COVID-19

Restaurants face closings as business slows and rents go unpaid

Jasmine Garsd Jul 14, 2020
Heard on: Marketplace
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A man waits for his lunch order at a nearly empty restaurant at Grand Central Market in Los Angeles in June. Frederic J. Brown/AFP via Getty Images
COVID-19

Restaurants face closings as business slows and rents go unpaid

Jasmine Garsd Jul 14, 2020
A man waits for his lunch order at a nearly empty restaurant at Grand Central Market in Los Angeles in June. Frederic J. Brown/AFP via Getty Images
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The restaurant industry has been hard hit by the pandemic. 

Between the shutdowns, social distancing regulations and the economic crisis, a lot of restaurants say they are simply unable to pay their rent. 

Lien Ta co-owns two restaurants in Los Angeles. Here’s Looking at You is in Koreatown, where her favorite dish is frogs legs. All Day Baby, in LA’s Silver Lake neighborhood, has a mean catfish sandwich, she said. 

Early on in the pandemic, she had to transition to takeout and delivery, but “we just didn’t make any money,” she said.

“There were nights when two orders would come in,” Ta said. “There were nights when no orders would come in.”

She took out a Paycheck Protection Program loan. Still, Ta said paying rent became a big concern. 

Restaurants nationwide have seen their income decimated by the shutdowns. Alex Susskind, a professor of food and beverage management at Cornell University, predicts that 30% of restaurants may go out of business.  

“Restaurants historically are very cash-flow dependent,” he said. “When you cut that off, restaurants that don’t have any reserves, or very low levels of reserves — it’s a huge issue for them.”

The NYC Hospitality Alliance recently found 80% of the city’s restaurants did not pay full rent in June.

“I think the federal government needs to come in with direct cash injections,” said Andrew Rigie, executive director of the alliance. “We need to deal with the rent issue.”

Back in Los Angeles, Ta decided to close her Koreatown restaurant for now. The landlord for that spot has forgiven her rent for the time being. 

Her Silver Lake restaurant is still open for delivery and takeout. She said her landlord won’t renegotiate that rent, and she’s had to lay off 60 people.

She still can’t break even on the amount of business she is getting.

“There’s just not enough. So what are we going to do? We’re just going to wait until we get kicked out, I guess,” Ta said.

She doesn’t want to close down. But she’s running out of ideas.

COVID-19 Economy FAQs

It’s still the question on everyone’s minds: What’s going on with extra COVID-19 unemployment benefits?

The $600-a-week payments have ended, officially, as of July 31. For now, there is no additional federal pandemic unemployment assistance. House Democrats want to renew the $600 payments. Senate Republicans have proposed giving the unemployed 70% of their most recent salary by this October, when state unemployment offices have had time to reconfigure their computer systems to do those calculations. Until then, jobless workers would just get another $200. But, nothing has been signed into law yet.

What’s the latest on evictions?

For millions of Americans, things are looking grim. Unemployment is high, and pandemic eviction moratoriums have expired in states across the country. And as many people already know, eviction is something that can haunt a person’s life for years. For instance, getting evicted can make it hard to rent again. And that can lead to spiraling poverty.

Which retailers are requiring that people wear masks when shopping? And how are they enforcing those rules?

Walmart, Target, Lowe’s, CVS, Home Depot, Costco — they all have policies that say shoppers are required to wear a mask. When an employee confronts a customer who refuses, the interaction can spin out of control, so many of these retailers are telling their workers to not enforce these mandates. But, just having them will actually get more people to wear masks.

You can find answers to more questions on unemployment benefits and COVID-19 here.

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