COVID-19: How to save restaurants

When the pandemic hit America’s restaurants, it was as if an anvil dropped — on a bubble.

To run a restaurant, any kind of restaurant, is a constant struggle to keep that bubble aloft. Every day is a negotiation: of labour costs, food costs, rent, insurance, health inspections, and the art and craft of creating an experience special enough to keep people coming through the doors. When the pandemic lockdown forced hundreds of thousands of establishments to close, there was no backup plan. No one was prepared for the extent of the fallout.

The restaurant and fast food industry, the second-largest private employer in the United States, collapsed overnight. At least 5.5 million jobs evaporated by the end of April, and the number of people employed in food services is still 2.5 million fewer than in February. Technomic, a consulting firm for the food-service industry, estimates that 20 per cent to 25 per cent of independently owned restaurants will never reopen. And those restaurants uphold an ecosystem that extends to farms, fishmongers, florists, ceramicists, wineries and more. The damage has been so severe that the James Beard Foundation announced in August that it would cancel its restaurant awards this year because of the pandemic and a need to re-examine structural bias.

The most deeply affected were restaurant workers, who were either laid off so that they could file for unemployment or were asked to keep working and risk their health. These are people who often do not have access to health insurance, earn less than a living wage and disproportionately include undocumented workers, immigrants, and Black and brown people — the most marginalised people in this country.

As the country begins to open up and restaurants slowly invite customers back in — New York City announced on Wednesday that indoor dining could resume at 25 per cent capacity — many of those same people are being asked to come back to work, with no change to their compensation or promises of assistance in case they get sick. (A number of restaurants have even had to close after reopening because workers tested positive for the virus.)

It’s unfathomable to imagine a country without restaurants, but even more unfathomable to imagine a successful economic recovery that doesn’t include restaurant employees. As such a large slice of the American work force, they are not only essential to growth. How we support them will be a litmus test for whether the United States can ever build a fair, equitable economy.

How the restaurant model is changing

Rebuilding the restaurant business can’t be just about diversifying revenue streams. It requires rethinking how employers and patrons value labour, which means shifting the restaurant model to one that’s centred on workers.

The onus for change should not fall solely on restaurants. The success of a worker-centred approach, especially in the middle of a recession, requires cooperation from customers and help from government. With many restaurants now welcoming customers who are tiring of home cooking after an extended lockdown, and getting national attention by policymakers, this is the time to make a structural shift.

The restaurants best equipped to kick-start this change won’t be those that are part of larger empires in densely populated, high-cost-of-living cities like New York and San Francisco. In fact, outside the fast-food industry, many restaurants in America have only one location. These are the places that don’t have a large corporate infrastructure. They are run by a small group of people, often family members. They buy ingredients from local producers. They are the lifeblood of their communities, and for them, survival is about more than just keeping a business running.

Every restaurant should be able to find a model narrowly tailored to its workers and community, so long as there is also a broader public safety net.

They are restaurants like The Four Way, a 74-year-old soul-food institution in Memphis. At the beginning of March, it was racking up record sales of its fried catfish and peach cobbler. Once the pandemic hit, Patrice Bates Thompson, the owner, had to make changes fast. Like many other restaurateurs, she shifted to mostly takeout and delivery, has been buying her employees groceries when purchasing food for the restaurant and is helping a few of them cover their utility bills.

Nearly every restaurant that survived the pandemic so far has had to adjust its operations in to survive. The shift to takeout is perhaps the most visible and lasting change for restaurants. Takeout and delivery services have allowed thousands of restaurants all over the country to survive, and the experience is evolving as restaurants apply their creativity to this now ubiquitous form. Seven Reasons, a fine-dining restaurant in Washington, bundles orders with cocktails in Mason jars and sends customers links to Spotify playlists to listen to while they’re eating — a lockdown-appropriate approximation of dining out. Junzi Kitchen, a mini-chain of Chinese restaurants in New York and Connecticut, was inspired by restaurants in China to design an interactive, rotating takeout menu, with an accompanying Instagram Live by the chef, Lucas Sin, explaining the story behind each dish and how to plate it. Other restaurants have turned into grocery stores, offering their premium ingredients to home cooks. The New York restaurateur Gabriel Stulman started selling meal kits out of his West Village spot, Jeffrey’s Grocery, so that customers can replicate popular dishes at home.

These innovations will certainly help restaurants to hang on in the near term, keep paying their employees and even increase revenue once dine-in service is more prevalent.

What tips mean for restaurant workers

But they don’t confront the larger issue: The business model of restaurants is built on the assumption of cheap labour. One out of six restaurant workers live below the poverty line, according to the Economic Policy Institute, and the industry has an exceptionally high turnover rate — 75 per cent in 2018, according to the Bureau of Labour Statistics, compared with 49 per cent for the rest of the private sector. In other words, jobs in the restaurant industry look increasingly like gig work — unstable, poorly paid and with few protections for workers.

To make it worse, the practice of tipping front-of-house workers (servers, bartenders and hosts), which is deeply ingrained in the culture and business model of restaurants, creates a disparity in income between front- and back-of-the-house workers, privileges white workers, who are more likely to work in the front of the house, and fuels sexual harassment. The Bureau of Labour Statistics reports that the median hourly wage for cooks is $12.67 and $11 for servers, but the IRS estimates that about 40 per cent of tips go unreported, which would inflate that server’s hourly wage to $15.40.

Anakaren Ibarra-Dumovich, a former sous chef at Rye Plaza in Kansas City, Montana, said that too many restaurants are reopening without considering what relying on tips for income means for workers. If people aren’t dining out as much, she explained, tip income could fall drastically and workers could end up returning to the same job for much less money. But if you’re offered work and don’t take it, you no longer qualify for unemployment. “Either you work and risk potential exposure and make no money or you lose all of it,” she said. “It is scary.”

Who is going to want, much less be able, to pay more for meals in the middle of a recession? And reduced capacity in restaurants will also mean reduced labour.

Devita Davison, the executive director of FoodLab Detroit, an incubator for socially minded food businesses, believes the industry needs to use this period of upheaval to think more radically. “The question is not ‘What does the restaurant look like?’ but ‘What does it mean to have a profitable restaurant?’” she said. “Because guess what, for the sake of profitability, who suffers?”

This is the harder question, and one that a few restaurants are starting to answer. One of FoodLab’s partner restaurants, PizzaPlex, in southwest Detroit, is already working to generate enough revenue to become a worker-owned cooperative, where every employee has a financial stake in the business and has a say in major decisions. For the owners, Alessandra Carreon and Drew McUsic, the goal is not to maximise profits for the two of them but to redistribute the wealth generated by their restaurant back into the community.

There are other ways for a restaurant to change its relationship with workers. Melissa Miranda owns Musang in Seattle, a restaurant she calls “Filipinx” to honour the genderqueer people she knows among immigrants from the Philippines in white American neighbourhoods. She instituted a single hourly wage across the board, with a tip pool divided by hours of work. She closed Musang for dine-in service before the stay-at-home order was issued in Seattle, because many of her employees live in multigenerational homes with older family members.

Turning restaurant into a community kitchen

She turned the restaurant into a community kitchen open two days a week, where people can pick up a free meal on a first come first served basis. Her team delivers meals three days a week, and that work is supported by donations from suppliers and customers. (About 75 per cent of online orders include donations, she said.) Musang’s takeout and outdoor dining sales are buoying the kitchen’s work as well, now that revenue has returned almost to what it was before the pandemic and the restaurant is profitable again.

The pandemic forced Miranda to re-examine what it means to run a restaurant: How do you provide health insurance during a pandemic when margins are so slim? What do you do with front-of-house workers when you’re a long way from dine-in service? How can you mentor employees and encourage them to become business owners themselves?

She has made some concrete changes. She eliminated tipping and plans to offer everyone on her staff health care and retirement benefits. She has reduced the size of her staff so that she can pay them more — between $25 and $30 an hour — and spend more time on training them and teaching them about the business. “I have worked in this industry a long time,” Miranda told me. “I never had a 401(k) or benefits or anyone looking out for my financial future.” Musang, she hopes, will be different. The old-school model of restaurants is exclusively about revenue. “We didn’t build this restaurant for that,” she said. “We built this restaurant with the intent to make change.” She wants it to be the last place her employees work before they open up their own restaurant.

Restaurants, workers and diners are left to make ethical calculations of their own. Close forever or reopen under unsafe conditions? Take a job in harm’s way or forfeit a paycheque? Support a local restaurant or risk a server’s health for a plate of enchiladas?

Francesca Hong, the chef and a co-owner of Morris Ramen in Madison, Wisconsin, also started a community kitchen, which she and another restaurant group, Rule No. One, have expanded into an initiative called Cook It Forward Madison. The project works with non-profit to provide meals to people in need. In turn, the non-profit provide the restaurant with financial and technical assistance, like accounting and legal aid.

That aid, plus donations through Cook It Forward Madison, allowed her to offer 100 per cent of her staff their jobs back. (About three-quarters of them accepted.) It also means that she gets to keep buying from local farms and other producers, ensuring that those benefiting from the restaurant include not just her employees, but also the broader community of workers that support it. (Hong has also become more active in the community politically; she is a candidate for a Wisconsin State Assembly seat.)

All of this effort to come up with new business models will accomplish little unless restaurant patrons understand the true costs of labour. Communication is key. Miranda, for example, has raised menu prices while trying to keep the restaurant accessible to locals. “If we were to introduce a 20 per cent service charge, that would be a bit of a shock,” she said. So she has shifted the restaurant’s repertoire to more vegetable-heavy dishes, so that she can spend less on meat and more on employee compensation. The menu includes a note to customers on how the cost of taking care of employees is factored into food prices. Not being transparent with guests “is where the pushback happens,” she told me.

How to follow safety guidelines while still making money

The rustic Berkshires restaurant, the Prairie Whale in Great Barrington, Massachusetts, reopened in June for outdoor dining, adding a 3 per cent kitchen service charge to offset the pay discrepancy between its front-of-house and back-of-house workers. Claire Sprouse, who runs Hunky Dory, an all-day cafe in Crown Heights, Brooklyn, announced in July that she was reopening the restaurant’s outdoor patio, but with no tipping and slightly increased menu prices.

The biggest argument against worker-centric systems is an economic one: Who is going to want, much less be able, to pay more for meals in the middle of a recession? And reduced capacity in restaurants will also mean reduced labour. Not every restaurant will be able to make big changes; many have always been in survival mode and lack the resources to alter how they do business. When Jacklyn Pham’s father opened Saigon Pagolac, a Vietnamese restaurant in Houston’s Chinatown, in 1989, he didn’t have a mission, she said. Cooking was simply what he knew how to do. He still does inventory with pen and paper. At the beginning of 2020, sales plummeted because anti-Chinese sentiment from the coronavirus slowed traffic to Chinatown. The restaurant did takeout through March and April, and reopened for dine-in service in May, as soon as Texas allowed it. There was no other way, Pham said. There were bills to pay.

At Monkey 68 in Roswell, Georgia, which reopened to the public at 50 per cent capacity in mid-May, Tay Wunn, the general manager, is focused on how to follow safety guidelines while still making money with fewer customers. Wunn doesn’t feel ready to ponder structural changes when the restaurant is making half what it did before the pandemic. He reopened because “we needed the revenue,” he said, and because so many of the employees did not receive unemployment benefits and wanted to get back to work.