COVID Effect: The Louisville Restaurant Industry

For most of us, hearing the phrase “in these uncertain times” or “during this unprecedented time” is one of the most cringe-worthy things about the year 2020. I’m exhausted by the headlines, the mandates, the fighting, the confusion. There’s a dark line that divides the American people today, darker than anything I have ever seen in my 40 years of living on this planet. That line is created from “opinion”. What?!! You thought I was going to say that it’s a virus…maybe protests? Nope, it’s actually the idea that you’re either this way or that way. You’re either 1A or 1B. There’s no middle ground and if you’re over there, then you’re not on my team. Everyone is allowed to have an opinion. This is a freedom that we, as Americans, are allowed. There are places where your opinion doesn’t matter. Here in America, you can be heard, to a degree. Nothing is perfect, and I am certain that the USA is further from perfect than maybe we have ever been. I just want to provide an opinion of my own. It’s not based on political affiliation or scientific research, but on my firsthand experience in an industry that is feeling what is quite possibly the heaviest burden of the global COVID-19 pandemic: the restaurant industry.

THE ESSENTIAL

Let me begin by saying that I hold 3 paying jobs. 1) Realtor 2) Photographer 3) Bartender at a local restaurant. I am a restaurant industry veteran of more than 13 years (1999 -2013 & recently 2019 to the present), and I’ve served in almost every capacity within the industry. This article is not condemning the precautions taken by our government, it’s not built on conspiracy theories, and it’s certainly not political. This is a perspective looking through a lens of which most people are unaware. I believe that service industry professionals (and yes, I call them professionals because it is a CHOSEN profession for many people who make a very nice living doing it) are bearing the brunt of this pandemic, and there’s not much reason for it.

You may remember back on March 15 of this year hearing extraordinary chatter regarding the shutdown of business as we know it. It seemed absurd to me. This has never happened. Ever. I can’t imagine anyone had ever thought anything could cause such drastic measures, other than the end of the world. At this point, a number of states had already shut down restaurants and bars, they were requiring new protocols for office workers, and Kentucky was on the verge of following suit. We had never even heard of the nation’s workforce being classified as “essential” and “non-essential”. Sure enough, we were given the news: Beginning March 16, 2020 – restaurants closed, bars closed, retail closed, salons closed, churches closed, and 6 feet represented more than just your height. Social distancing became a trending phrase and we were encouraged to wear a mask in public. Public mask-wearing goes all the way back to the H1N1 global pandemic of 1918 that killed more that 50 million people worldwide and at least 675,000 people in the US. Masks were quite common then, however the thought of a global economic shutdown is unprecedented!

Here’s the initial shutter list for KY:

  • Grocery stores (obviously) were deemed “essential”.
  • Liquor stores were deemed “essential”.
  • Target, Wal-Mart, Lowes, Home Depot, Costco – “essential”.
  • Restaurants and retail were allowed to offer curbside carryout service only. (restaurants were even given a provision allowing the sale of to-go alcohol with purchase of food).
  • Bars were just closed if they didn’t sell food.
  • Gatherings larger than 10 people were discouraged, and that’s what started the sports, concert, music venue, music festival demise.

Georgia Tech Football Game circa 1918

STEP 1 – reinvent the wheel

I honestly think the initial reaction to this news in Louisville was rather mild, perhaps due to shock or disbelief. Nonetheless, businesses closed and people listened to the recommendations set forth by the governor. The restaurant where I work decided to remain open for curbside. “We can do carryout? Let’s do it!” I was super confident. Certainly our seasoned staff of managers, servers, and bartenders can run a great carryout program and all make money doing so…

During the first week we were basically playing Nintendo Wii the whole time. We had a few orders here and there, but nothing to justify paying two salaried employees on payroll. During the second week we decided to advertise on social media through various local dining channels and suddenly gross sales for an entire day were almost at the break-even point for the company.

I was minimally encouraged. I mean, after all we were actually getting great tips on the few orders we took, but the business wasn’t making any money. In fact, they were losing money. We started reinventing the wheel. We came up with a completely new cocktail list in order to take advantage of the carryout cocktails. We bought a wine corker, a few cases of empty wine bottles, and started promoting the carryout cocktail program. The response was amazing! And since the ABC requires food to be purchased with carryout alcohol, our food sales started climbing as well. I remember the first day that we were busy. It was hilarious. Our incredibly experienced staff, including me, were all basically reliving their first day working in a restaurant. It was chaos and we were all frustrated. We soon realized that there was no system in place for this type of carryout volume, nor was there a plan for scaling it. We basically had to create a new business model. So we did.

Changes:

  • We used the bar top to line up carryout orders. Nobody was sitting at the bar anyway. We placed the ticket on the bar and someone would come out from the kitchen with the order to match it to the ticket. (NOTE: this is completely different than when a restaurant accepts a carryout order at a full capacity restaurant. Typically someone calls to place an order, they are given a time, and they come to bar to pay for and retrieve their order)
  • We had to create better communication over the phone (ie. what car are you driving, when are you planning to pick up your order, we need to take your credit card over the phone to encourage less contact, etc)
  • The cocktail situation was taking off so we started making batches of specialty cocktails in a 5-gallon container and bottling 24 bottles at a time. Each bottle contains 4 cocktails. We had 5 different flavors of cocktails with a weekly rotating 6th cocktail. I would arrive at the restaurant at 10:00 am to basically batch and bottle cocktails until 2:00 or 3:00 pm to prepare for the evening rush, hopefully leaving a few bottles to start the next day. I remember one day selling almost 90 bottles of one specific cocktail, all while selling a typical amount of the other cocktails.

MAN, WE MUST BE KILLING IT!

Killing it? Not so much. I mean don’t get me wrong, we were no longer worried about breaking even. I would say that if your measure of success is based on whether or not you’re breaking even, there’s not much of a future for your business. Just for reference, I am including a few numbers at the bottom of this section. Keep in mind that this is only representative of one restaurant in the Louisville area, however I know that the effect of COVID lockdown is similar across the majority of the industry to an extent. The restaurant industry is a tight-knit community, pandemic or not. So, to say that we have all been in contact during this is an understatement. We all root for each other and discuss our successes and failures.

  • A typical Friday and/or Saturday prior to shutdown for one specific restaurant = $8,000 – $10,000 in sales.
  • A typical weeknight prior to shutdown for one specific restaurant = $3,000 – $6,000 in sales.
  • I cannot forget the excitement by the staff and owners when we first reached $4,000 in sales on a weekend night doing only curbside carryout. That was not the norm, and in fact there were still days where we only sold $1,000 for the entire day. I believe we hit $4,700 as a record for the carryout era.

GRAND OPENING, GRAND CLOSING

It was May 7th when Governor Beshear announced that restaurants could reopen as of May 22nd for indoor dining at 33% capacity with unlimited outdoor dining as long as social distancing could be maintained. That meant that our relatively large restaurant could open with a max indoor capacity of around 50 people. Not an exciting number for the owners, but we could continue to sell those carryout cocktails so they felt good and so did I. The first week of 33% capacity was super weird. I mean, people were acting like it was their first time eating out, and rightfully so. It became evident that people weren’t sure of the “rules” at the establishment they were walking into. Hmmmmmm. I thought the governor made it pretty clear what the rules were: Wear a mask to your table, employees wear a mask always, 33% capacity. What was I missing? Perhaps not every restaurant was following the rules.

The numbers were not in the restaurants’ favor at this point (or really ever). A mandate for 33% capacity meant that your staff had to be willing to work for 66% less money and risk losing their unemployment, which was the only thing keeping them afloat so far. Side note: I’ve already had the conversation with people… “Well, 33% seating means there will be less staff, meaning each server will have the same amount of tables, so they should make the same amount of money.” I’m giving you the buzzer on this one. No. Not even close. Can a server or bartender make money that’s equivalent to what they typically made pre-COVID during ONE SHIFT? Yes. Can a server or bartender work their normal 5-6 shifts a week when the restaurant is seating at 33% capacity? No. Fewer staff members per shift = fewer shifts per staff member. So here comes the next obstacle…

People coming off of unemployment to make less than half of what they were making pre-COVID makes absolutely no sense. You can’t blame someone for that. Bills still have to be paid and mouths still have to be fed. If you were paying any attention, you could see “now hiring” signs all over the city at restaurants and fast food establishments. It’s because nobody could afford to go back to work. So now you have an influx of new people working at your restaurant, some of which have never worked in a restaurant in their lives.

We continued to prepare cocktails in wine bottles so that whoever was bartending at night could pour cocktails without having to actually know how to make the cocktail. We hired a few non-bartender bartenders. Here’s where people find out that working in the service industry doesn’t require a masters degree, it requires far more than that. It requires patience and customer service, no matter the attitude of those you are serving. As it goes, hiring new people, whether they’re experienced in the industry or not, requires training. Training = time & money. So now we’re spending time and money on people who may or may not last because they may or may not have what it takes to survive, and even if they do, they may or may not make any money. At this point the restaurant is paying bartenders $12 per hour because they have to make money somehow, and at 33% there are no bar seats. Bartenders are serving cocktails to the whole restaurant without actually serving them. Tip-outs from servers are fine, but that ain’t paying the bills.

Here’s what we didn’t see coming. With people being allowed to dine in, carryout sales, including the lucrative, keep-your-business-afloat novelty of carryout cocktails, took a nosedive. We went from making 18-36 bottles of each carryout cocktail per day to making 6 bottles every other day. Essentially, re-opening in-person dining ended up hurting the restaurant. That’s so 2020.

Step 238 – Reinvent the Reinvented Wheel

In what universe are you forced to create a new business model for something as common as a restaurant, not once, but twice? Corona 2020, that’s what universe. Buy a tent and set it up in the parking lot so that we can accommodate more guests? Sounds great. Need a permit? (read: pay local government money to acquire said permit) Sure, we’ll get the permit. Find out that you actually need 2 permits from the same government office, yet no one told us about it when we paid for the first permit? Is this OZ? Where are we? Oh yeah, 2020, that’s where. Cancel the tent. We need bar seats. Our happy hour was basically nothing, and our dinners were supporting our lunches, meaning it didn’t make sense to stay open for lunch, but we had to hold out hope. It was a mess.

Halfway There

The announcement came that restaurants could open at 50% capacity, and bars were allowed to open again with social distancing. This was encouraging. Even though most restaurants couldn’t actually make it all the way to 50% capacity because of the 6-foot social distancing rule, this at least gave us the room to add bar seats and try to get that happy hour crowd that we were desperately missing. After all, curbside orders were coming in at about 20% of what they were when we were shut down, and carryout cocktails were almost non-existent at this point.

Bumping up to 50% gave us about 22 more seats, 10 of which were at the bar. The first week was just another learning experience. Shocker. We have completely changed what we knew to be a “normal” business model 3 different times now. It wasn’t the same as it was before lockdown. Will it ever be? Sales were way down. People were coming in for dinner, but we were hurting for that carryout cocktail business that never came back. Here’s an idea: let’s offer a ridiculously low price on some of our cocktails to get people in the door, then overall sales will increase because of food. Brilliant! A new model! Here’s the kicker: We could no longer utilize the “non-bartender bartenders”. Cocktails weren’t going to be made in batches any longer, so experienced bartenders were needed. Out of the 6 original bartenders on staff, we were left with 2… me and one other. Sweet. Thankfully, we were cross-training a server before shutdown and he was ready to pickup bar shifts. To bring labor cost back into an acceptable range, bartenders were going to go back to the lower hourly wage, but now we could actually serve people and make tips. The owners of my restaurant always had the best interest of the employees in mind first. It was always about the employees making money, and I can’t give them enough credit for that. So, now the bar would have 2-3 tables and 10 bar seats, as well as server tip-outs (though not required, all servers were happy to tip us out for making all the drinks for their tables).

The first Friday night at 50% was hilarious. We were offering incredible prices on specialty cocktails and certain liquors, but we are typically known for our beer. Here’s why that’s important: orders that roll in from the tables usually look like – “beer, beer, beer, cocktail”. Cocktails are time-consuming, but pre-COVID it didn’t matter because we had at least 3 bartenders behind the bar, and although we had 25 bar seats then instead of 10 now, we didn’t have tables to serve. It was a smooth system… a well-oiled machine.

Every ticket that came back on the first Friday was a cocktail. Mostly it was 4 or 5 different cocktails. Like, nobody ordered the same drink as another person sitting at their table. The two of us being more experienced than most bartenders in the area were absolutely buried in the weeds. We were happy for the business, but certainly ill-prepared for yet another shift in the logistics and economics of the restaurant industry, which up to this point had remained pretty standard. We each made $100 that night working harder than we ever worked on a pre-COVID night where we were accustomed to making $300. Time to tweak this method a bit. It’s ok. By now we realized that every new week of COVID-19 is a learning experience, and an adjustment.

The next week was much better and we were able to, once again, change the way bartenders prepare for the busy nights. This time the outcome was more money and less disaster. Still not on par with pre-COVID numbers, we were encouraged by the adjustment.

John Mellencamp Was Right

The walls came tumbling down… crumblin’, crumblin’. Monday, July 27, 2020 – Governor Beshear announces that he is requiring bars to shut down again and restaurants are required to reduce in-house seating to 25%. Ok, I guess. We just revamped our entire business model 4 times in 3.5 months so that we could barely stay afloat, but sure we’ll reduce capacity to the lowest point in the history of COVID-19 restrictions. Like, we started at 33%. Why does it make sense to drop down to 25% now? And, why is it that bars in Lexington are being blamed for the capacity reduction for restaurants in Louisville. Trust me, I know that there are a few Louisville bars that gave zero concern for the rules that were given them upon re-opening, but come on. Also, when is that 25% capacity mandate going to be required for Target? Wal-Mart? I mean, if we’re going backwards let’s make sure that we cover all our bases. Should we not instead reward the businesses who did exactly as they were told, and punish those who didn’t do what they were asked to do? That, I suppose, would require enforcement, something I don’t believe is anywhere on the radar for the government anytime soon. I say shutdown the business, not the industry.

What else could possibly happen to make this worse? The government suspends or reduces the additional pandemic relief through unemployment insurance? Or maybe they decide to fight the Governor’s executive order to suspend eviction filings. All of the above happened as these very same citizens were starting to make money again and possibly pay off some of the debt accrued during this lockdown. It’s a major problem, not only for the restaurant employees, but for the restaurant owners as well. How can they stay afloat at 25%? How can they keep their staff? We went from 45 employees to 12 when the initial lockdown occurred. Now we have around 16. Can we avoid spending time and money on new hires? How do we avoid changing the business model again, only to be thrown into the fire again?

I have to say that the patrons of our restaurant have been incredibly gracious and supportive during this weirdness. I have seen the community come together to support something that they feel is getting demolished by all of this. I’ve watched as countless local restaurants have folded and closed permanently. I’ve seen the restaurant industry treated as if it were expendable. Zero restaurants have been offered any sort of “bailout” from the government, and the employees of these establishments have been accused of taking advantage of the unemployment system. Until you have walked in these shoes you can keep your mouth shut. Instead, pay attention to the perseverance of those restauranteurs who have somehow managed to limp through this mess. Who will survive? It’s unclear. Will restaurants ever be allowed to make money again? Also unclear. One thing is 100% clear: We will fight until we can fight no more. We will reinvent as we are required to. We will change because we are forced. We will try to ignore the double standard that includes massive national retailers being placed in higher importance than the local, independent restaurants who employ multitudes of Kentucky citizens. We will serve the public with smiles on our faces. If there was ever an industry that could muster the strength to survive this disaster, it’s the restaurant industry.

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