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Will mom and pops survive the shutdown?

No one knows with certainty what independent restaurants will look like on the other side of the coronavirus pandemic, but one thing is for sure: There will be fewer of them.
Photo illustration by RB

This is the third story in a five-part series examining the long-term impact of the coronavirus pandemic on the restaurant industry.

Seattle chef Eric Rivera started Addo restaurant a couple of years ago, as a two-seat dining series in his apartment, before securing a space for his inventive, impossible-to-categorize restaurant.

That scrappiness and agility has served him well during the coronavirus crisis, says Rivera—who previously worked at Chicago fine-dining stalwart Alinea. But he suspects that won’t be the case for many independent restaurants.

“A lot of the mom and pop places will probably die,” he says. “It sucks. There’s not a lot of help at all for them unless they’re fending for themselves like I am. There are restaurants on the same street as mine that are closed.”

Rivera says he’s now operating “like 10 different restaurants in one space,” including a grocery operation selling seafood, meat and pantry items; a three-meal delivery package; a wine club; and a charitable, pay-it-forward offering. A catering van now serves as a delivery vehicle.

“We’ll do whatever it takes,” Rivera says. “If I have to drive around in my car and sell instant ramen out the back, we’ll do it. I’ve never gotten to the space where we’ve perfected this one thing. If you do that, you’re dead.”

 

“If I have to drive around in my car and sell instant ramen out the back, we’ll do it. I’ve never gotten to the space where we’ve perfected this one thing. If you do that, you’re dead.” — Eric Rivera, Addo  


A shrinking segment

One thing is clear when it comes to independent restaurants in a post-pandemic world: There will be fewer of them.

“None of the chains are going to come through unscathed, but chains obviously do better,” says David Henkes, a senior principal with Restaurant Business sister company Technomic.

The way Henkes sees it, full-service, independent restaurants will be hardest hit by COVID-19, with up to a quarter of them unable to survive the effects of the pandemic.

The market was already oversaturated with restaurants before the virus hit the U.S., and undercapitalized players will be the first to go.

“The market is going to be much more heavily chain-focused because they’ll be the ones that don’t decline as much,” he says. “For independents that do survive, you’ve got to do some shifting in your business model. Everybody’s going to need off-premise, delivery, takeout and catering. We used to talk about restaurants competing on convenience or on experience. Most full-service independents were experience focused. Those are the ones getting killed right now because you just can’t offer a dine-in experience. They’ve got to diversify. They’ve got to have an outlet if something like this happens again.”

Where indies stand

Source: James Beard Foundation survey of independent restaurants conducted during the first part of April

Will employees remain?

Pre-pandemic, employee recruitment and retention were the biggest headaches for operators. There never seemed to be enough people to fill all the jobs. After the pandemic, some independent restaurants might find themselves in a similar, though slightly altered, situation.

Jimmy Cavallo runs Napoli’s Pizza & Catering in New City, N.Y. The restaurant is just 950 square feet, with a couple of tables and a heavy takeout business driven largely by its proximity to a couple of large schools.

Cavallo was open for deliveries for a couple of weeks but decided to temporarily close on April 1 to protect his employees. Now, he’s unsure if they’ll all come back when Napoli’s reopens.

“There’s going to be a lot of guys on my level that are going to lose employees,” Cavallo says. “How long can they go without working? Will they go into construction or landscaping or whatever? That’s going to be the collateral damage, the staffing issue. The delivery guys and the counter people are transient. But our cooks have been with us for a long time. It’s going to make me nervous if we’re out here for two months or three months.”


Changing the landlord-restaurant dynamic

Robyn Matarazzo, co-owner of New York-based Villaggio Italiano Restaurant, which has been in business for 42 years, had to let go of all but five of her more than 20 employees once her dining room shut down to slow the spread of the virus.

Before the pandemic, takeout was just 10% to 15% of her business. “Now, obviously, it’s all we can do,” Matarazzo says.

Yet she still has a $15,000 monthly rent bill for her space.

“I kept getting emails [from the rental company] that said, ‘We’re here for you. We’re here to help,’” Matarazzo says.

So she asked about a rent deferment.

“They emailed back and said if the state of New York allows you to open, you’re responsible for the rent on the first,” she says. “Had they been more able to work with us, I might’ve closed my restaurant. But because it put me in a detrimental position financially to close, it didn’t give me a choice. I was so irritated by the lack of compassion.”

She expects to see independents be more conservative and cautious about signing leases in the future, especially with major rental corporations.

Restaurants will remain attractive tenants for landlords, especially as more and more retail is pushed to online-only, says Yann de Rochefort, founder and CEO of the Boqueria tapas chain, which had seven units before the coronavirus hit. All locations are currently temporarily closed, a “heartbreaking” decision, de Rochefort says.

“Whether restaurants remain attractive tenants is going to depend less on the coronavirus than on where the economy goes,” he says. “The trends that were in existence before this are going to continue and be exacerbated. I don’t think it’s going to change restaurants being attractive for landlords. If anything, it may paradoxically accentuate it. Out-of-home dining is what people are still willing to travel for.”

“There’s so many restaurants that are cozy little places where people don’t mind sitting on top of each other. You’re going to see a change in that.” — Jimmy Cavallo, Napoli’s Pizza & Catering  


Will the character of independents remain?

And then there is the intangible, unquantifiable character of independent restaurants. From the corner bistro that was always humming with bar business to the friendly neighborhood Chinese takeout place where the owner knew everybody’s order—what happens to those places? How will they change in a post-pandemic landscape?

No one knows for sure, obviously.

“There’s so many restaurants that are cozy little places where people don’t mind sitting on top of each other,” Cavallo says. “You’re going to see a change in that.”

Matarazzo is already planning to remake her dining room.

“We’re going to take out 30% of our tables, so there’s enough space in between the tables,” she says. “Even if they don’t require us to, we’re going to do it.”

Dave Miller, co-owner of Chicago bakery-cafe Baker Miller, hopes and believes that consumers will display a loyalty to their neighborhood restaurants, one that continues long after the current crisis has passed.

He saw it happen after Sept. 11 and during and following the 2008 recession, in which people frequented neighborhood cafes even during their unemployment, just to have a place to hang out.  

“The places that fought to keep serving, people feel more attached to them because it’s real people,” Miller says. “People are realizing their dollars matter so much. When they do go out, they’ll be more intentional about where they go.”

 

How the coronavirus will change the restaurant industry

Sunday: Why the coronavirus shutdown will upend delivery services for good

Monday: Shakeout and takeout usher in new realities for full-service chains

Today: Will mom-and-pops survive this?

Wednesday: How the coronavirus will change menus

Thursday: With survival on the line, expect restaurants to plan for the impossible

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