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Adapt or close: Prominent Seattle and New York restaurants offer a cautionary tale of what's coming

Mar 15. 2020
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By The Washington Post · Emily Heil · BUSINESS, FEATURES, FOOD

For weeks, people in and outside the restaurant industry have wondered how eateries would survive the dramatic drop in business caused by the spread of the coronavirus and the financial downturn that the pandemic has wrought. Last week, they got an early and high-profile answer from one of the hardest-hit cities: Perhaps they wouldn't - at least not in the same form.

Famed Seattle chef Tom Douglas on Wednesday said he is closing 12 of his 13 restaurants in the city, citing a bottoming-out caused by the decision of many Seattle businesses to have their employees work remotely. Meanwhile, Seattle fine-dining outpost Canlis announced Thursday that it is ditching its white tablecloths and dinner service and instead pivoting to three new concepts: a fast-casual breakfast, a drive-through-style burger lunch, and a meal delivery service. And on Friday, restaurateur Danny Meyer closed 19 New York locations operated by his Union Square Hospitality Group.

Those approaches offer a blueprint for many restaurateurs across the country.

"It's a tsunami, not a ripple on the beach," Douglas said in an interview about the way the coronavirus went from something he heard about on the news a few weeks ago to the motivation behind the closure of his restaurant empire this week. Douglas advised restaurateurs across the country in areas that haven't yet been as hard-hit as Seattle to prepare for a swift downturn in business: "Get your team aware. Get your finances in line - this is happening so fast," he said. "And if it happens in your town like it happened in Seattle, it's hard to survive that." 

Douglas said his thin operating margins couldn't take the plunge in business that followed the moves the city took to stem the virus, which included major employers sending workers home to work remotely, school closings and the cancellation of conferences, concerts and other events. "People see me as rich guy, and I'm not," he says. "The way it works is that today's incoming receipts pay yesterday's bills, and when the faucet turns off on income ..." 

Douglas said he hopes to reopen his restaurants once diners re-emerge, but he's aware of the difficulties he'll face: Landlords could foreclose, and then there's the cost of restocking, rehiring and training, he noted. Once he's handled all the business of winding down the restaurants, he plans to research what loans and other programs will be available when the time comes to rebuild.

Meanwhile, Canlis - a third-generation-run institution - opted to switch gears as the city remains on high alert, with schools closed and large public gatherings banned. "Fine dining is not what Seattle needs right now," read a message posted to Facebook and to Canlis's website, which was signed "The Canlis Family." "Instead, this is one idea for safely creating jobs for our employees while serving as much of our city as we can."

Other businesses have attempted to make up for revenue lost from their empty dining rooms by shifting focus to delivery and takeout - modes of service that require less interaction and allow customers to avoid crowds. Starbucks CEO Kevin Johnson told customers in an open letter on Thursday that some locations may become drive-through only, accept only mobile payments or limit seating as a way of coping with the virus.

Amanda Topper, associate director of food service for market-research firm Mintel, says that even pre-virus, the trend was toward more takeout and delivery. "We know it's probably going to be even more of a shift, and that (the coronavirus) will be a catalyst for more of that happening around the world," she said. 

Adapting will be easier for some operations than others, though. Fast-food and fast-casual operations may be better suited, she says, since they typically have lower real estate and labor costs. But coronavirus might push even upscale places to rethink. "This might be something full-service operators also implement," Topper says. 

Other high-profile closures have come to some of the places where the coronavirus' effect hit early. On Thursday, Jing Fong, New York's largest Chinese restaurant, announced it would cease service. The move by the 800-seat restaurant was prompted, according to local news reports, by the city's decision to ban gatherings of more than 500 people, though Chinatowns around the country had already been experiencing downturns. On Friday, Meyer reportedly told employees they would be paid through March 18 and that the restaurant group hopes to re-open as soon as possible. He cited city regulations and also "science that has provided evidence urging everyone to reduce nonessential social contact," according to the New York Times. "By fully facing this storm today, we hope to return to serving our guests and community as sooner than later," he tweeted.

David Henkes, a senior principal at market-research firm Technomic, says that adapt or no, not all restaurants will survive the coronavirus-prompted downturn. Segments of the industry, including casual-dining restaurants, were already in trouble, he noted. "In an industry already challenged by sluggish traffic and slim sales margins, this will be final blow for operators who have been working on the edges," he said. When it comes to the possibility of more closures, Henkes says, "It's not a question of whether - we know, 100 percent, it will happen." 

For Douglas, there's plenty that is bitter about the shuttering of his restaurants, like losing colleagues of 30 years and not being able to prepare his workers, particularly those he called the most "vulnerable" ones, for the shutdown. But there is some sweet, too: After their final service this weekend, many of his chefs devised a plan to gather all the food remaining in their kitchens and bring it to Douglas's catering kitchen. There, they will make boxed meals that they plan to deliver to Pike Market Senior Center.

Of all the tumult that has left Douglas alternately angrily swearing and regretfully lamenting, he says, hearing of their plan "just brought tears to my eyes."

 

 

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