COVID-19

Restaurants face closings as business slows and rents go unpaid

Jasmine Garsd Jul 14, 2020
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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
Heard on:
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

What do vaccines mean for economic recovery?

COVID-19 is not going anywhere anytime soon, according to expert witnesses who testified at a recent hearing held by the Joint Economic Committee. Put simply, we can’t eradicate the virus because it infects other species, and there will also be folks who choose not to get the vaccine or don’t mount an immune response, according to Dr. Céline Gounder at NYU School of Medicine & Bellevue Hospital. “That means we can’t only rely on vaccination,” Gounder said. She said the four phases of recovering from the pandemic are ending the emergency, relaxing mitigation measures, getting to herd immunity and having long-term control.

Can businesses deny you entry if you don’t have a vaccine passport?

As more Americans get vaccinated against COVID-19 and the economy begins reopening, some businesses are requiring proof of vaccination to enter their premises. The concept of a vaccine passport has raised ethical questions about data privacy and potential discrimination against the unvaccinated. However, legal experts say businesses have the right to deny entrance to those who can’t show proof.

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

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