Local restaurants feeling COVID-19 impact
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While the restrictive guidelines placed on individuals for dealing with the coronavirus may be inconvenient or irritating to many, similar restrictions may pose an existential threat to Iowa’s hospitality industry.
“The picture is grim,” said Jessica Dunker, president and CEO of the Iowa Restaurant Association, in reference to a recent survey of Iowa’s on-premise food and beverage industry. “We knew the precautionary step that shuttered large portions of our industry in an effort to fight the spread of the Coronavirus would be detrimental, but our initial numbers indicate that for as many as 20 percent of our operators, there may be no coming back.”
Owners of Ringgold County restaurants said they are definitely feeling the financial pinch of the restrictions, but all expressed their gratitude to their customers for their continued support during this difficult period.
Jamie’s Coffee Mill
Jamie Miller, owner of Jamie’s Coffee Mill and Deli, estimated her business is off “easily 50 percent.”
She has had to lay off two part-time employees and has closed her business on Saturdays, a day that usually drew in several out-of-town customers.
Store hours are 8 a.m. to 2 p.m. Monday through Friday.
Miller said currently her entire menu is available for carryout or delivery, and she thanks her customers for their continued support. A new website will allow online ordering of both menu items and merchandise.
Miller is unsure how long she can continue to operate her business under the current restrictions.
“We’ll see,” she said.
Still Smokin’ BBQ
Doug Still co-owns Still Smokin’ BBQ with his wife, Gina, and their business has truly become a family affair in light of the coronavirus restrictions.
After being forced to lay-off 15 employees, Still said his restaurant is now operated entirely by family members. He reasoned that limiting his staff to that close-knit group would lessen the likelihood of someone bringing the virus in from outside.
Still Smokin’ offers carry-out, curbside, and delivery service Wednesday and Thursday from 4-6 p.m. and Friday and Saturday from 4-7 p.m.
Still estimated his food receipts were down 50 percent. Alcohol sales are gone entirely.
Still added he was forced to eliminate some menu items due in part to suppliers laying off workers on their end. He said he was still learning to adjust his food orders so as not to have too much left over.
After first considering to close the restaurant entirely, he and Gina decided “to ride it out.”
“We’re just trying to break even at this point,” he said. “We’re in the same boat as everyone else.”
Rumors Bar and Grill
Amy Comer, owner of Rumors Bar and Grill, was forced to lay-off three-quarters of her employees and reduce business hours.
Rumors is now open for carryout Monday through Saturday from 11 a.m. to 2 p.m. and again from 5 p.m. to about 7:30 p.m., depending on orders
She estimates her sales are down 75 percent following the mandate against sit-down dining.
Comer said she was unsure how long she can continue to keep her restaurant open.
“It’s hard to say,” she said. “Maybe another month or two.”
She added she may decide to close Rumors before it is cut to the bare minimum with plans to reopen as soon as conditions allow.
El Vaquero Mexican Restaurant may be in the most precarious position of any of the other local establishments.
Owner Stephanie Morales estimates her revenues are off 90-95 percent, and she has cut staff hours by 60-70 percent.
While El Vaquero is still able to offer a full menu for carry-out, Morales has been forced to make other concessions.
The restaurant is no longer open on Sundays, and evening business hours have been reduced.
In addition, Morales said she is considering dropping or at least cutting back on breakfast offerings, a service the restaurant had only recently begun.
Morales said she hoped recently passed legislation offering a financial lifeline to small businesses will help her restaurant stay afloat.
Without that lifeline, Morales said, El Vaquero might be “good for another couple weeks.”
A national brand restaurant is not immune from the negative effects of the dine-in restrictions.
Chad Malmager, owner of the local Subway restaurant reports his revenues are off over 50 percent, and he has been forced to cut operational hours from 150 hours per week to 90-95 hours per week.
The store is now open from 9 a.m. to 8 p.m. seven days a week.
While Malmager has not yet been forced to layoff employees, he has encouraged them to go ahead and file for unemployment benefits to supplement their reduced hours and compensate them should layoffs occur down the road.
Malmager said he is hoping financial assistance from governmental initiatives can supplement enough revenue to keep his Subway open. Without it, he said, he anticipates his store can remain open for only another two to three weeks.
Malmager did not place a food order last week, but he anticipates placing one this week. However, if conditions remain the same, this week’s order may be his last. He asks customers for their patience if supplies run low.
Considering Dari Sweet has always operated as a take-out restaurant, owner Peggy Overholser reports that her business has not been affected too much by the mandated restrictions.
“We’re fortunate about that,” she said.
Overholser added one rising expense for her business comes from the increased use of hand sanitizer and disinfectant wipes as recommended by health officials.
Owner Donetta Phelps of the Wagon Wheel Cafe in Tingley reports her revenues have dropped about 30-35 percent during the shutdown.
Phelps has been forced to layoff three employees, which she plans to bring back once dine-in restrictions are lifted.
Right now, Phelps is running the business with the help of two high school students.
The Wagon Wheel is open for carry-out orders from 6:30 a.m. to 1:30 p.m. Monday through Saturday and 11a.m. to 1 p.m. Sundays.
Phelps explained one major loss to her revenue stream has come in the cancellation of two events she was scheduled to cater.
Casey’s General Store
The local Casey’s declined to comment for use in this article.
Statewide restaurant survey
The Iowa Restaurant Association study found:
• 35 percent of hospitality establishments (all categories) are currently closed.
• 91 percent of bars are currently closed
• 82 percent of restaurants and bars have laid off employees.
• Revenues across all types of concepts are down 84 percent when compared to March 2019.
Restaurants offering carryout for the first time are operating with skeleton crews and have still laid off as many as 90 percent of their employees
“Sixty-five percent of restaurants are trying to offer some sort of carryout or delivery, but only six percent of those surveyed are set up with a drive-thru” said Dunker. “Turning a table service restaurant menu, kitchen, infrastructure, team, and business model into a carryout program is difficult to do overnight. Many of our restaurants are simply providing carryout to the community as a public service. There is no profit for a restaurant that a week ago averaged $15,000 in sales and is now doing $2,400 per week in take out.”
She added that the industry’s average net profit in good times is 5 percent so an operator selling $2,400 per week has a net profit of less than $100. “You don’t keep a business long with those numbers,” said Dunker.
Dunker emphasized the industry understands its important role in delivering nutritious meals to people. Before these on premise service restrictions were put in place, 51 percent of every dollar spent on food was spent in the restaurant industry.
“I can’t imagine what would have happened in grocery stores if the restaurants hadn’t been allowed to provide carryout,” said Dunker. “They would have been even more overwhelmed.”
State aid a start, but federal funds needed
The State of Iowa took a number of quick steps to attempt to assist Iowa’s hospitality sector including: relaxing unemployment restrictions and penalties for employers and employees; expanding alcohol privileges to restaurants and bars to include carryout, delivery and drive thru for beer, wine, and spirits; deferring sales, some property and state payroll tax payments; and creating a Small Business Grant Relief Fund. The Small Business Administration (SBA) is also offering a number of disaster relief programs.
But Dunker says Federal money will be needed if there is any hope for Iowa’s hospitality operators. “We need cash in hand to ensure rents, food costs, and employees get paid,” said Dunker.
The Association asked survey respondents to rank the steps that could be taken to help operators survive this unexpected business interruption. Two options immediately rose to the top.
• 46 percent said immediate reprieve for all tax obligations including but not limited to property, sales, unemployment and payroll taxes would offer the fastest help.
• 45 percent said direct relief aid for operational expenses including energy, rent, mortgages, food costs, etc. would be most helpful to keeping them open or helping re-open.
Other priorities mentioned included the automatic extension of licenses, expanded alcohol privileges and a desire to repurpose alcohol profits to provide restaurant relief.
“We’ve appreciated the state and SBA’s first steps, but we’re anxiously awaiting to see what the Federal Coronavirus Aid, Relief, and Economic Security Act provides our industry,” concluded Dunker.