Hartford Business Journal

10 Hartford Business Journal • April 20, 2020 • www.HartfordBusiness.com By Sean Teehan steehan@hartfordbusiness.com S teve Yung filed for unem- ployment three days after Restaurant Bricco in West Hartford closed its doors amid statewide bar and res- taurant bans due to the coronavirus. The 64-year-old longtime server who's been working at Bricco for a decade isn't too worried about his own finances — between his wife's income, their savings and a combina- tion of unemployment and stimulus funds available, he says he'll be fine. But he worries about some of his co-workers. "They're living paycheck to pay- check, week to week. I am older so I have a little financial security. It's devastating," Yung said. It's not just the effect the shutdown is having on the more than 154,000 people like Yung who work in Con- necticut restaurants that have res- taurateurs nervous. The way eateries pay employees and their business model in general is almost incompa- rable to most other sectors, and they operate on razor-thin margins. Gov. Ned Lamont's COVID-19 shut down order, which has been in place since March 16 and will last until at least May 20, disrupted the restau- rant sector more than any event in living memory, and industry leaders in Connecticut collectively wonder how they will bounce back, and whether some legislative remedies even apply to them. While Lamont's order allows res- taurants to operate takeout only, that service usually only accounts for about 15% of an eatery's revenue, said Scott Dolch, executive director of the Connecti- cut Restaurant Association (CRA). "Unfortunate- ly, what we've seen recently is the full-service restaurants have tried to make it work for a couple weeks, and now they've shuttered," Dolch said. "The sales decrease is 80% or worse." So far, four res- taurant owners who responded to a CRA survey said the shutdown closed their doors permanently. Dolch has been in constant contact with state officials throughout the crisis, and believes everyone wants to see restaurants succeed. But he's not sure the state and federal stimulus measures being taken will help the industry much. For example, the $350-billion Paycheck Protection Program, which is part of the larger federal $2-trillion stimulus package and provides potentially forgivable loans to small businesses, requires compa- nies to keep employees on payroll, but restaurants have already laid off most of their workers, many of whom earn more from tips than a salary. As a result, many restaurants have been unclear whether they are eligible for funding, Dolch said. (Restaurants that have laid off workers can still apply for PPP funds, but they would need to rehire employ- ees after their application is ap- proved and the federal money is in-hand. Nation- ally, restaurants have complained that the loan amount — 2.5 times a company's average 2019 monthly payroll — and eight-week window to spend the funds won't be enough to help the industry deal with a longer-term downturn.) The state launched a $50-million bridge loan program, but Dolch said many restaurants are worried about taking on debt because they may stay closed permanently, or may not re- cover sales quickly. The CRA has asked state lawmakers for other help, includ- ing to fund a state-backed business interruption insurance program and forgive sales tax payments for three months, Dolch said. Meantime, when it's time to re- open, restaurants can't just flip on a lightswitch. They'll need cash for a lot of upfront costs, like restocking kitchens with food and bars with al- cohol and paying workers to prep for opening, among others, Dolch said. Added to that, nobody's sure whether restaurants will have to operate under social-distancing guidelines that could require them to host fewer customers indoors than normal. "These are bridge loans, … at some point they're going to have to pay them off, and with what revenue?" Dolch asked. "It's going to be a slow start, and it's probably going to be a slow progression over the next six to eight months." Billy Grant, who owns Bricco in West Hartford and Bricco Trattoria in Glastonbury, said both restaurants are making less than half the revenue they were before switching to all takeout and laid off about 80% of employees. Grant said he worries a potentially slow recovery that leads to sluggish sales when restaurants do re-open will be a problem likely not solvable Help Wanted The Connecticut Restaurant Association has urged state lawmakers and Gov. Ned Lamont to adopt the following measures/programs to help the industry survive the coronavirus shutdown: Immediate and significant capital injections: Grants, lines of credit, or zero-interest loans from the state "will deter- mine whether most restaurants can survive this storm," it said. Forgive sales tax payments for at least three months. "Con- necticut restaurants are absorbing drastic cost increases for the good of the public health, and forgiving sales-tax payments is one way to recognize that sacrifice," it said. Fund a state-backed business interruption insurance program. Address unemployment compensation issues. "As the number of filings increases daily, the state needs to be prepared now for insolvency and look for avenues to ad- dress the problem other than burdening employers down the line," the association said. Looking for Answers Restaurateurs worry about long-term impact of COVID-19 shutdown Scott Dolch, Executive Director, Connecticut Restaurant Association Restaurateur Billy Grant said he worries about a slow recovery when restaurants do reopen, which won't be solvable via a government- assistance program. PHOTO | CONTRIBUTED

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