coronavirus pandemic

‘Cataclysmic Scenario': Philly Restaurants Brace for Layoffs, Closures Under New Restrictions

A restaurant serves take-out meals through their window in Philadelphia, Pennsylvania, U.S., on Wednesday, April 15, 2020.
Hannah Yoon/Bloomberg via Getty Images

New shock waves tore through Philadelphia’s already struggling hospitality industry Monday when city officials announced additional restrictions to help temper the spread of Covid-19.

Among the new guidelines, which formally go into effect Friday, are a ban on indoor dining, a reduction in the number of outdoor diners allowed at a table from six people to four, and a requirement that outdoor dining only take place between members of the same household.

The regulations left many Philly restaurateurs reeling as they rushed to develop new strategies to sustain business, which was already facing tough odds as cold weather begins eating away at the outdoor dining business that has buoyed eateries in recent months.

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'Absolute frustration'

Rumblings about the new guidelines worked their way through the hospitality industry over the weekend, and on Monday morning about 50 Greater Philadelphia restaurant owners joined an emergency Zoom call in preparation for the restrictions. The business owners are members of the Save Philly Restaurants coalition, a group of about 200 local eateries that have banded together throughout the pandemic to advocate for legislation and financial support for the industry during the crisis.

“The overall sentiment is of just absolute frustration," said Nicole Marquis, the coalition organizer who owns Philadelphia vegan concepts HipCityVeg, Bar Bombón and Charlie was a sinner. "Everyone is so enraged by this, we cannot believe that we're here again ... eight months into this. We feel it's utter chaos at this point.”

A total ban on indoor dining came as a surprise to many, Marquis added, noting that no inside service coupled with the rain and snow typical of the winter months ahead is akin to no dining whatsoever. At best, Marquis projects this will reduce revenue at her concepts by 50%. At worst, it could be 70%, raising questions about long-term viability.

“We’re going back to spring all over again, which means furloughs,” Marquis said.

Questions abound, layoffs loom

Many restaurateurs are left scratching their heads as to how to ensure outdoor diners indeed hail from the same household.

“It’s hardly enforceable unless you begin to operate your restaurant like a DMV where you’re requiring people to bring in utility bills and prove home residence,” said Chef Tyler Akin of Stock. “... It becomes an honor system that's shared equally by guests and restaurant,” he said, adding he doesn’t expect guests to volunteer the information when there is “exhaustion” around complying with Covid restrictions.

As a whole, the restrictions are “completely devastating,” said Akin, who advocates for the Greater Philadelphia restaurant industry as part of the leadership team for the Independent Restaurant Coalition. Additional layoffs in the local industry are a question of when, not if, he said.

Earlier this month, Akin’s esteemed 26-seat concept Res Ipsa Cafe in Rittenhouse closed permanently as the pandemic worsened. He anticipates even more closures are now on the horizon — and not just small eateries.

“Short of receiving more aid, I don’t think any single restaurant in Philadelphia is immune to the prospect of failure in this environment,” Akin said.

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For Branden McRill — the owner of Fine-Drawn Hospitality, which encompasses The Post, Walnut Street Cafe and The Commons virtual food hall — the new restrictions form a “cataclysmic scenario.” He said he wishes the city had been more transparent about its timeline leading up to this point so restaurants and guests could have been better informed.

McRill similarly projects at least a 50% reduction in business from the new guidelines, and suspects it could end up being upwards of 75%. The fallout will be worse than what happened when indoor dining was first banned in the spring, he said, because restaurants won't see nearly as many people willing to dine outside in cold weather as they did in the warm summer months that swiftly followed the initial March shutdown.

With COVID-19 cases on the rise, Philadelphia is putting restrictions in place to help stop the spread. Restaurants are once again taking the heat as indoor dining is banned. NBC10’s Rosemary Connors spoke to some well-known Philly restaurateurs about the new guidance.

Fine-Drawn Hospitality shuttered its seasonal concept Sunset Social two weeks ago as temperatures dropped. While the group’s other concepts have been running with an “exceptionally light team,” McRill said, he anticipates some tipped employees will need to find alternative work because there won’t be enough business to make up their income.

“It’s going to be the end of a lot of people's livelihoods all throughout the entire industry from every position, top to bottom,” McRill said. “People are going to be no longer involved in this industry because they are going to lose their jobs and then their employers are going to lose their businesses.”

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What's next?

Urban Village, a brewpub in Northern Liberties, “saw the writing on the wall awhile ago,” said Dave Goldman, co-owner and head brewer. In anticipation of the pandemic taking a turn for the worse during colder months, the concept invested nearly $100,000 in building out a patio covered by a wide-reaching awning retrofitted with overhead heaters.

The awning covers about 21 tables, which under the new restrictions can hold four guests each. He hopes outdoor dining can hold strong through December, before likely becoming less reliable in January. To help offset the loss of indoor dining revenue (until Friday, Urban Village is able to accommodate about 35 people indoors), the restaurant is rolling out its own in-house delivery service this weekend. The concept is also in a unique position, Goldman noted, because it’s able to rely on takeout beer and other beer distribution sales to balance out losses from dine-in business.

Between the indoor dining ban and incoming cold temperatures, in some ways it feels as though restaurants are being backed into a takeout-only corner, Goldman said. That scenario would spell layoffs and a reassessment of Urban Village's business model. Goldman anticipates most concepts will return to the alternative revenue streams they relied on in spring to weather the coming months.

“It’s so impossible to know what's going to happen next that to try to plan out a month, three months, six months, you can have ideas in your head but you have no idea what's going to happen,” he said.

The top priority of the Save Philly Restaurants coalition is expanded free, rapid Covid-19 testing, Marquis said. Many of the participating restaurant owners see this as “the key to getting this virus under control and still keeping our businesses open.”

“We don’t have the most basic tools we need to survive this,” Marquis said. “It’s like trying to paddle a boat to shore with a teaspoon. It’s exhausting and it’s not working.”

Restaurateurs like Akin and Ellen Yin — the owner of popular concepts Fork, High Street on Market, High Street Provisions and a.kitchen — are pinning their hopes on the Restaurants Act, which would provide $120 billion in grants to independent bars and restaurants.

The bipartisan bill is stalled in Congress, but its approval would be the “best-case scenario” for the struggling restaurant industry, Yin said. Second best, Yin added, would be an additional round of federal Paycheck Protection Program funds, coupled with support from local government such as sales and liquor tax deferrals, help financing personal protective equipment, or additional CARES Act funding allocated to Philadelphia.

At her own concepts, Yin is funneling attention into growing delivery and further connecting with clients in the suburbs and surrounding five-county region.

“[It’s] thinking about the business a little bit differently to try to ensure that we don’t lose our customer base, because that's the other thing,” Yin noted. “It’s not just now, but what happens in April when everyone has forgotten about you?"

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