits. In addition to the current standard weekly unemployment payments, supplemental payments of $600 per week are provided as part of the Federal Pandemic Unemployment Compensation measure in the CARES Act. For self-employed and gig workers, they also qualify for extended 39-week benefits, which is 13 weeks more than normal eligibility.

While the supplemental payments are a help to many workers filing for unemployment, the unemployment websites and offices have been overwhelmed and the process can be slow, clunky and confusing. Some checks began going out to unemployed New Yorkers in early April, but Missouri did not plan on doing so until April 12, and Indiana residents may have to wait until as late as April 20.

No matter whether you’re in a state that makes provisions for unemployment payments early or later this month, there are some workers who may not even qualify for unemployment benefits. Even for those a stone’s throw from the Capitol, who count amongst their guests the same legislators who passed the CARES Act, restaurants like Buffalo & Bergen were not immune to being left high and dry by unemployment. Gina Chersevani, who founded and owns both the Buffalo & Bergen at Union Market and the newest on Capitol Hill which opened just weeks before the country shut down, explains, “We just got rejected. Out of 26 people from my one location that applied [for unemployment], only two were accepted, both not tipped employees.”

Chersevani also feels that insurance companies are failing the industry just as unemployment isn’t there for so many of her employees.

She’s discovered that her carrier will not pay disruption of business for COVID-19 and says, “I’m in my ninth year paying them—the same insurance company—and they denied all my claims for disruption of business.”

Chersevani is not the only owner in the hospitality industry who has had this issue, and, as a result, some restaurants are getting together to file class action lawsuits against insurance companies. Wolfgang Puck, Dominique Crenn, and a handful of other famous chefs have created the nonprofit foundation We Are BIG (Business Interruption Group), which is threatening to bring legal action against insurers who do not start paying insurance business claims.

According to founding member and chef Thomas Keller’s statement on the organization’s website, “The restaurant industry is the largest private sector employer in America…We need insurance companies to do the right thing and save millions of jobs.”

Photo by Francine Cohen

Many restaurant owners are in agreement with Keller and the other chefs taking legal action against insurance companies. Longtime New Orleans restaurateur and co-owner of Commander’s Palace Lally Brennan shares, “I very much agree with the efforts by Thomas Keller and others [to take legal action] and have the law changed around, because that’s not what America is about; that’s abusive.”

This fear felt by restaurant and bar owners and staff is not unfounded. An analyst at UBS predicts that one in five restaurants could permanently close due to the outbreak, which would mean nearly 200,000 establishments are in danger. Thus far, about three percent of restaurants have closed their doors, despite the recently passed stimulus package, according to the National Restaurant Association.

In the wake of ongoing hardship and potential lawsuits due to COVID-19 related regulations, and the failure of programs that are not one-size-fits-all, the industry does what it does best — turns within to help one another, especially when lawmakers cannot.

“We currently are ignored by lawmakers, which has been true for as long as we can remember. Case in point, our independently owned businesses have not been given a substantive seat at the table during Congressional relief conversations,” Chefs Andrew Carmellini, Luke Ostrom & Josh Pickard said in an email urging others to sign their Relief Opportunities for All Restaurants (ROAR) petition.

Chef Guy Fieri and the National Restaurant Association Educational Foundation worked together to create a relief fund for restaurant workers who are struggling due to COVID-19. Their fund is raising money for those in need with one-time $500 grants. And big and small liquor brands like Jameson and actor Ryan Reynolds’ Aviation Gin have committed financial support to the USBG National Charity Foundation Bartender Emergency Relief Program’s Covid-19 Relief Campaign, which is offering needs-based philanthropic grants. Over a quarter million people have applied thus far.

Chef José Andrés is in week five of his #ChefsforAmerica campaign through his World Central Kitchen foundation. He has closed his restaurants, turning them into community feeding centers for people facing food insecurity due to COVID-19 related lost income. To date he has served 2 million meals.

Brennan and her cousin and co-owner, Ti Martin, are concerned about their team, many of whom have been with the iconic restaurant for more than a decade. They have been providing their recently laid off workers with food and other basic needs during the crisis, too. Brennan shares, “We gave away bags of vegetables and all the perishable items and things that we had cooked, and we’re giving away bags of toiletries and paper and paper towels and hand sanitizer. We’re doing all those types of things with the team to still stay in touch.”

Philanthropy for the hospitality industry is not just coming internally. Twitter personality Yashar Ali opened a GoFundMe to support restaurant workers. On his Instagram account he explains, “Restaurants have closed or are offering only takeout and delivery options, hotel business has slowed dramatically, and bars have been shuttered. As a result, people who rely on hourly wages (including those who rely on tips) are suffering, having seen their daily income all but disappear overnight, and for some already losing their jobs.”

Photo by Francine Cohen

Ali has already amassed over $1.1 from more than 8,900 donors, surpassing his goal of raising $1.1 million to be directed to Tipping Point Community and Robin Hood, two established foundations long dedicated to serving those in need.

Independent bars and restaurants need help. The future of COVID-19 is uncertain, and so is the future of many restaurants and bars in the nation. While many owners have had to close their doors forever, others are trying not to follow in their footsteps. The hospitality industry should not have to rely on famous chefs and Twitter personalities to help keep their doors open.

These days, it feels like an insurmountable task as Gina Chersevani concludes, “We are risking our lives serving f**king sandwiches.”

Photo courtesy of Wake the Dead

Features

BARS & RESTAURANTS AND THEIR STAFF ARE STRUGGLING DURING THE PANDEMIC. YOU CAN HELP…

April 21, 2020

CHEFS, SERVERS AND BARTENDERS TAKE CARE OF YOU. NOW THAT BARS & RESTAURANTS ARE CLOSED YOU CAN TAKE CARE OF THEM. HERE IS HOW YOU CAN HELP

Even as states like Georgia are early to open, much of the country remains in lockdown, compounding lost wages and heightening poverty issues such as housing and food insecurity. When the country comes back to business it could be months and months before those working in the hospitality industry find their financial footing once again. If at all.

In preserving the lives and livelihoods of those who are always there to serve you, your help can make a difference. Explore these links below to see how:

NATIONWIDE RESOURCES
https://www.barmagic.com/relief

GOFUNDME
Courtesy of Camila Fernandez (formerly of Osamil, NYC)
1. Osamil link: https://www.gofundme.com/f/1xnrl3duo0
2. SoHo Restaurant & Bar (Ecuador) link: https://www.gofundme.com/f/support-for-soho-team

FOUNDATIONS/501C3
USBG (United States Bartenders Guild) – https://www.usbgfoundation.org/