Murphy Says ‘All Options on Table’ to Fight N.J. COVID Spread
Including shutting indoor dining. Gov. Phil Murphy stressed Friday that “all options are on the table” to fight the second wave of the coronavirus pandemic that’s now gripping New Jersey — “even draconian ones” like another round of statewide stay-at-home orders and business closings. He specifically warned that indoor dining could be shut down if numbers get worse. Still, Murphy said he’s hopeful he won’t have to issue a statewide order to close schools. And he continued to express optimism the state can bring the growing spread under control using more localized and less heavy-handed restrictions, even as the weather gets colder and the holiday season approaches.
If Restaurants Go
What happens to cities? Downtown restaurants in big cities are suffering the most. And it is urban America that will feel the shock of their demise most intensely. In 2019, restaurants, bars, food trucks and other dining outlets took at least 47 percent of the food budget of consumers in cities with populations above 2.5 million, according to government data. That compares with 38 percent for people outside urban areas. In the early 1970s, by contrast, urban consumers devoted 28 percent of their food budget to dining out. Restaurants have been a key element of America’s urban transformation, helping draw the young and highly educated to city centers. This has often turned industrial and warehouse districts into residential areas. It has also overhauled many low-income neighborhoods, sometimes forcing longtime residents out of town. As restaurants fail, cities will lose economic output and jobs, of course — over two million restaurant jobs and 173,000 bar jobs were lost between February and August. But they also stand to lose their glue.
Judge in North Carolina Favors Policyholders
In COVID-19 business interruption closure lawsuit. A judge in Durham County, North Carolina has handed down what may be the nation’s first dispositive ruling in favor of policyholders in a COVID-19 business-interruption lawsuit. Superior Court Judge Orlando F. Hudson Jr. ruled on Oct. 7 that closure orders that restricted the use of a group of 16 restaurants in the Raleigh-Durham area constituted a “direct physical loss” that was covered by the policy. According to a litigation tracker maintained by the University of Pennsylvania law school, as of Thursday 1,183 lawsuits have been filed seeking coverage from insurers for business income losses caused by coronavirus closure orders. Judges have granted insurers’ motions to dismiss in 26 cases, but have denied summary judgment in 12 cases, including the Durham County lawsuit, according to the university’s data. Attorney Gagan Gupta with Paynter Law in Hillsborough, N.C. said Hudson’s decision is the first that he is aware of that found policyholders were owed coverage.
Restaurants Weigh Survival Chances
Without full capacity or winterization efforts. Outdoor dining will only grow in importance with limited indoor capacity expected to continue throughout the next few months as coronavirus cases spike across much of the country, but another complete shutdown or capacities that become even more limited will further devastate the industry. Of the restaurants surveyed by Rewards Network, 29% of those operating at less than full capacity said they could keep their doors opening indefinitely, while about half said they would last less than a year and 28% said they could last four to six months. But keeping outdoor dining open during the winter comes with additional challenges, especially with rising costs as other restaurants scramble for similar equipment. One New York operator, for example, purchased heat lamps for $250 each, a $100 markup from their typical cost.
Restaurant Chains are Set to Close
Thousands of locations. Restaurant chains are largely seeing their sales recover during the pandemic. But it isn’t keeping them from closing restaurants. On Thursday, Starbucks said that it would close 200 more locations in the Americas in the coming 12 months than it originally said it would back in June, including another 100 in the U.S. The closures are part of a “transformation” of the company’s asset base, as it replaces lower-performing units in urban business districts with suburban locations with drive-thrus. But it’s not the only one. Rival Dunkin’, facing some of the same consumer shift, has closed nearly 700 U.S. locations, nearly 450 of them inside Speedway locations, as part of that chain’s effort to “scrub” its asset base of lower performing locations. Like Starbucks, Dunkin’ plans to replace those locations with newer, remodeled units, preferably with drive-thrus. The challenges in urban areas are clearly causing problems for some entire chains that built their business by locating where people work. It’s not just coffee chains, either.
Lessons Learned Through Pandemic
May help restaurants meet challenges ahead. Two-thirds of the operators who are planning to winterize outdoor seating are optimistic that their customers would be willing or somewhat willing to dine outside in colder weather. But more operators are optimistic about delivery as a winter revenue stream. Self-delivery became a lifeline for 27% of operators who launched their own service during the pandemic. And an earlier Rewards Network consumer survey indicated that people expect to order delivery more in the coming months than in previous fall/winter seasons. Overall, the restaurant owners surveyed had a positive outlook when the survey was conducted earlier this month. Although it looks like the coronavirus crisis will drag on well into 2021, 69% said they are optimistic about the next six months, with only 8% claiming to be very unoptimistic.
How to Make Restaurants Safer
During the pandemic It’s a cruel irony that the things that make a restaurant appealing are precisely what currently make it dangerous—the intimacy, the coziness, the groups of people deep in conversation, whiling away the hours over drinks and a meal. Eating in a restaurant is one of the riskiest things you can do during the coronavirus pandemic. To understand why, you need to think about the latest science around how covid-19 passes from person to person. The official line from the World Health Organization from the start of the pandemic has been that the coronavirus is mostly spread by the droplets we generate as we talk, sneeze, or cough. However, the evidence has been mounting for months now that aerosols—which are smaller than droplets and can hang in the air like smoke—are a significant route for infections, if not the main one. This would explain why virtually every recorded coronavirus outbreak has occurred indoors.
Jon Taffer’s Plan
To rescue restaurants. Bar Rescue’s Jon Taffer is known for his strong opinions on bars. He likes them to have the polished look of a high-end chain. He likes to mathematically game out drink specials in order to attract women customers. He’ll conduct undercover missions to investigate pubs that violate health codes, and then storm into the kitchen, yelling, “Shut it down!” He will berate anyone—disorganized manager, unsanitary fry cook—who is not on board with his advice. Some critics argue that he strips mom and pop establishments of their character, but Taffer would say that without his changes they would go out of business. Almost two years ago, I identified that in my view, the casual dining model did not work any more for three reasons. One, at the time, we had no labor pool. Two, the labor pool we had was new Americans who often had communication problems, and we’re a high-communication industry. So, it created challenges for training, etc. Three, minimum wages were going up to, in some states, 600%, with employee tax credit and such. So, when you looked at those three things, and you looked at the staffing levels in kitchens and casual dining, it was pretty easy to conclude that this model will not work in this environment.
Did You Know?
A running list of NYC restaurants that have permanently closed. More than seven months into the coronavirus pandemic, restaurants across the city continue to close in masse. More than 1,000 have closed since March due to the financial downturn caused by the COVID-19 pandemic. Among them are neighborhood favorites like Uncle Boons and Maison Premiere, along with sites of teenage debauchery like FiDi’s China Chalet and the glitzy McDonald’s flagship store off Times Square. In all likelihood, though, this is only the beginning of permanent closures in New York, as loans from the Paycheck Protection Program run dry, rent payments continue to mount, and the return to indoor has started at 25 percent capacity. According to a September survey from the New York State Restaurant Association, as many as two-thirds of state’s restaurants could permanently close by the end of the year if they don’t receive additional government aid. Due to the difficulty of tracking restaurant and bar closings right now, experts say that number could be even higher, and will likely only continue to grow.
Presidential Election could delay stimulus for restaurants and workers until 2021. Congressional Democrats remain at odds with the White House over the next trillion-dollar stimulus, while the Republican-controlled Senate, necessary to pass any deal, adjourned until November 9 after ramming through a Supreme Court nominee. Translation: Any sort of fiscal relief won’t reach taxpayers until later this fall in a best-case scenario, and possibly not until 2021. As a result, scores of restaurants across the country will continue to shutter while hospitality workers teeter on the brink of poverty. This should surprise no one and enrage everyone. The need for further aid was clear in May when the House of Representatives passed the HEROES Act, which would have extended $600 unemployment checks through the end of next January. The need for aid was clear at the end of July as those jobless benefits expired. The need for aid was clear in September as some of the biggest New York City restaurant groups extended their furloughs. And the need for aid remains crystal clear in October now that another surge in infections threatens renewed shutdowns.
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