Boston Restaurants Are Struggling to Stay Afloat During the Coronavirus Pandemic

School closures, work-from-home directives, and a state of emergency have all contributed to revenue losses already

Boston Eater
by Rachel Leah Blumenthal and Terrence B. Doyle

March 13, 2020

View Original Article Here

How will we give to other communities in greater need, if we’re no longer open for business?” says Tracy Chang, chef and owner of Pagu in Cambridge’s Central Square. “What happens when we become the ones in need?”

Greater Boston’s restaurant industry is beginning to feel the financial impacts of the novel coronavirus. What began as a downturn affecting restaurants in Chinatown — initially spurred by a mix of racism and misinformation — has spread to the rest of Boston and its surrounding suburbs. Restaurants are already reporting significant loss of revenue, losses that can prove devastating in an industry in which normal margins are already razor thin.

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Massachusetts governor Charlie Baker declared a state of emergency on March 10 after state officials announced dozens of positive coronavirus cases. As of March 12, the total number of confirmed and presumptive positive cases in the state is up to 108; the majority have been traced to a leadership conference at the Harbor View Ballroom of the Boston Marriott Long Wharf hotel. The World Health Organization recently classified the novel coronavirus as a pandemic, which it defines as the “worldwide spread of a new disease.” There are now more than 125,000 reported cases of COVID-19, the disease caused by the virus, in at least 114 countries. There are more than 1,600 reported cases and 40 deaths in the United States.

As the novel coronavirus continues to spread across Massachusetts, local restaurant owners and industry professionals are concerned about the safety and health of their staff and customers but also about how the crisis is impacting business. Reasons for concern are manifold and include: A growing number of colleges and universities in and around Boston have told students not to come back for spring semester, moving classes online; companies, including pharmaceutical giants Vertex and Takeda, the latter of which employs 5,000 people in Cambridge, are advising their workforce to work from home; and Boston has canceled its annual St. Patrick’s Day parade and will most likely postpone the Boston Marathon, an unprecedented move. Large restaurant industry conferences that draw thousands of attendees have also been canceled, including the Seafood Expo North America and the New England Food Show.

On Canceled Events and Empty Dining Rooms

For some restaurant owners, there’s a vague sense of unease, but the numbers aren’t obvious yet. Max Toste, co-owner of Deep Ellum and Lone Star Taco Bar — which are both located in Allston, a mile from Boston University and two miles from Harvard — says that the effects of the virus “are a bit hard to quantify right now.”

“On one hand I think there are some people that are very afraid and are changing their habits, and on the other hand I think there are also a number of people who are trying to live their lives as normally as possible and some perhaps more so in defiance of the fear and paranoia that is everywhere in the media and social media.”

Toste isn’t the only one who mentions paranoia; the Tanám team, in a joint statement from owners Sāsha Coleman, Ellie Tiglao, and Kyisha Davenport, notes that “social media has definitely fueled a sense of paranoia.”

“We’ve seen it play out at work and in our daily lives,” say the owners of the intimate Somerville restaurant, which has a single communal table. “Sāsha was on her way to work today, and her Uber driver blatantly suggested quarantining Asian American folks. Our friends in the food community have been struggling.”

While paranoia certainly played a role in the early days of the crisis and the restaurants that suffered in the first days (see: Chinatown) are in an even more vulnerable position now since they’ve been seeing losses since late February, the pandemic has reached a point where it’s not just a matter of scared people staying away: Governments and health organizations are beginning to tell people to stay home, or at least keep a distance from others.

The Centers for Disease Control and Prevention (CDC) recently issued “mitigation strategies” for communities affected by the novel coronavirus, which include recommendations for “social distancing.” There is evidence to suggest that social distancing is the most effective way to “flatten the curve” of novel coronavirus spread.

And so the cancellations are piling up.

Tanám — for which meals are ticketed and prepaid, and there’s a fairly strict cancellation policy due to the restaurant’s tiny size — has received cancellations specifically due to COVID-19 concerns, the team says. “Tanám thrives off of the intimacy of our space, and how it drives connections; where the loss of two or three covers would not typically impact your standard restaurant, those numbers have an acute impact on our 10-seat table.”

Larger restaurants and groups, especially those that usually do a lot of private event business, are also seeing a steep dropoff. “Private events have gone down to zero,” says Colin Lynch, chef and partner of Bar Mezzana, Shore Leave, No Relation, and Black Lamb. “We have just come out of January and February being the most difficult months in Boston; typically our savior is knowing that we can look forward to a trio of events: the seafood show, the Boston Marathon, and graduation season. This just puts us all in a bad place where there’s no cash flow.”

“China Pearl has never recovered since the initial news broke about the coronavirus,” says Brian Moy, whose family owns the dim sum-focused China Pearl, and who personally owns Shojo and Ruckus, all in Boston’s Chinatown. “Unfortunately it has gotten worse where functions and events are being canceled now leading into May. Large crowds for dim sum and events and functions are the whole basis of our business, so for large places of assembly to be steered away from the consumer severely hurts the business.”

Restaurants around Cambridge’s Central and Kendall squares, in close proximity to massive companies like Takeda, as well as MIT, usually do quite a bit of event and buyout business thanks to the companies and university.

“For the month of March, in just the past week, we have had at least nine event cancellations (party size 20-plus), including a buyout, due to COVID-19,” says Chang of Pagu, located near MIT. “Many of the parties were biopharma companies and MIT.”

Chang also details a monthly biopharma after-work gathering of 50 to 60 people that canceled and a lunch buyout from Takeda that also canceled. “[Takeda’s] international leaders were advised not to travel and thus the conference here in Cambridge, just above Pagu, was canceled. Thankfully, they were kind enough to reach out to us about paying 50 to 75% of the bill to not leave us completely hanging.”

Lunch business — of which Takeda employees generally comprise 90 percent — has dropped from 50 or 60 people a day to fewer than 10. “People ask if we will close for lunch,” Chang says. “We would like to stay open and continue to serve our community. We had a very kind man come in for lunch today say he will be back to support us. We plan to stay open for regular hours and not cut services and not cut shifts. Our employees have families to take care of too.”

Not far from Pagu, Steve “Nookie” Postal is seeing similar decreases at Commonwealth. “It’s not pretty,” says Postal. “There are the obvious things like no more travel, no more seminars, no more meetings; that means no more catering platters, bagel platters, private dining room buyouts. Those, in an instant, are gone. People working from home, no bueno. Restaurants need asses in seats to survive.”

Postal is already seeing an increase in delivery orders — but that’s not necessarily a good thing. “It’s also no bueno as they take such a large cut, sometimes up to 30 percent,” he says. “And the worst is still yet to come for sure.”

When asked if this is similar to what he contends with in a typical summer when the students all go home, Postal is very clear that it is not the same at all. “Summer has an influx of tourists,” he says. “Now we have no one working, no one going to school, and no one coming to visit. I’m no math wizard but that ain’t the formula for a successful restaurant.”

On Pivoting

Restaurants in and around the city are figuring out ways to keep business up, whether by finding ways to encourage diners to come in (offering deals, being transparent about cleaning processes, etc.) or order out (ramping up takeout and/or delivery options, for example).

“Restaurant owners are problem solvers,” says Chang. “We’re always fixing something because something is always broken. We don’t just let things fail and continue to fail. We’re nimble. So what are the possible avenues? We could do more delivery. Individually packed delivery, with cost-effective dishes that people crave. We could sell ramen takeout bundles like we did for the holidays. We’ll try those ideas until we find one that sticks. We’ll pray that this pandemic passes in two weeks, and Takeda can come back to the office.”

Unlike Postal, Chang hasn’t really seen more people ordering delivery, at least not yet. “We will continue to monitor,” she says. “Some friends have suggested we lower prices and offer more value options on [delivery services like Caviar, DoorDash, and UberEats], like rice bowls.”

Lynch is looking to emphasize delivery but says that he’s taking everything “24 hours at a time.” His team is also adjusting their restaurants’ hours as they see fit, “trying to stay open as much as possible so that the community has a place to go where they feel safe and comfortable.”

Moy is thinking of a more drastic change: “We are discussing converting our business to shut down the dining room and exclusively do takeout and delivery.” he says. “A waitstaff that wants to can do deliveries and earn tips instead of waiting on patrons that come in, along with a fair rotation of kitchen staff to equally share the schedule to have some type of earnings. We are thinking of the next level of protection for our staff if we go that route: no cash transactions; drop-off/pick-up area where customers and staff do not have to interact; doorstep drop-off instead of handing to customers.” Other restaurants around the country are making similar changes, such as Seattle’s high-end icon Canlis, which is temporarily converting to a takeout-only spot with casual breakfast and burgers and also offering a meal delivery service.

What Comes Next?

As Chang said, restaurant owners are “nimble” and used to solving problems, but preparing for a global pandemic was the farthest thing from anyone’s mind when opening a restaurant.

“Does anyone have a contingency plan?” says Chang. “Does anyone see this stuff coming — owners, operators, landlords? How do you even ‘prepare for the worst’? I do recall a professor in college saying ‘have an exit strategy, but perhaps I was wearing rose-colored glasses and thought, ‘That’s not me. That will never be me because I’m an entrepreneur. I’m capable, I’ll always have a job, find a job, make a job.’ So, I have a job, I’ve created many jobs for others, but what if the other half doesn’t show up? Supply and demand. We got the supply, but where is the demand? I thought this location was great. We’ll always have the recession-proof universities nearby to lean on; there will always be students and professors. Well, not when the universities send everyone home.”

Some owners are turning to their landlords for relief and going through their insurance policies with a fine-tooth comb — with mixed results.

“About a week ago, I saw this coming and called my insurance company to make sure i was covered,” says Postal. “We are talking massive losses in business. I had bought every available insurance product that is offered. Unfortunately there is no pandemic insurance, at least not yet. I have no idea how this is going to play out; it ain’t gonna be pretty. I have been talking about an emergency rent reduction with my landlord, and thank God I have landlords who are all understanding and are working with us, but there are others who won’t be as fortunate.”

“You are going to see lots of changes, abbreviated hours, days, limited menus,” Postal continues. “Restaurants don’t generally have the bankroll to withstand a long pandemic outbreak. Not in the budget forecasting. Places will close. That is a fact. This goes on until June, and we are fucked with a capital giant F. It’s going to take more than a tax-free weekend to get us back.”

“If restaurants go under, who will be around to feed the survivors of the apocalypse?” says Chang. “José Andrés?!”