How Coronavirus Is Impacting the Restaurant & Hospitality Industries

How Coronavirus Is Impacting the Restaurant & Hospitality Industries

How Coronavirus Is Impacting the Restaurant & Hospitality Industries

Ponce’s Mexican Restaurant in San Diego was slammed last weekend, despite the massive fear of coronavirus spreading. But today, things look a little different. While restaurants in the city hadn’t yet been told they have to shut down (they have since), Ponce’s elected to shut down dine-in service and focus on takeout.

Owner Ponce Mesa said it was a difficult decision, but he said, “it’s better to keep our employees safe” than to try to continue normal operations. 

While the restaurant has cut back on staffing, it is trying to find creative ways to keep employees working. “Most of them live paycheck to paycheck. This is really going to hurt them. We’re bummed. I’m worried about my employees,” said Mesa.

He says they’re offering sick pay to qualified employees, as well as encouraging others to apply for unemployment benefits if eligible. He’s also looking into keeping staff on to do a deep clean of the restaurant, and exploring insurance options so that employees can deliver food.

Across the street from Ponce’s, Kensington Brewing Company is shuttered temporarily, thanks to a statewide mandate in California that all bars, nightclubs, wineries, and breweries close until further notice. 

Just before the mandate, the brewery was busy, but owner Zach Knipe says, “as more news came out, it completely emptied out. We have had lots of events canceled, which is very unfortunate.”

The brewery offered 20% off of to-go orders on six-packs and growler refills just before they were forced to shut down. Knipe says the brewery may open for limited hours so people can pick up to-go orders, and that they’ll continue to offer the discount.

“We are just hopeful that there will be some kind of assistance for us once this is all said and done,” Knipe said, “We are trying to prioritize the most important things… family, friends, and community. Helping those that need the help more than us.” 

Across the country, in New York City, restaurant and bar owners are told they will be arrested if they don’t comply with the city’s mandate to stop dine-in service and only offer takeout and delivery.

Kevin Hooshangi, Managing Partner of American Whiskey and American Whiskey TriBeCa, said the shutdown has crippled his business. Because the business doesn’t do much delivery or takeout, he has laid off his entire staff at both locations, 80 people in total. 

Unfortunately, the best thing we can do for them is let them collect unemployment until we see what sort of small business loans we can get or government relief is provided.”

These same stories are being told by small businesses all over the world right now.

The Problem Is Immediate…and in Our Future

Right now, small businesses in the restaurant and hospitality industries are fighting fires on all fronts. They must act quickly to respond to the ever-changing dynamics of the situation: if dine-in isn’t an option, how can they keep employees busy and on the clock? How, for that matter, can they afford to pay them? How should inventory orders change?

Money may not be flowing in as quickly as normal, and yet vendors still want to get paid. Businesses have to determine whether they can stay afloat with what they’ve got in their bank accounts, or whether it’s better to take out some form of financing now before things possibly get worse.

What many business owners aren’t thinking about is the far-off future. It’s easy to be myopic when you’re getting hit hard in the now. But it’s important to consider how your business will look in three months, six months, a year. The financial impact of the coronavirus is just one factor in what experts see as being our next recession. What you do now will determine what that future looks like for your business.

“These are difficult times and the health and wellness of the population is more important than business right now. We’re hopeful and resilient by nature. We figure we can overcome whatever we have to, but for the time being, we have to take care of the vulnerable part of the population and be a part of the solution,” Hooshangi said.

Let’s keep supporting these businesses as best we can right now. If you’re in the habit of going out to eat, consider ordering takeout or delivery instead. Not planning on takeout? Buy a gift certificate or a dining bond if the restaurant offers it. These businesses rely on our love, so let’s give it to them.

Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors. To review your real-time funding options with one of Nav’s lending experts, please contact us.

This article was originally written on March 18, 2020 and updated on March 31, 2020.

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2 responses to “How Coronavirus Is Impacting the Restaurant & Hospitality Industries

  1. It does appear that the general attitude toward the virus is progressing toward a more caution stance. Until recently, there was almost a jovial attitude toward the possibility that the Coronovirus was a real threat. Now people are taking it more serious. We need to proceed with caution, but at the same time we need to only reciprocate our actions with the level of threat that is actually present.

    It is quite sad to see these businesses suffering; however, it is probably a good time to start being more preventive in our behaviors. In actuality, recent charts released by China do reveal numbers which suggest that for most nations are still in a strong acceleration of the virus spreading. It’s the first time I saw a breakdown of who is actually dying and at the greatest threat from the virus. The charts

    1. Hi Edward. Thanks for your comment. I think the best thing we can all do is be safe and remember that we need to support these small businesses. Thanks for reading!