Restaurants contribute $3 trillion to the US economy each year. More locally, Rhode Islanders are proud to point to local restaurants as not only a major contributor to our culture, but also to the state economy. The RI restaurant industry generates some $2.7 billion in annual sales, and employs nearly 60,000 people, according to the Rhode Island Hospitality Organization. We can all see that the longer the shutdown lasts, the bigger the impact on the independent restaurant operators, so beloved by locals. What kinds of changes will the pandemic bring to this essential component of our state identity?
Top of mind for most people is keeping customers and staff safe from COVID-19. Ryan Bessette, founder of the Rogue Island Restaurant Group said, “I think we will see hand-held heat scanners and employees being tested prior to coming to work for temperature. I have heard of new cameras being made that actually tell people’s body temperature before they walk into your establishment. I think it’s important that we know the customers are healthy that come in, so we protect our staff and their families.”
Governor Gina Raimondo has suggested a few guidelines in her daily briefings, such as temperature checks, keeping personnel together on shifts to avoid unnecessary exposure and reducing the number of tables in a restaurant. However reducing the number of tables could be disastrous for many restaurants. As Bessette put it, “If it was up to us, I would assume most restaurants would say no. I do see the importance of social distancing even when this is over, but some restaurants might not be able to operate at a shortened capacity.”
The calculus for how many tables are needed in a restaurant is a carefully calibrated equation. Reduce that number and the profitability of the restaurant will also be reduced. As David Dadekian, consultant and founder of EatDrinkRI said, “Consumers need to be made aware of the painfully low margins a restaurant exists on.” Restauranteurs are still waiting to hear how the state wants them to structure dining rooms and kitchens after lockdown ends. In the end, it may be a purely subjective call based on size, configuration and finances.
Small independent restaurants typically employ fewer than 50 people, thus providing health insurance is not mandated by the government. With the best will in the world, it remains nearly impossible for owners to offer healthcare coverage and paid sick leave considering how very small the margins for profit are in the restaurant business. But if there is any lesson to be learned from this pandemic, it is that everyone needs to be covered, sick days need to be paid for and people must be able to take time off to be sick and not lose financially. Maintaining public safety would seem to require that health coverage for all food workers is an essential tool in the arsenal of public health.
Unemployment insurance is another anomaly of the restaurant world. Most employees, particularly servers or front of house personnel, are classified as part-time workers and don’t qualify for unemployment when they lose their job. And while the CARES Act has included the gig economy for now, when folks head back to work, it would be a missed opportunity to fail to make that a permanent change.
When asked whether consumers will see menu changes, answers varied. Dadekian said, “I can answer this anecdotally from talking with many owners and chefs, and the answer is yes. It’s a lot more comfort dishes and things that travel well.” Bessette from Rogue Island responded differently, “For me no. I see what’s available to us and make a menu based around that. That is something we have always done and will continue to do. We will continue to support as many local farms and purveyors as we can. I think this won’t change in any way and hope to see more people shopping at farmers markets than at Whole Foods. Support local!”
Rhode Island is fortunate to have a robust agricultural and fishing community to offset supply chain disruptions suffered by other restaurants with less access to homegrown. In this state, many independent operators go to great lengths to support the local producers. With a symbiotic relationship between the two sectors, it is vitally important for independents to remain viable in order to maintain the health of those supply chains. Absent state and federal support for the food community, Derek Wagner, chef owner of Nick’s on Broadway, wonders, “If we make it through somehow, will the farmers and small wine shops and fishers and producers be there at the other end of this?”
While the CARES Act and other government bailout subsidies have provided some relief, much more is needed. If not direct cash payments then, at the very least, reprieves or grace periods from credit card debts, mortgage payments, rent, health insurance, liability insurance, taxes and more. The list is daunting.
But without that kind of significant and targeted assistance, we will be left with, as Wagner put it, “Corporate or chains. Say goodbye to the owner-operated pub or restaurant where customers and preferences are known by name.”
When restaurants re-open, prices are likely to be considerably higher, particularly if unemployment insurance or health insurance become mandatory. Beyond that, as Wagner explained, “The economic model of a traditional restaurant has been on the brink of extinction for years. Any business that spends 92 to 98 cents on the dollar … well, we don’t even use the P word, profit. COVID-19 is just the straw that broke the camel’s back in terms of exposing the fragility of our industry. The bottom line is, you can’t pay the same price that you paid 25 years ago for the same meal. It’s time that people have a reckoning with that.”
Dadekian went further. “Many of those consumers need to make more money themselves to pay for this. Is our whole economy based on not paying people enough so they can’t in turn pay the true cost of goods?”
It looks inevitable that an industry we have for so long taken for granted will undergo major changes in costs and structure. Painful as that may seem, permanently losing restaurants like Nick’s, Rogue Island or the many other temples of gastronomy unique to Rhode Island would seem a far greater loss than paying a few extra dollars at a meal out. Will we step up to meet those challenges? That is truly the trillion dollar question.