For a sector with already thin margins, restaurants and other small food businesses are just looking to stay above water as pandemic restrictions slowly lift.
With 50-percent occupancy restrictions and virtually no revenue from in-house and public events, these small businesses’ options are limited for generating new income. On top of that, they’re dealing with a food system in flux as order patterns shift and supplies run short, as well as uncertain demand from restaurant-goers and ongoing concerns over worker safety.
“I feel like what’s happening now is we’re in maintaining mode,” said Matt Smith, co-owner of Louise Earl Butcher LLC in Grand Rapids. Smith noted the absence of most public events, as well as the cancellation of various dining events and classes the shop held as a way to boost profits.
“Some of those things that were really carrying the momentum for us going into the new year are gone,” he said. “Getting into a maintaining thought process is probably one of the biggest challenges and where we think things are going to stay for a while.”
During a June 24 virtual roundtable held by MiBiz, restaurant owners and others agreed with the outlook that the industry will need to focus on “maintaining” for the foreseeable future. The panel featured:
- Trey Malone, a Michigan State University professor of agriculture, food and resource economics;
- Cindy Schneider, owner of San Chez: A Tapas Bistro and Roam by San Chez in Grand Rapids;
- Smith, who co-founded Louise Earl Butcher with wife Cynthia Esch in early 2016; and
- Jessica Ann Tyson, owner of The Candied Yam LLC in Grand Rapids.
Schneider, who reopened her restaurants in mid June when dine-in services resumed with restrictions, said it’s difficult to get creative in the current environment.
“Every time we try to get an idea, it’s scary — there’s a lot more fear involved,” she said. “So we’re maintaining.”
Throughout the pandemic, the small business owners struggled with fluctuations in their supply chains, including increased prices and limited availability of products.
“I’m still feeling that,” said Tyson, who opened her southern-style restaurant in 2016. At one point, prices per pound of ground beef more than doubled. At other times, chicken thighs were the only available cuts and “collard greens got mowed because they didn’t have enough people to pick the greens. It definitely trickles down and it does affect the people who want it the most, and that’s the customers.”
Schneider said the switch from paper to digital menus that patrons access via QR code has helped with displaying what items are available.
While Smith — who owns the small butcher shop on Wealthy Street that sources its meat from farms within 60 miles — wasn’t directly affected by COVID-19 outbreaks at large meat processing facilities, he saw the fallout trickle down to smaller producers.
“We were very fortunate not to be involved with that,” he said, referring to processing plants. “We deal directly with the farmers. … We don’t essentially have any middlemen in our supply chain. I think all of (the farmers) have had increased demand.”
Smith called the first six to eight weeks of the pandemic “pretty chaotic. We were very, very busy. The choices that people had for finding meat were getting more and more limited.”
The slaughterhouses that process Louise Earl’s orders also saw demand spike, and the butcher shop had to give a longer lead time for orders.
“We had to commit to all of our places for all of our animals through the end of the year,” he said.
Malone, who studies various food supply systems and does outreach for MSU Extension, said figuring out what products go to restaurants versus grocery stores is key to understanding how systems will be disrupted.
“These disruptions were COVID-related, but often public policy-related, which created a lot of uncertainty in terms of what is and isn’t allowed,” he said, adding that the meat supply chain “became top of mind” during much of April.
“It’s been a roller coaster,” he said.
Employee, customer safety
Restaurants are now in a new phase of the pandemic after being allowed to reopen dine-in services at 50-percent capacity. Under executive orders signed by Gov. Gretchen Whitmer, restaurants in the Upper Peninsula and 17 Northern Michigan counties were allowed to reopen for dine-in service on May 22, while the rest of the state followed on June 8.
Schneider and Tyson said it’s been a challenge keeping employees despite the extra safety requirements and precautions. San Chez and ROAM are under three-stage back-to-work plans, which helped coordinate the restaurants’ reopening and also build up expenses that are covered under a federal Paycheck Protection Program loan, Schneider said.
“It’s kind of a battle right now because it’s hard to tell if they don’t want to come back due to COVID or with their unemployment and stimulus they’re getting,” Schneider said. “It’s a strange battle we’re having, and I know we’re not alone.”
Schneider added that the social unrest surrounding the Black Lives Matter movement has increased concern among some employees, particularly African Americans, who have asked the restaurant to have “better policies toward racism. Like every company, we have been reevaluating our inclusiveness.”
Tyson said she’s lost four employees who haven’t returned to work, and believes at least some of that is due to COVID-19’s disproportionate effect on the Black community. Meanwhile, Tyson has picked up work washing dishes, cooking and taking orders.
“I have been working my ass off,” she said. “It’s just been crazy. Then trying to find individuals to work has just been nothing but on the other side of ridiculous. … For the most part, I deferred to how (employees) feel because it’s not me, it’s them, and if you’re in an environment and you’re not comfortable and are terrified of it, that’s no way to work.”
In addition to employee safety, restaurants are also grappling with how consumer demand will play out, as well as attempting to figure out whether and how much patrons are clamoring to get back.
Malone said it may be a combination of perception — how safe are the restaurants — and economics.
“Now, as we’ve stepped into a recession, one of the first things that happens in terms of what people eat is they eat less at restaurants,” he said. “What’s going to be interesting to watch is if that’s true this time. Obviously, people have less money because of the constraints on income, but at the same time, we’ve been cooped up for months. There are a lot of folks out there who are thrilled to be spending time outside of their house.”
However, he said this will likely vary depending on the type of restaurant. As well, the supply chains restaurants depend on are also different, whether they’re more local or national.
Malone is also leading ongoing research on consumer perspectives related to COVID-19.
“What we’re finding is well over two-thirds of U.S. food consumers are concerned about getting coronavirus from where they’re eating, whether that be from the food they’re eating specifically or from the location of the food they purchased,” he said, adding that science doesn’t support such a concern. “This is still a real perception even if it’s not real in the science.”
Looking back on late February and early March is like an entirely different time period for Schneider, Smith, Tyson and Malone, whose research projects and priorities have shifted due to COVID-19.
“Nothing has stayed the same in terms of my trajectory because of coronavirus,” Malone said.
Tyson said she’s “a little nervous” moving forward with a different atmosphere inside her restaurant, increased reliance on catering and uncertainty around the rise in delivery services seeking to partner with restaurants. Delivery is just under a quarter of The Candied Yam’s business right now, she said.
“Are those delivery companies going to stay relevant as people start to come out of their homes?” she said. “Some of the companies who are now asking us to do business with them, I’m not sure if they’re viable or not, or if it’s something we need right now. I don’t know how that all looks.”
For now, though, she looks forward to carrying on: “We feel fortunate just to still be in the game.”
News coverage in the small business section of MiBiz is made possible by advertising support from the Small Business Association of Michigan. SBAM is the statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. This advertisement has no effect on editorial consideration in MiBiz.