No Soup For You?

Tom Colicchio, the celebrity chef, thinks 50 percent of restaurants may not survive the pandemic, and that they’re going to have to change.

No Soup For You?
Capital Thinking | No Soup For You?

Capital Thinking  •  Issue #587  •  View online

Three months ago, one could have easily argued that restaurants had reached their zenith of cultural and economic significance to the United States.

But the coronavirus has dragged restaurant spending down 60 percent, and $3 out of every $4 is going to chains.

The golden age of restaurants may be coming to a sudden end.

-Derek Thompson

The Dumbing Down of the American Restaurant

Derek Thompson | The Atlantic:

Tom Colicchio, the celebrity chef known to many Americans as a head judge on Top Chef, has been one of the more vocal advocates for restaurants during the pandemic.

He’s also been relentlessly dire about the near future of the restaurant business.

“Restaurants have become a part of culture,” he told me, but “the boom times of the last few years are over … Restaurants are going to have to change.”

We spoke this week about the tough present and future of the U.S. restaurant industry. This interview has been edited for length and clarity.

Derek Thompson: One month ago, you said that you thought 50 percent of America’s restaurants would not reopen. Are you now more or less optimistic about the future of restaurants than you were a month ago?

Tom Colicchio: Less optimistic. The James Beard Foundation did a survey of restaurants, and only 20 percent of them said they’d definitely remain open through the shutdown.

Even if they get their restaurants open, they might immediately lose half of their seating to social distancing.

Most restaurants can’t get by with that.

The question isn’t when we open up. The question is: When will the public feel safe to go to restaurants?

If the disease is still around, people won’t feel safe.

And if they return to restaurants, and the bartenders and waiters are wearing masks? I don’t think people are going to feel safe.

The boom times of the last few years are over. That reality just shifted in a major way.

We’re looking at a major recession, and maybe a depression. So who’s going to go out there and spend right now?

Restaurants are going to have to change.

Thompson: How do you see restaurants trying to adapt?

Colicchio: Restaurants will have to cobble together a business of delivery and community-supported agriculture.

They’ll sell proteins and vegetables and fish and cheese. They’ll use their supply chain to act as a grocery store.

But in my case, for at least two of my restaurants, most of the business comes through private parties and conferences.

For the foreseeable future, that’s gone. I don’t know how to make up the income.

The only way to sustain yourself is to get major concessions on rent and shrink the staff.

And, by the way, both of those things could make the recovery slower.

Thompson: You’ve been extremely critical of the federal response, including the Paycheck Protection Program. Why don’t you think these measures will help the restaurant industry recover?

Colicchio: The problem with PPP is that it’s not there to help small business. It’s there to keep people employed.

That might sound cynical, but it seems like it’s designed to keep people off unemployment, at a time when unemployment insurance is very strong.

For businesses like restaurants that are mandated by the government to close, all PPP does for them is get them to keep employees, or hire back employees, that they might just have to lay off in two months, when PPP is over.

Thompson: You’re saying PPP helps companies for the very short term but when the doors open up, a lot of them are going to die anyway. What would be better?

Colicchio: We are calling for $120 billion of replacement income to flow through restaurants, to pay our bills and our landlords. And that is based on what the loss of revenue will be over six months.

Publicly traded restaurants could not tap into this money, and neither would restaurants with more than 20 locations.

This is a plan that actually gives restaurants a runway to remain open.

It would act more like a countercyclical program to keep restaurants alive during the crisis, rather than a block grant where the money runs out long before the crisis ends.

Thompson: There are so many different kinds of restaurants, from fast food to fast casual, like Chipotle, to fine-dining establishments. Who is surviving the pandemic?

Continue Reading =>

*Featured post photo by Ash Goldsbrough on Unsplash