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

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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