As I've told audiences on several virtual Annual Meeting presentations we have done for Destination Marketing Organizations, what we thought would be a universal understanding of the pain caused by government-ordered shutdowns simply hasn't happened. And, that's because a lot of people don't work in hospitality and can't fathom the depth of pain we feel. They're still working; getting a regular paycheck and benefits. They may be inconvenienced by the 'VID...but they aren't looking at eviction.
Terri and I have a special affinity for Hell's Kitchen, a Minneapolis bar-restaurant that hosted our DMO client-and-friend reception when Destinations International met in the Twin Cities in 2016. If you were there, you know how nasty cool this employee-owned spot is.
Terri continues to be tickled by their irreverent e-mail marketing (We're happy to be offering delivery & curbside pickup so you can take a little Hell home with you)...but shared this recent missive with me last evening. While the majority of the e-mail was about opportunities to make Hell's Kitchen part of their fans' Halloween, there was this at the close of their message:
As promised, we want to keep you up to date with how HK is surviving COVID because so many of you have written that you like our "behind the scenes" news. Even though we expanded our hours and delivery range dramatically last month, the truth about trying to survive COVID as a large, downtown restaurant with high fixed costs and real estate taxes remains harsh:
We're thrilled with all the orders we've received for Pickup and Delivery, but the numbers don't lie: our total September 2020 income was just four percent of what we brought in September 2019. That's not a typo: our business is down 96% compared to last year's same period.
Our staff roster pre-covid was 155--it's now at 7, and that's after bringing back more employee-owners to help with delivery and expanded hours.
When we first closed down on March 16, we were completely debt-free and had money in the bank. That's why we were so positive in April..."don't worry, folks. We have our savings account to get us through this temporary setback" (keep reading to see why we're still optimistic). On March 16, our "current" payables to food and service vendors amounted to approximately $193,000 (we've always paid invoices on time, so nothing was past due). Of that amount, we've paid off all but $15,000 and are almost caught up. We're thrilled that we've been able to honor our commitments to our critical food suppliers, but it drained our savings completely.
As the virus continued to drag on into fall and we still had mounting bills (remember, our "burn rate" while closed is still well over $50k/month), we were finally forced to dip into our PPP funds in early September. Many people think "but that government stimulus PPP money was forgiven, wasn't it?" Nope; in fact, NONE of it was forgiven because we did not have anyone on payroll during the government's "time limit," a restriction which made NO sense whatsoever for restaurants throughout the country that were (or are) still shut down to help control the spread of the virus. So ALL of our PPP money is now DEBT which now must be paid back.
Re the PPP loan: No matter how frustrating it was to once more take on debt, we're still grateful, because we honestly feel this loan will give us a long enough runway to survive COVID through next spring if we spend our pennies wisely. Our mantra is "Every. Penny. Counts." For example, we now drag the soiled linens home each week rather than pay the linen service. We moved all of our banquet supplies from our rented storage lockers ($412/mo) to our empty dining rooms. We cancelled every contract we could (grrr to those mega companies who don't give a damn). Even our many phone lines are now down to only a few, and our unused bar coolers/refrigerators are turned off to save on our electrical bill. Baby steps, righhhht?
That's our story and yes, we still have a lotta moxie and hope. We didn't share these details to despair, guilt-trip or inspire fear; our skeleton crew is doing an amazing job guiding the business back to safe harbor and we're confident that Hell's Kitchen will weather the storm. We only share these admittedly-scary numbers because we want everyone to understand the reality of running a downtown restaurant that was dependent on 1) office occupancy, 2) hotel occupancy, 3) convention center activity and 4) visitors to downtown music, sports, and theatre events.
So whether you're in NYC, Nashville, L.A., Seattle, Charlotte, Houston, Chicago or any other major metropolitan area, don't forget to also support the indies that have helped make your downtown experiences unique and marvelous all these years. Those "takeout and delivery" orders mean the world to us all as we wait for this nightmare to be over. Your help now allows us to get back to normal and take care of you when our dining rooms finally reopen.
Be well, stay swell and VOTE!
We know Hell's Kitchen will survive; it's who they are. But, did you catch all the contracts they've canceled? What about those companies...and the ones that depend on them? The ripple is frightening. And, most Americans don't recognize that this all will impact them in the next year.
Did you also pick up on the real estate taxes that contribute to their "sunk costs?" That government has ordered these businesses closed, shouldn't there be some relief there, as well?
And, of course, Congress continues to sit on its hands.
Be well, stay swell and VOTE, indeed.
Recent Comments