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Pandemic Puts Restaurant Owners In The Business Fight Of Their Lives

Jul 31, 2020
Originally published on July 31, 2020 7:09 am
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It's a tough time for restaurants, small ones in particular. Most are independently owned and do not have the protection that size and scale can bring. They also generally don't have a lot of money stored away for tough times. Stacey Vanek Smith and Cardiff Garcia of NPR's daily economics podcast The Indicator from Planet Money asked how some small restaurants survive.

CARDIFF GARCIA, BYLINE: Right now, restaurants all across the country are trying to figure out ways to comply with social distancing rules and make people feel safe and get as many butts into their seats as they can.

STACEY VANEK SMITH, BYLINE: A bunch of them have come to Stephani Robson for help. Stephani works at Cornell University's hotel school, and she has spent more than 25 years studying restaurants and money.

STEPHANI ROBSON: This is unlike anything I've ever seen before.

GARCIA: Margins are really thin for restaurants. Their costs are high, and every foot of space is precious. Fewer tables just means less money, so Stephani has worked to find other ways to make the math work for restaurants.

VANEK SMITH: Things like fewer items on the menu, which means fewer people in the kitchen preparing food and less food that restaurants have to order; also paper plates so restaurants don't need dishwashers; a bigger emphasis on alcohol, which is very profitable, and things like turning parking lots, sidewalk spaces and other areas into patios, places to put tables.

GARCIA: Stephani says she has never seen so much creativity in the restaurant industry. But even still, staying open just is not always possible.

VANEK SMITH: It's estimated that as many as a quarter of the restaurants in the U.S. will go out of business.

GARCIA: And it's not just the little guys. Big chains are struggling, too. A number of franchise companies operating branches of IHOP, Wendy's, Pizza Hut and Le Pain Quotidien filed for bankruptcy recently, as did the parent companies of Chuck E. Cheese, Fig & Olive and Soup Plantation. And this is really bad news for the whole U.S. economy because the food services industry employs more than 10 million people in the U.S., and a lot of those jobs are not coming back.

VANEK SMITH: Lester Gouvia, owner of Norma G's in Detroit, is determined to stay on the right side of that prediction.

LESTER GOUVIA: The joke I make is if you ever see Lincoln squinting on a penny, it came through my hands because I squeezed the crap out of it, you know, as best I could. So you just pinch the pennies wherever you can.

GARCIA: But there are also new expenses - extra expenses. Lester spent extra money trying to make customers feel comfortable so that they will feel safe and hopefully come back. So there's hand sanitizer on every table. There's partitions between bar seats.

VANEK SMITH: But there's just so much Lester can do. After all, the restaurant is an enclosed space, and he's dealing with a very contagious virus. Recently, not far from Lester's city of Detroit, more than 170 cases of COVID-19 were traced back to one local restaurant. And Lester says something like that could destroy his business entirely.

GOUVIA: Every day and every minute, that crosses my mind. Every day and every minute, it crosses my mind.

VANEK SMITH: Lester says he's determined to keep Norma G's open and keep pinching his pennies until Lincoln squints and keeps serving up his famous oxtail sliders.

Stacey Vanek Smith...

GARCIA: Cardiff Garcia, NPR News.

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