Restaurants' 'Existential Crisis'

Jul 21, 2020
Originally published on July 22, 2020 5:05 pm

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The Girl & The Fig's inside dining room is empty these days.
Megan Steffen / Untapped Media Inc.

In 1997, Sondra Bernstein took a chance on a dream and opened a 45-seat restaurant in Glen Ellen, a small town in California's wine country. She named it The Girl & The Fig. The restaurant, which she describes as "country food with a French passion," took off, earning rave reviews in places like Bon Appétit and The New York Times. The Girl & The Fig grew into a mini-empire in Sonoma Valley, including two restaurants, a food truck, a catering company and a product line. Business was good.

That is, until COVID-19. In mid-March, Bernstein became the first restaurant in the area to shut down. "I was freaking out, honestly," she says. A couple of days later, California imposed a mandatory shutdown. And soon afterward, her catering business cratered with a wave of wedding cancellations and postponements.

"And then we really just went into that emergency mode," Bernstein says. "Like, 'We need to cut our expenses way, way, way down.' " This included laying off most of her staff — thereby adding a couple of hundred employees to the jaw-dropping 6 million restaurant workers who have been laid off during the pandemic.

The restaurant industry is facing "an existential crisis," according to a report from the Independent Restaurant Coalition, a national organization formed in March that counts Bernstein as a member. Laid-off restaurant workers are the largest category of the newly unemployed. The Independent Restaurant Coalition warns that without doing something big, "85% of independent restaurants could close permanently."

You could blame the free market. It's doing its best to kill restaurants and "reallocate" their workers to new sectors where people are actually spending money. Adam Ozimek, the chief economist at Upwork, has been watching this closely. But we didn't call him because he is just an economist. He's a restaurant owner too. He's the co-owner of an "eatertainment" place in Lancaster, Pa., called Decades that is part bar, part restaurant, part arcade and part bowling alley. He describes it as "an upscale Dave & Buster's" with supergood cocktails.

Decades and The Girl & The Fig are doing their best to survive. They've laid off staff, streamlined their menus and boosted their takeout business. They've invested in protective equipment and cleaning supplies. They've expanded outdoor seating. And they've both received forgivable loans from the federal government's Paycheck Protection Program. Ozimek wouldn't disclose the exact amount. But The Girl & The Fig ended up getting over a million dollars through the program. Bernstein is incredibly grateful, and she says, "I don't know how we'd be here without it." But she also says the program's rigid rehiring rules and formulas to make loans forgivable were a headache and kinda impossible to satisfy while business collapsed. She even testified in a Zoom congressional hearing to reform the program. Congress ended up giving businesses like hers and Ozimek's more flexibility to pay their bills with PPP money.

Even so, Bernstein says The Girl & The Fig is getting less than a third of pre-pandemic sales; Ozimek says Decades is getting only about 15%. This plunge in demand is killing America's restaurants. And Ozimek is worried that if we let viable restaurants die before we get a vaccine, it will destroy a once vibrant culinary scene and create an army of unemployed restaurant workers.

To fight the bust, the Independent Restaurant Coalition is calling for a $120 billion "Restaurant Stabilization Fund" that would dole out grants to restaurants as a bridge from now to whenever the impossible economics of the pandemic end. The idea has formed the basis for a congressional bill called the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed To Survive Act, or the RESTAURANTS Act, which currently has 93 co-sponsors. (Slow-clap for that acronym, right?)

Ozimek would prefer huge, multi-decade loans to restaurants at zero interest. He also wants such loans to be given to everything from mini-golf courses to bars to basically any face-to-face business finding it hard to survive in the pandemic economy. "I think the focus should not be on piling short-term cash into these companies to keep them whole for short-term periods," says Ozimek. "Because that's what PPP was. It's a short-term fix."

Massive zero-interest loans, he believes, would provide the bridge to normal times, give businesses greater flexibility to adjust and also give them an "incentive to stick it out for a long time." These generous loans, he says, would lower operating costs for decades, and businesses could use them to do things like buy their buildings and get out of rent payments. Yeah, the policy would benefit incumbents, but Ozimek says, hey, businesses alive right now are going to have huge debts to deal with. This would help them recoup coronavirus-related costs over the long run.

While Washington debates, my mother and I initiated our own rescue package by dropping by The Girl & The Fig. We sat outside — the only option. I got a fancy sirloin burger with brie, house-made pickles and frites. She got the local salmon with grilled squash, fingerling potatoes and arugula pistou. It was delicious. And besides the masks, the hand sanitizer, the contactless menus and the 6-feet-apart tables, for a brief moment we were transported back to normal times. It was glorious. We tipped extra because Lord knows they need it. Burger pic below.

Mmmm, burger.
Greg Rosalsky / NPR

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