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Restaurant losses from March to June estimated at $700 million

While busines is slow, restaurants say their expenses are rising, including having cases of gloves go from $22 per 1,000 to $70.

While the COVID-19 pandemic has wreaked havoc on many Delaware businesses, the restaurant and food service industry lost $700 million in three months, a Delaware Restaurant Association report says.

“We are still operating at a significant loss, and, according to our survey, we expect to be operating at a loss for at least the next six months,” said Carrie Leishman, CEO of the association. “Restaurants are the state’s largest small business employer, so that’s also affecting the state’s revenue.”

While many people have resumed routine activities, some consumers are still skittish about dining in a restaurant.

Leishman maintains it’s one of the safest public environments if you look at contact tracing data from Maryland and Michigan. Those numbers say that most people’s illness is traced back to a family gathering, house parties or outdoor events.

Behind the scenes restaurant work at Chelsea Tavern crop
Chelsea Tavern Operating Partner Elvis Rosales, left, and Executive Chef Alrick Mitchell prep for food service.

Sobering statistics

Between March 16 and June 1, Gov. John Carney limited restaurants to takeout. But it was not enough to keep many restaurants in the black.

“I don’t think people truly grasp how much money we’ve lost doing it,” said Scott Stein, co-owner of Bardea in downtown Wilmington. “But we felt a responsibility to the community. Even if we only served 50 people a day, we were providing a service.”

Today, dining rooms are restricted to 60 percent capacity but with social distancing requirements, many can’t take in that allotment.

The shutdown and limited opening have had a devastating effect, reports a DRA membership survey:

  • Ninety-six percent of respondents experienced a sales decline from March through and July.
  • On average, operators had a sales loss of 60 percent.
  • Seventy-five percent of restaurants spent from $1,000 to $10,000 on COVID-19 gear, such as personal protective equipment, disposables and plexiglass dividers between booths.
  • More than 23,500 Delaware restaurant workers lost their jobs—two out of every three employees.
  • As of August 2020, restaurant unemployed nationwide hit a high of 35 percent. 

Stein, whose business earned a James Beard Foundation nomination in 2019 for best new restaurant, puts a face on those statistics.

Bardea is one of the busier Market Street restaurants. Still, “we’re drained,” he said with fatigue in his voice. “We’re drained every day. We’re fighting for our life over here.”

Behind the scenes restaurant work at Chelsea Tavern
Lorena Martinez cleans one of Chelsea Tavern’s grills.

The trickledown effect

A loss in revenue affects the state’s coffers. After showing gains in January and February 2020, restaurant gross receipts plunged more than 50 percent compared to 2019 figures.

“A healthy industry is important if you’re going to have a healthy economy,” Leishman noted.

Stein would agree. Restaurants on Market Street have helped with the area’s renaissance, and he’s worried about the movement’s momentum if they close.

State revenue from income wage taxes is also down. Industry lob losses have helped propel Delaware’s unemployment rate to 12.5 percent—which is higher than the national average of 10.2 percent.

According to the Bureau of Labor Statistics, Delaware lost 66 percent of the jobs in eating-and-drinking establishments between February and April 2020, placing it third behind Vermont and New York.

“It’s pretty telling to see that nationally we lost more restaurant workers in the state of Delaware but for two states,” Leishman said.

The sector expected to have 50,800 people working in it — 11 percent of the state’s work force — but now has only 30,200 jobs filled.

The loss of restaurant jobs resulted in fewer summer jobs for teens and entry-level positions. The state’s youth unemployment rate is 18.5 percent as of July 2020 compared to 9.1 for the same period in 2019, she said.

Restaurant relief

More than 80 percent of the DRA survey respondents expect to continue operating at a loss for the next six months, and up to 30 percent may permanently close.

“It isn’t about profit anymore,” Leishman said. “It’s about survival.”

Restaurateurs says their expenses because of COVID continue to rise, including having to pay $70 for a case of 1,000 gloves for the staff. The case used to cost about $22, said Joe Van Horn of Chelsea Tavern. The restaurant runs through two cases a week, he said.

The industry will need the support of state and federal governments to cope, Leishman maintained.

Scott Stein of Bardea Food & Drink
Scott Stein

Said Stein: “There needs to be some kind of package that that provides relief.” Certainly, the government has helped other industries in the past, he pointed out.

And some help seems to be coming.

The city of Wilmington is trying to help restaurants succeed with Curbside Wilmington, which shuts down Market Street every Friday night so restaurants can put tables in parking spaces. The City of Newark does something similar. Wilmington also started Dine on Delaware, which shuts down Delaware Avenue in Trolley Square from 4 p.m. Friday until 10:30 p.m. Sunday, letting restaurants put tables in the road.

And on Wednesday, Gov. John Carney, New Castle County Executive Matt Meyer and the Delaware Division of Small Business announced a grant program of at least $100 million to assist Delaware small businesses and nonprofit organizations affected by the COVID-19 crisis.

The program is expected to reach more than 3,000 small businesses and nonprofit organizations with grants of up to $100,000. The grants are based on the size of the company’s revenue.

Businesses can use the grants for a variety of COVID-19-related purposes, such as purchasing PPE and plexiglass, refinancing debt, advertising, paying fixed expenses and even catching up on rent.

Leishman called the grants “a good start.” She’s also glad that the state has allowed restaurants to sell carryout wine and cocktails, and municipalities have made accommodations for increased outdoor dining space.

But in January, when the Legislature is back in session, she plans to leave “no stone unturned when it comes to other forms of relief that the Legislature might be able to provide.”

Behind the scenes restaurant work at Chelsea Tavern
Caty Frausto pushes dishes into the Ecolab at Chelsea Tavern.

Gaining consumer trust

Meanwhile, the restaurant association is on a mission to show that restaurants are safe. Even before COVID-19, eateries were heavily regulated by multiple government entities and inspectors.

The organization recently sponsored an independent study to determine if establishments throughout Delaware were complying with the COVID-19 guidelines from the Delaware Division of Public Health.

Individuals trained in safety protocols visited 75 restaurants throughout Delaware, from large chains to independent eateries. Some had bar service; others did not.

The inspectors looked to see if the staff and guests were wearing masks. Were the tables properly distanced? Was hand sanitizer available?

According to the results, at 84 percent of the targeted sites, guests and staff wore face coverings. Tables were correctly spaced at nearly 94 percent of the locations, and COVID-19 signage was on display in 87.1 percent of the sites.

“Most restaurants are doing all they can to ensure the safety of the customer,” Leishman said.

Stein is in no hurry to increase the dining room’s capacity. He is relying on guidance from health professionals and legislators. So far, he said, the rules in Delaware have been fair.

But the situation is dire.

“We can’t possibly operate the way we are operating for very much longer,” he said of the industry. “Soon, you’re going to see places close.”

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