Without a plan, state shutdown throws restaurants into despair, and maybe to death row

Gearing up for its third summer season, the entertainment venue Ocean 5 in Gig Harbor and adjacent restaurant Table 47 employed 137 people, some part-time.

Under the first round of pandemic restrictions in March, manager Aaron Shook laid off all but eight of them. When half-capacity dining in Pierce County resumed in June under Gov. Jay Inslee’s Safe Start plan, he was able to rehire about 30 more.

On Wednesday, he laid them off again.

“There’s numbness but also a wash of emotion around it,” Shook told The News Tribune that day, the beginning of a second pandemic-induced ban on indoor dining in Washington state. “With going backwards, we really hit a point where we said we can’t justify the loss anymore.”

The restaurant and venue, which normally would have hosted dozens of events this summer, has been operating at “a significant loss” since March. Despite nearly nine months of slow bleed, “It was worth it to us to keep our team working,” he said.

Already on the brink with reduced capacity and just plain lower revenue, the business will only survive in the long-term if it amputates the highest costs today.

The governor told Washington businesses the latest partial lockdown would last four weeks. Many restaurant owners don’t believe it will be that short.

Chad MacKay, the CEO of El Gaucho, a steakhouse with five restaurants in Washington and one in Portland, Oregon, heard “four weeks” and said, “And then you just realize they’re not gonna let us open this year.”

John Xitco of Tacoma’s X Group, among its properties the Argentinian steakhouse Asado and E9 Brewing Company, said last weekend he was “frustrated and upset.”

All three of these operators expressed the same consternation, not with some new restrictions, but rather the extent of them. They anticipated further capacity reductions, a service curfew or smaller party sizes. They did not expect to lose their bread and butter, again, without a plan.

IS OUTDOOR DINING ENOUGH?

Many restaurants might not have access to outdoor space or the funding to build it. Local governments have stepped up to assist with various grants, often funded through the CARES Act, but is it enough?

The state has earmarked $50 million to support affected businesses, Inslee said Sunday. How far will it go? When will it arrive? How will it be distributed? None of these questions was answered when the governor addressed the state earlier this week.

“That was probably the most heartbreaking part of this latest setback,” said Shook, “is that once again they put forth policies that have devastating impacts on small businesses like ours and others in hospitality, and other industries, without a solid working plan to support those businesses.”

He paused and added, “It’s just — you would think they would have gotten it by now.”

Shortly after the governor’s announcement on Sunday, Washington Hospitality Association president Anthony Anton said, “This industry was hanging by a thread before today. If this is our December, we need relief.”

His coalition, which represents restaurants, hotels and entertainment venues, has been fighting for outdoor tenting guidelines from the governor’s office for weeks, he said. Two-sided tents were permitted this summer, allowing for ventilation. According to guidance released Monday, winterized versions can still only have two walls (three with a “large enough” opening “to create cross ventilation”). Pods and igloo-like structures are permitted, but they must be “aired out” between parties and empty for at least 10 minutes before sanitizing.

WA RESTAURANTS ‘HANGING BY A THREAD’

Of the restaurants that survived this year until now, some, like El Gaucho and X Group, credit the Payroll Protection Program, administered by the Small Business Administration, with helping them get there.

Under the nation’s largest federal relief program, businesses with under 500 employees at one location were eligible to apply for a PPP loan last spring, as much of the country had shut down to thwart the spread of COVID-19. If used primarily on payroll, the $525 billion in loans to more than 5 million companies would would be forgiven, a process that is going on now. It was structured to be accessible, yet the SBA’s inspector general uncovered copious fraud, ranging from newly formed corporations to multiple deposits to the same account, according to recent investigations by the Wall Street Journal.

In Washington, more than half of hospitality workers who lost their jobs last spring had returned to work, according to state employment data. The Employment Security Department this week, in its October report, said, “Most payroll jobs lost year-over-year have been in leisure and hospitality.”

MacKay said El Gaucho lost money when it reopened in June but had finally turned a corner in October when the company’s PPP loan ran out.

“A lot of restaurants were able to come back because that was in place,” he said. “The survival rate was much better. It’s gonna be a much harder go-around.”

Though not the first to say so, The New York Times this week published an editorial titled, “Save America’s Restaurants,” officially endorsing the RESTAURANTS Act. The Congressional version excludes chains with more than 20 locations, whereas the Senate would include large corporations. Both have bipartisan backing, but all is quiet on the Hill.

“Cash relief is critical,” said Anton. Maybe it’s direct grants, another iteration of PPP or an industry-specific act, he continued. “I don’t care about the label or the party. I need to help small businesses now.”

The industry also awaits the hope of a special session of the state Legislature.

HOSPITALITY WORKERS CAUGHT IN THE MIDDLE

Lost in the deluge are hospitality workers themselves, who, like their service sector counterparts in grocery and retail, have been subject to adverse conditions both before and during the pandemic.

This week, the hospitality association sent a letter to the governor requesting reconsideration of the indoor dining ban, arguing that restaurants are not cesspools of infection. The governor’s office has said the trade group’s aggregated data fails to paint “the complete picture,” according to The Seattle Times, and omits the risk posed by people spending prolonged time in enclosed spaces.

Working Washington, a labor advocacy group, said in response that restaurant workers have had little choice in confronting “dangerous situations,” and lamented employers that have kept cases secret. Rather than focus on reopening given the circumstances, the group said in a Thursday press release, the state should “immediately fix the unemployment system to provide benefits quickly to workers in need, and to ensure any relief offered to restaurant owners should be equally shared with restaurant workers who are bearing the health risk as well as the financial impacts of the restaurant industry’s actions.”

As the Washington state Employment Security Department watches the claims roll in, every day matters, said Shook, who closed Ocean 5 and Table 47 on Nov. 18 for the foreseeable future.

“Most of those businesses that are being impacted are being impacted today; 20- to 30,000 people will lose their jobs today. Not three to four weeks,” said Shook. “We needed that plan before you put this in place.”

This story was originally published November 20, 2020 at 7:31 AM.