Restaurants Face Major Obstacles to Reopening

A new story at the Wall Street Journal, ‘Running on Fumes’: Restaurants Trying to Reopen Face Cash Crunch, provides some key details on why many restaurants are having a hard time reopening. And mind you, the issues the Journal describes are in addition to ones typically cited, like how can they be profitable when they need to reduce table count or implement other measures to establish enough distancing to satisfy local requirements and/or skittish customers.

Restaurants are a tough business. The famed factoid that nine out of ten businesses fail in the first three years is significantly due to the high mortality rate of new restaurants. And reopening in the Covid-19 era, with having to make significant operational changes on top of typically being seriously behind on bills, arguably has a similar level of difficulty to starting afresh.

The Journal states that 3% of the restaurants have already gone out of business. In Birmingham, a foodie town, I’ve already encountered three that have died, and it’s not as if I’ve gone looking. The high-end restaurants here, save the Ruth Chris, which already had a lot of space between tables, are only doing takeout.

The chart below, at the Journal site, cycles through the various cities. Another not-good sign is that many show a recent decline after some recovery. Is this fear of a resurgence? Or a flattening after pent-up demand was satisfied?

The Journal sets forth specific adversities for restaurants. The biggie is paying off debts to their suppliers. Restaurants usually pay 30 days in arrears, so they sell the food and get the income before they have to pay their vendors. But in many cities, the shutdown orders blindsided the restaurants, leaving them with supplies on hand that went unused. This happened in Birmingham; by happenstance, I ordered for pickup from a local upscale grill restaurant (this had nothing to do with Covid). I asked when they would be taking their last order. I was told way earlier than I expected. When I got there, the manager was in a panic because the order to close restaurants had come literally hours before. I was one of the last two patrons on what turned out to be their last day.

Suppliers are requiring that restaurants pay the amounts owed or at least come up with a plan as to how they will make good or else. ike DeNiro, vice president of LaSource Group, a restaurant supplier debt collector, told the Journal that May had been his most active month ever, confirming that many restaurants can’t or won’t pay up.

Loans are scarce and expensive. From the Journal:

Restaurants, with their high failure rate even in good times, have trouble getting financing from banks, and the situation is worse now. “You do have very limited options,” said Kathryn Petralia, president of Kabbage, a small-business lender. Kabbage lends to restaurants, and the average interest rate on its loans is greater than 25%. Since restaurants have had little revenue recently, Kabbage shut down all its credit lines for new and old customers, and instead helped them apply for federal loans….

Restaurant chains typically have more access to cash than independent restaurants, but it can be costly. Anthony Pigliacampo started a small chain called Modern Market in Denver that took on private-equity funding and expanded to dozens of locations. He said founders of private-equity-backed chains might have to give up some of their equity if they need to tap their investors for more money ahead of reopening.

There is still cash available, but it is a fraction of what it was before. ARF Financial LLC, a finance company that lends to restaurants, has cut back the size of its loans from an average of $100,000 to between $15,000 and $20,000, and borrowers will have to “show they’re making progress ramping up to average sales” to get further credit, said President Les Haskew.

Federal assistance hasn’t been of great help either. The article mentions that one of the restaurants profiled got a turn down. The Paycheck Protection Program, which turned loans into grants if recipients kept their employees on full pay for at least eight weeks, didn’t work for many restaurants since they were under lockdown when the eight weeks would start ticking. From the Portland Press-Herald:

Shortfalls in the program have pushed state and national trade groups to ask for immediate reforms. HospitalityMaine, which represents restaurants and hotels, wrote to Maine’s congressional delegation asking to be able to use the money over a longer time period with more spending flexibility.

The National Restaurant Association asked for similar measures in a letter to congressional leaders last week.

“A growing number of restaurant owners are concluding PPP is not going to prevent them from permanently closing operations in local communities,” the association said.

Restaurants also have sufficiently high fixed costs that the prospect of reopening when they have no idea how much business they will get is nerve-wracking. And takeout-only is a bust for many; the article mentions one operator who got only 10% of their former revenues when they went to takeout. The loss of high-margin alcohol sales is yet another negative. Yes, some and I assume many states now allow restaurants to sell alcohol on a takeout basis. But how many customers do you think are placing orders?

Many restaurant owners will come to this conclusion:

Mr. [Justin] Brunson, who had been the owner of Old Major, said additional cash wouldn’t solve his bigger problem: Restrictions on the number of customers and a depressed economy mean he might end up operating at a loss. He could have switched to a cheaper menu or focused on takeout. Instead, this month he sold Old Major and will use the money to support his other ventures.

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49 comments

  1. PlutoniumKun

    From the other side of the pond, the situation is similarly dire, but I think its far too early to know how things will shake out. I think that for a great many restaurants, the key issue is rent. If there is either a collective decision by landlords to suffer a blow in order to keep tenants long term or if they are forced to by law, I think a lot of restaurants may survive. But I know many will have concluded that they are not sustainable with current rents. Back during the last financial crash, one of my favourite restaurants in Dublin failed despite it being viable even in the downturn, because the landlord would not bring rents down to a more realistic level. According to what I’d heard, she decided that it was better to keep the property empty in order to maintain its capital value with a notional pre-crash rent. It was empty for about 3 years before being occupied by a fairly poor quality but cheap kebab place.

    What disturbs me about the future is just how quiet most restauranteurs here are. One family owned restaurant locally is owned by someone I know casually. She has stopped posting on social media and there hasn’t been an update on the restaurant FB page since April. I’m honestly a bit reluctant to call her directly to ask whats up, as I assume she is tired of those questions. I’ve asked mutual friends, but they are equally in the dark. Several smaller family type operations in my area have kept ticking over with takeaways, but its not clear how and when they will fully open. The one bright spot is a local small but hugely popular fish restaurant re-opened as a sort of semi-takeaway operation (they allow a small number of customers to sit down).

    Back in January, my favourite cafe in Dublin, owned by a lovely Korean couple, closed down – due to high rents and the landlord wanting to convert the premises to… yes indeed – an AirBnB unit. They told me they were reopening an identical cafe (same name, same decor) in Seoul, where the rents are more sane. But I see on FB that they’ve delayed the opening, for obvious reasons, which is a bit sad, but hopefully they timed that move just right. But of course, even in Seoul there has apparently been a major drop in spend at restaurants and cafes.

    I think a key question will be whether the survivors will be family restaurants, or chains. Anecdotally, local mini-chains seem to be in a better condition than most, as they can use a bit of scale and flexibility to keep their most viable outlets open, while maybe sacrificing those less viable. The big chains are, I suspect, in a lot of trouble – in the UK they were falling like nine pins anyway even before this happened (the Jamie Oliver chain being the best known example). Maybe the smallest family (mon and pop) restaurants will do ok, as they will have the lowest overheads and most flexibility.

    Reply
    1. Yves Smith Post author

      Some experts have proposed that landlords go from fixed rents to participating rents, although then the landlord has the risk of the tenant lying about his results (as well as an unsteady income, which is a real drag if they have a decent sized mortgage).

      Reply
      1. PlutoniumKun

        I guess a lot depends on whether the landlord is an investor or if its a big institution. The great majority of restaurants in my city would be owned by institutional investors (many, ironically, having bought them off the bad bank after the last crash). I suspect they’d be very unwilling to get involved in more complex arrangements like that. But a number of private landlords I know have been making fairly informal and reasonable arrangements with their residential tenants – they calculate that its better to lose money from an existing ‘good’ tenant than take the risk of moving them out and then finding they can’t be replaced.

        Reply
      2. Shiloh1

        Who eats the property tax bill? Landlord?

        Local government around here has not cut one person, not cut one hour of pay. One ridiculous example: the empty train commuter parking lots get the street sweeper treatment every day like the zamboni on ice at a hockey game. They have to go around the cop in the police car sitting in the corner doing nothing, too. Empty park sidewalks and paths getting the leaf blower treatment every day. All essential!

        Reply
        1. rtah100

          @Shiloh1, Property taxes are small beer in the UK compared to the US (highly regressive, though: you could own a £MM London town house and pay <£2k p.a. in property tax) and local authorities receive a lot of central government funding, even of revenues they ostensibly collect locally but are actually pooled centrally and redistributed.

          I am not sure about Ireland but they don't even have water bills (there was insurrection when they proposed them recently) so I am guessing the property rates are fairly low too!

          Reply
      3. rd

        My guess is that leases and supplier costs are going to force many sit-down restaruants to close down and go Chapter 7 or 11. That will allow them to negotiate with their suppliers and landlords on past costs plus new costs moving forward. They will then be able to re-open (if they get the capital) in that space or new space.

        There is likely to be a reset on rents for this type of space in many expensive areas for a couple of years until the virus issue is resolved. There will probably not be a lot of competition to occupy that space for at least two years, so landlords will have the options of cutting rents or holding empty space.

        There will probably be a lot of kitchen equipment and dining room furnishings available used cheap over the next couple of years for start-ups as bankruptcy sales make it available. So it could be a good time for start-up restaurants with access to capital.

        I don’t foresee being in a sit-down interior restaurant or bar unless I am 100% sure of adequate ventilation and other protective measures. Most restaurants would not come close to qualifying in my book. So I don’t think I will be in an inside sit-down restaurant or bar for at least a year, and probably two years. That is multi-thousand dollars lost revenue over two years based on personal dining out and business travel.

        This pairs up with the story today that the top 25% of income earners in the US have slashed their spending, and much of that is in places like restaurants: https://www.npr.org/2020/06/17/878946307/the-rich-have-stopped-spending-and-thats-tanked-the-economy

        An interesting graph here shows that Georgia shut down before an official government order and then spending started to pickup after stimulus started but before the stay-at-home order was lifted . https://www.tracktherecovery.org/

        People are reacting based on the information that they have and what money they have. Government orders that are causing the tooth gnashing and rending of garments are just one component of a complex economic situation. I think we will see “square root” recoveries in many areas where there is a sharp rebound to a plateau that sits some percentage below 2019. The big cities will likely see lower plateaus than suburbia and rural areas because the population density is a major part of the problem, including mass transit. In much of Upstate NY, we can get back almost to normal other than large gatherings and sit-down inside restaurants without too much of a challenge. So schools, sporting events, state fairs, concerts, restaurants, etc. are going to have serious challenges. Most other things can figure out how to muddle through.

        Reply
  2. Medbh

    ” Another not-good sign is that many show a recent decline after some recovery. Is this fear of a resurgence? Or a flattening after pent-up demand was satisfied?”

    Perhaps one contributing factor is that customers have seen how businesses are actually being run, even with their supposed protections. I’ve twice gone to the local ice cream shop. You can order outside through a window. Both times one of the employees was wearing her mask below her chin (not covering her mouth or nose). In addition, about half of the customers weren’t wearing masks, people weren’t staying apart 6 feet, and people were sitting in the “closed” tables. We stopped for ice cream because it’s part of the fun of biking around the lake with the kids, but now we’re just sticking to ice cream from the freezer at home.

    I would have considered going to a restaurant if we could be seated outdoors and safety precautions were followed. Businesses keep sending me email messages touting all the safety standards they’ve put into place. Means little if they’re ignored, and I don’t trust businesses to enforce the practices anymore.

    Reply
    1. PlutoniumKun

      Thats a very good point. The first cafe i visited when things relaxed here two weeks ago was being very strict on customers and staff – to the point where the manager openly reprimanded a customer for getting too close to a staff member. I suspect that they’ll reap long term benefits from being seen as being very responsible. The last time I passed it, there was a very long queue out the door.

      On the other side, I’ve stopped going to my nearest local small greengrocer. They were so casual and downright careless when dealing with customers and food (staff openly handling veg with bare hands when gloves were available) made me feel its not worth the risk. If they can’t be bothered to follow the rules, I can’t be bothered to go out of my way to support them.

      Reply
      1. monday1929

        Gloves mostly give a false sense of security (much like masks-especially if transmission is airborne e.g. small aerosolized particles). Gloves get contaminated, just like hands do. It is doubtful glove wearers are frequently changing their gloves.

        Reply
    2. russell1200

      The data is year-over-year. Normally the best way to go.

      But if you had the absolute numbers there might not be an actual drop, but a relative drop to the year previous. Looking at various restaurant chains, 2018 was an expansionary year, and I believe 2019 would have been as well : can’t find data. Without haveing the actual numbers, it may just means we aren’t recovering particularly quickly.

      Reply
  3. Nick

    I wonder how food trucks will fare this year. On the one hand they aren’t subject to all of the same fixed costs as restaurants but their selling opportunities a bit different too. No festivals or big events, but outdoor recreation (around here anyways, with nice summers) has been noticeably up. Could run delivery from them but fees might be high given typical cost of food, or perhaps a rotating location schedule could work. Not like the ice cream truck, more like SNAP’s summer meal distribution to kids.

    Reply
    1. freedomny

      Was just thinking about food trucks the other day. Jackson Heights in Queens NY has a number of pretty well known food trucks/carts that are still doing pretty well. Also wondering if we’ll see a resurgence of pop up restaurants that don’t depend on a monthly rent…. or citizen cooks/chefs opening up their homes like we used to see a few years ago – kind of like an underground restaurant scene…

      Reply
    2. Moshe Braner

      I avoided “food trucks” even before the pandemic, due to assumed poor hygiene given the lack of water and space.

      Reply
  4. .Tom

    Is the cost of credit normally so high for small businesses?

    Is there a general rule that the cost of credit goes down with size of the corp?

    Reply
    1. Jeremy Grimm

      Search “prime rate” to answer your question. Of course if a business is large enough to own a piece of the Senate and Congress with hooks in the President — credit is unnecessary. They can arrange ways for the Government to give them money.

      Reply
    2. False Solace

      > Kabbage lends to restaurants, and the average interest rate on its loans is greater than 25%.

      I wonder if it comes with a free knife stab to the face to get you started. In cartoon terms, whenever you draw on the funds a spring-loaded boxing glove should pop out to punch you in the groin.

      Similar to the interest rate on personal credit cards. I wish we could go back to those Biblical commandments banning usury and interest. 25% for a loan to a small business or individual should be illegal on its face.

      When our civilization collapses I guess we can console ourselves that we weren’t actually that civilized.

      Reply
  5. Adam1

    We try to do take-out once a week from one of a few local family owned restaurants. One thing I’ve noticed is that while family members have always been working at these establishments, it’s currently almost 100% family right now. And one location where the owner lives in my neighborhood I noticed an elderly man working who must have been her father-in-law given how much he resembled her husband. I can’t imagine he worked in the restaurant regularly before the lock-down. I’m suspecting family members are more willing to work for free (or in delayed payment) or other in kind ways so as to help keep needed operating cash flow as high as possible.

    Reply
  6. 430 MLK

    I’ve got mixed feelings about the impact on restaurants in my small city. I live in a gentrified/gentrifying area and not far from the university area, so I ate out with family and friends quite a bit (4-5 times a week), and I also know a lot of people on the restaurant industry, mostly waiters, cooks, dishwashers, and bartenders. It’s hard to see places go out of business and friends in danger of losing jobs.

    On the other hand, the restaurant boom ( and chef-Love generally) was a symptomatic driver of the touristing and gentrification of the city. The fact that places like my city ( and Birmingham) were becoming foodie places was used by city leaders to justify all the other neoliberalizing city processes, from tax breaks that went to foodie areas to revivtalization narratives in low income neighborhoods….none of it really addressed by the restaurant owners who benefitted, or the mostly pmc(+professional artist) patrons who supported them. So we got a decade of restaurant saturation that shifted both the city’s productive capacities—smart entrepreneurs that you saw in my paper were mainly food/bar people opening new concept ideas that got them in magazines like Garden and Gun to showcase both their and their city brands—and its civic priorities.

    I hope that trend dies with Covid and we get way less of a focus on restaurants going forward. Like mall space in the 90s and beyond, our city policies and actions promoted way more restaurant space than was needed for a population that generally has adequately-sized kitchens for way less-costly home production.

    Reply
    1. Arizona Slim

      Hear, hear!

      I’m of the mind that the US isn’t just over-stored (on a retail square footage basis), it also is over-restaurant-ed.

      And, if you’ll indulge me for a moment, I’ll share a story of my growing up years. I lived in a neighborhood with excellent cooks. All women, of course, but that’s another story.

      I recall that “going out to eat” events were very few and far between. Why? Because it was easier and more convenient to just gather ’round the table at home.

      Then Slim went to university in a town that wasn’t, ahem, known for great food in the local restaurants. (Place is now a foodie town.) That town is where I was taught to cook by (mostly) male housemates. What I learned from them serves me well to this day.

      Reply
        1. Arizona Slim

          Yes, I do live in Tucson. And, true confession, I wasn’t big on “going out to eat” before our friendly neighborhood pandemic rolled into town.

          Reply
      1. Pavel

        I have friends in NY and London and SF and elsewhere who eat out much more often than eating in (let alone cooking for oneself!). I confess I did the same many years ago before shifting to cooking for myself, partly to save money but also to ensure that I was eating organic and high-quality food. It is also fun :)

        I asked my 90 y.o. mother the other day how often her very middle class family ate out when she was a child. “Perhaps once a month.”

        Don’t get me wrong: I love going out to great restaurants, ideally independent and family-run, where one can dine with friends and have a conversation. I have done this at cheap places and expensive. But a society where many dine out every night, or regularly patronize fast food joints or chain restaurants…that is not healthy or sustainable. And consider all the food waste!

        Reply
    2. Jeremy Grimm

      I am surprised at your view of restaurants. They are an important part of what makes living in a City, even a town, worth the many costs. Restaurants are one of the few places remaining where people can meet to socialize, especially when many of us live in small homes where entertaining friends is simply not possible.

      “… neoliberalizing city processes, from tax breaks that went to foodie areas to revitalization narratives in low income neighborhoods… none of it really addressed by the restaurant owners who benefited, or the mostly pmc(+professional artist) patrons who supported them”.
      How are the city processes you refer to “neoliberalizing”? Please don’t use the word so indiscriminately. You destroy its meaning. Your concern for the poor — implicit from your disdain for “restaurant owners” and
      pmc patrons — is touching … until I recall the waiters, cooks, dishwashers, and bartenders you claim to know.

      “… shifted [away the endeavors of] both the city’s productive capacities—smart entrepreneurs…” — To what sort of enterprise would you have the city’s productive capacities and ‘smart’ entrepreneurs [one of Lambert’s favorite words with a usage suggesting a denotation closer to a ‘smart phone’ than member of the ‘smart’ set’] shift their investments and ‘smarts’? Have you ever given much thought to why so many people think of a restaurant when they think about opening a small business?

      You observe that the local “population [that] generally has adequately-sized kitchens for way less-costly home production.” You express concerns for efficiency and cost in the ‘production’ of [meals]. Do you really think about food, eating, and meals that way?

      After using the word ‘neoliberalizing’ as a vague pejorative, you’ve adopted a point of view and used words like ‘cost’ and ‘production’ expressing what seems to be a concern about efficiency to describe what I regard as an important human feature of Culture and Society. How Neoliberal of you. Do you count and boast about your ‘likes’?

      Reply
      1. False Solace

        – Thirty-one percent of restaurants surveyed in Toast’s 2019 Restaurant Success Report offer medical insurance for employees, while 21% offer dental and 18% offer vision insurance. Less than a quarter (23%) said that they provide workers’ compensation insurance.
        – Of 1,253 restaurant owners and operators surveyed, 18% said they guarantee a 401(k) plan and 11% provide disability coverage.
        – Big-name franchises including Sweetgreen and Starbucks have recently rolled out substantial paid parental leave policies. But across the board, just 14% of restaurant owners surveyed said they offer paid family leave to their employees. (RestaurantDive)

        So: they don’t provide health care (and if they do, the employee certainly can’t afford it), they offer no retirement at all, and essentially no other paid benefits necessary to life (like the ability to take time off when sick or to care for a family member). On top of all that, wages are so low that typical workers barely survive on a shoestring budget. These businesses are essentially strip-mining their workforce.

        Sounds pretty neoliberal to me.

        Reply
        1. Jeremy Grimm

          I don’t believe restaurants or bars offer good jobs. They offer one of the only jobs left where someone can work without some kind of credential beyond a little experience and some ability. Businesses “strip-mining” their workforce is a feature of Capitalism — Marx called “exploitation”. Neoliberalism is not the same as old school Capitalism, or its recent devolution — Libertarianism. The differences are important. Calling restaurants Neoliberal because they exploit their labor force again misuses and robs meaning from the meaning of Neoliberalism. To me. the most important feature of Neoliberalism is its axiom of the Market as the ultimate tool for discovering Truth — the Market as epistemology. There are of course many other characteristics of Neoliberalism which distinguish it.

          Reply
          1. 430 MLK

            That may be an important feature to you, but the original comment was about neoliberal cities and restaurants’ role therein. You disclaimed the original comment as having nothing to do with neoliberalism. From “The Neoliberal City: Governance, Ideology and Development in American Urbanism” (Hackworth 2000):

            “The neoliberal counterpart [as compared to Keynesian urban governance], urban entrepreneurialism, devolves regulatory power from national to local authorities, diffuses local government authority to public/private partnerships, emphasizes public choice and unregulated growth.”

            Are you stating that restaurants have played no part in this transformation? From where I sit, I have trouble finding _any_ urban public/private partnerships over the past decade that do not rely upon new restaurants as a talisman of success, nor can I find many writings of gentrified neighborhoods (another symptom of neoliberal urbanization) that do not foreground new hip restaurant openings.

            A second tendancy of neoliberal cities is to justify economic development priorities based on a global competitive marketplace. I haven’t read my David Harvey in a decade or so, but one of his big markers of this switch to urban neoliberalism was the TINA requirement that cities put large amounts of economic development money into branding a ‘sense of place’ for the city, as a way to attract the pmc. In this sense, “culture” became a marketable trait…the kind that gets you in culture magazines like Garden and Gun.

            A third trait of urban neoliberalism is a general transition from production (factories) to consumption (shopping). As factories left, space was transformed for new purposes (loft housing, studio galleries…and yes, restaurants).

            Agreed that restaurants offer non-credentialed jobs, and also some measure of sociability, but so does Wal Mart. The difference (beyond Wal Mart marginally raising wages for its workers, unlike most restaurants), I guess, is that the pmc don’t get any sense of shared values going to Wal Mart, and our urban mayors haven’t been pushing economic incentives to bring Wal Marts into the city as a sign of their community’s uniqueness that can help them compete in what was called our new global economy. (Trader Joe’s maybe…)

            So while I still eat at restaurants and don’t fire-bomb or spit upon restaurant workers when I see them, it seems pretty safe to say that restaurants have grown in stature, number, and economic importance as a result of neoliberalization of cities, a process that has been ongoing for quite some time and which is now–along with a lot of other neoliberal urban policies–being put under strain by our covid shutdown.

            Reply
            1. Jeremy Grimm

              You may claim that tossing out “neoliberalizing city processes” communicates “neoliberal cities and restaurants’ role therein” — it didn’t and doesn’t communicate that connection to me. I haven’t read the book you reference and I quit reading urban planning literature after a summer selling real estate and reading urban plans and a book of how to lay out neighborhoods and mucking in the old land books and reading county lot split ordinances. I did read one book on urban planning that I believe better captures the processes involved than what I understand of what you’ve explained about your reference. I believe “Who Really Rules? : New Haven and Community Power Re-Examined” by G. William Domhoff provides a better description of the processes that control local planning, particularly planning and controlling changes in an existing community — also ref. [https://whorulesamerica.ucsc.edu/local/new_haven.html].

              I have to admit a strong prejudice against the book you’ve referenced based on its title and your description of its content. The word Neoliberal is tossed around and used as lightly and inexactly as the word fascism, and your reference appears to use ‘Neoliberal’ in a similarly loose way. The three traits of you recount as characteristic of the Neoliberal elephant suffice to comfort me in clasping to my prejudice. Fancy restaurants as a feature of gentrification are a fashion in urban planning — like anchor stores in malls and winding suburban roads — not a feature peculiar to Neoliberalism. The use of fancy restaurants and bars to draw members of the professional/managerial class [pmc] to an area is a relatively old tool in the urban gentrification toolbox. Restaurants of a different sort can be found in almost any urban area with the exception of urban ‘war zones’, and they are important to their communities just as fancy restaurants are to members of the professional/managerial class [pmc] — of which broadly speaking — both of us seem to be members.

              Reply
              1. 430 MLK

                Couple things:
                (1) David Harvey, the second author you dismissed without knowing him, has been covering and defining neoliberalism since the 1970s. He’s a Marxist geographer, not urban planner. Those are way different things You might want to read him. Social Justice and the City is from the 70s and first starts charting the transformation of capital relations over urban space, and his Condition of Postmodernity from 1989 is still one of the landmark texts for defining the neoliberal moment. With all due respect, I’ll gladly take his precepts for neoliberalism over what I have read from you this far.

                (2) You have misread what I wrote, from what I can tell. Urban planning is zoning, street layout, etc. That is not what I referenced. I am talking about neoliberal urban economic development—not planners but mayors and council members voting tax breaks, grants, tax allotments and civic projects to private developers in the name of economic development that promotes specific, generally consumption-based, economic activity that empowers certain actors (pmc) to ‘stake a claim over’ specific parts of the city

                (3) Or…you ever thought about where the space for all those restaurants and day spas and art galleries and lofts came from? Harvey and other Marxist geographers (from what I can remember from my student days) would foreground the changed economic conditions that led to private entrepreneurs (and banks) discovering cheap and vacant buildings that, in an earlier production-focused era, would have been factories…and today (the neoliberal era) are investment opportunities for dominant forms of consumption (in my example/comment…craft food and bev) that produce different spatial relationships.

                (4) Not sure about your definitions of neoliberalism beyond your statement, with which I agree, that it is a philosophy of the marketplace. Other than that, you’ve only stated how wrong I am.

                So, if as you state, that there are other aspects of neoliberalism…and if you reject the three I offer… then what are the other aspects of neoliberalism. And… do you have a starting era for it? 1970s? 1980s? I gather from your statement about high fash restaurants being a planning trend that you find this gent trend does -not- overlay with the era of neoliberalism? On what grounds?

                (5) Of course restaurants can be found in all sorts of places! Like banks, baseball, andmost other things, restaurants both pre-date neoliberalism and will exist long after it. And I’ll keep eating at them. My comment was about over-saturation of restaurants and their use in neoliberal city development.

                I mean, if I said that banking is over-represented in our current economic order (and also in most of our built landscape), it doesn’t mean (a) I hate tellers, (b) banks don’t have functions that pre-exist the current moment and will extend into the next, or (c) that cities before the time you claim for neoliberalism didn’t use banks in different ways.

                Or, if I note a neoliberal turn in education, this doesn’t mean I hate teachers and students, find no value in learning, and would want all colleges shut. It means that the neoliberal era has altered collegiate education in a way that I hope changes—and like restaurants, has a much smaller footprint than what exists now.

                The book you cite sounds interesting. I’m also not a fan of urban planning books, though I admit to being a fan of APattern Language, probably because it seems less prescriptive and allows for a diverse type of density (urban, suburban, rural) without the moralizing over which one is best.

                Reply
                1. Jeremy Grimm

                  I should let you have the last word … but it is too much fun to engage with someone willing to argue with me. I admit to being opinionated, outspoken, and admittedly a crabby old curmudgeon. But I am not trolling you. I have strong beliefs about Neoliberalism which I have expressed … perhaps too many times at NakedCapitalism. So — for fun and afterword — please have the last word:

                  1) David Harvey may be a fine thinker and author. My objection and what you suggest is a dismissal of his work is entirely a matter of how the word Neoliberal is used. [I capitalize it because I took too much German in high school.] I have no doubt his ideas related to urban development, planning, whatever category you would are probably excellent. I still haven’t read the Mumford slowly feeding silver fish on my bookshelves.

                  2) I don’t believe I misread what you wrote though I do believe you misread, or more likely misinterpreted what I wrote. As for your explanation in item #2: the “mayors and council members” et al. including other players in local, State and National Power Elites definitely use urban planning commissions and public servants, and make full use of “tax breaks, grants, tax allotments and civic projects to private developers” to achieve what the Local and higher Power Elites support. [No use of ‘Neoliberalism’ necessary or userful for the argument or analysis.] Aside — have you ever attended a meeting for a local candidate? I doublt you will be surprised to discover how often the meeting is held in the very ample homes of local land developers.

                  I believe you are mistaken in thinking the “consumption-based, economic activity that empowers certain actors (pmc) to ‘stake a claim over’ specific parts of the city”. The professional managerial class are the prey who profit the architects of the urban transition. They are critical to its financial support and generally mindless of anything beyond their own concerns — and I regard them as prey, like lesser among rabbits wandering into snares.

                  3) No … I haven’t wondered where the space came from. Though my experience with local government and local political campaigns is limited [my ‘allergies’ prevent greater involvement] I find little mystery in where the space came from. I do admit mystery in the ‘who’, but have little doubt about their nature or class.

                  4) Neoliberalism started in the late 1940s. I am neither an exponent of nor sufficiently knowledgeable about Neoliberalism to write a definitive essay for you about its definition. For that I would refer you to Phillip Mirowski and one of the many papers he has posted to [https://www.academia.edu/] or one of his many lectures posted on youtube. [Hint: I referred to a favorite elsewhere today at NakedCapitalism]. Yes the fashion for fancy restaurants does indeed overlap the period of Neoliberalism … and Yes! some of the arguments made for fancy restaurants originate from Neoliberal ideas. That hardly makes ‘fancy’ restaurants a defining feature of Neoliberal arguments in justifying local planning/urban development/redevelopment … or what you will.

                  5) I think you could have stopped at #4 — but be that as it may — tony restaurants are indeed an important feature of urban re-development/gentrification/urban renewal. You plant the leaf your prey most craves.

                  And in conclusion: I believe we are very much in agreement about most of what really matters. I greatly appreciate engaging with you in argument and sincerely hope we might contest again sometime in the future. My most sincere thanks! [NO sarc]. I am an old dog, but even if you might question the Truth of my next statement — I can learn new tricks and I am most anxious to be well taught. I hope to engage with you again! Thanks!

                  Reply
          2. Jeremy Grimm

            It isn’t my point. It’s a point made repeatedly and emphatically by Phillip Mirowski in his lectures on youtube. His keynote lecture for ‘Life and Debt’
            [https://www.youtube.com/watch?v=I7ewn29w-9I] see minute 28+. [I have watched this lecture on the Neoliberal uses of the ongoing climate change many times.]

            Reply
  7. bassmule

    “Skittish customers”? It’s the ones who aren’t that are real obstacles:

    “One of the rules at Lawn on D is if you’re not sitting at your table, you need to put your mask on. But the crowd at opening night seemed unaware of the rules, and that’s why Chéz Lawn on D worries me. I saw some of the young denizens of South Boston…pushing tables together, or strolling from table-to-table without their masks on. Many followed the rules, but there were plenty who eschewed the regulations when they spied friends at other tables and went over to say hello, beer in hand.”

    Why Boston’s largest new restaurant is also Boston’s most worrisome new restaurant

    Reply
  8. john bougearel

    What if we have this story, in many ways, tragically all wrong. Wouldn’t surprise, would it?

    I think it is important that some of the readers consider what Dr Zach Bush has to say about the pockets of the world where coronavirus hit hardest being in areas where air pollution was the greatest allowing coronavirus to “abnormally clump” to particulate matter PM2.5 and other chemical toxicities such as cyanide. Cyanide poisoning leads to histo-toxic hypoxia. And how the 5700 Histo-toxic hypoxic “Blue” patients in NYC were not initially presenting as sick and infected (with temps, elevated WBC and lymphocyte counts) but rather presenting with a chemical toxicity that causes histo-toxic hypoxia.

    And then how the cohorts worst affected are patients with Cardio, end-kidney stage issues, or diabetics. What unifies these three cohorts are the drugs that they are prescribed, ACE Inhibitors and Statins. “Those 2 drugs upregulate the ACE 2 receptors in the lung for this virus.”

    “And so through the pharmaceuticalization of our elderly, we create this incredible receptor device for abnormal toxic clumps of coronavirus, and then we villify the virus for these people dying not from infection but from histo-toxic hypoxia” that never got treated.”

    Coupled with the role of ubiquitous glysophate introduced to the food system in the 1990s, that disrupts a gene and blocks an enzyme responsible for “cutting” snips of the viral dna, so that viral dna is not overexpressed…..

    “As PM2.5 dropped in China during their lockdown – suddenly everyone stopped dying of coronavirus….as soon as PM2.5 went below 40 parts per cubic meter. And so it was very profound that it was not social distancng or masks – it was the drop in air pollution that best matches this. A Harvard study that mapped air pollution in areas of high mortality found that for every 1 particle increase of PM2.5 per cubic meter, there was a 10-15x (or % ?) risk of death. All across Europe, the heaviest PM2.5 is Northern Italy, highest in the US, NYC, Loiusiana. All the pockets of highest mortality in Western civilization occurred in these areas.”

    Link to just released interview with Dr Z Bush – https://www.youtube.com/watch?v=SX71-cxbFB4&feature=youtu.be

    Reply
  9. TimH

    The character restaurants will face major attrition, and the chain ones will remain, perhaps with some franchisee mods.

    Reply
    1. Louis Fyne

      A perfect allegoryof Fed policy…. 0% headline rates does no good if a chef-owned restaurant can only get $50,000—secured by her parents’ home equity.

      While the local Cheesecake Factory,Cracker Barrel, etc. can tap their bank credit line and/or issue equity

      Reply
  10. Userfract

    My sister opened a new restaurant last year here in Ontario and has managed to keep it open through the first few months of the crisis. Her solution to the problem of paying her vendors has been to start a side business selling food boxes with ingredients for home cooking. Her restaurant does farm-to-table cooking, so she is mostly dealing with small vendors who have also lost most of their restaurant customers. She is taking their products, repackaging them and distributing them to the folks who would normally frequent her restaurant. This allows her to build credit and goodwill with her vendors and solves a problem for both of them.

    The problem for her now is that the short term minor success of this food delivery service has generated just enough revenue that her business is ineligible for our government’s programs to help subsidize worker wages and defray the costs of commercial rent. She might have actually been better off financially if she had simply done nothing, which is frustrating. Her landlord seems oblivious to the fact that giving her a break on rent now will ensure her continued ability to pay rent in the future.

    Now she is faced with the challenge of opening a patio with limited seating for the first time since that is the only option for reopening here. As demand for the delivery boxes falls as things reopen, it’s unlikely to be offset by revenue from the very limited number of tables they are allowed to have. There’s also a certain minimum amount of staff they need to have just to do dinner service, and a fair number of her staff are reluctant to return to work given the availability of government supports and considering the health risks. It’s been frustrating watching her successfully launch her business, knowing how hard that is already, only for it to come up against a crisis that may well kill off most restaurants.

    Reply
  11. Wukchumni

    Our award winning* sandwich/salad place in town had somebody from LA buy the little strip of buildings they were renting from, and then had the rent sharply raised to big city rates, so they bought a building in town last summer and the plan was to be ready to go on April 1, with lots of work gutting the place and making it theirs, and fast forward to today, and it’s strictly a take-away with the equivalent of a transparent cat door in which to order. The owner told me, it’s like he’s got a taco truck that doesn’t go anywhere.

    *in the Yelp Top 100 of all restaurants in the USA the last 2 years

    Reply
  12. elissa3

    Here in Santa Fe, a very foodie town and tourist magnet for 4-5 months/year, I would expect 25% or more of our restaurants to go bust by the end of the year. The ones that have thrived are those that found a way to provide value to locals or longer stay part-timers during the slow periods. But even the good ones will be struggling, and, yes, rents will be a key issue.

    Another simple reason that many will fail is that either people have much less disposable income right now, or they feel insecure about the future and are loathe to treat themselves to a high end sit-down meal in a less-than-ideal setting and “nervous” ambiance. This was our case last week. I’d thought of splurging at an expensive place that we go to about once a year. But when I checked out the online menu, I felt that we could do most of the entrees ourselves to an acceptable quality–at a third of the price. And that doesn’t include the quite nice bottle of cheap rose that I recently discovered at Trader Joes. So until the restaurant experience can re-discover the whole ambiance and social interaction thing, we will be taking it slow. (On the other hand, there will be a cohort who just will have to get out of the house after nearly three months of relative isolation).

    Finally, how many readers have discovered or re-discovered their talents as cooks? This was nothing new for us as we have a splendid garden and both have the time and skill to make really nice, if simple dinners at least four nights every week. (The other nights are leftovers or hot dogs).

    Reply
    1. Arizona Slim

      Me!!! Lockdown has motivated me to up my cooking game, and add beer brewing and mead making to my repertoire.

      Reply
      1. jr

        I’ll throw a little cooking tip out there for the home bakers…have you ever made toast? It’s easy! Take your standard bread dough recipe and substitute half of the water with egg white. You can play around with adding more if you like. Then bake your loaf.

        The bread will have a rubbery, stiff texture. It’s not great as bread but if you take it, butter it, and toast it in the oven it gets good and >crispy<. Just like the difference between the egg white in a fried egg and the crispy edges of egg white that are left in the pan…

        Reply
  13. Jeremy Grimm

    I can’t help taking the Corona hit to restaurants personally. Until this March my 26 year-old daughter worked in Brooklyn as a barista, then waitress, and after several years finally landed a job as a bartender — an area of the service industry which promises slightly better longevity and income than working as a waitress. She tried college briefly and dropped out soon enough that she escaped without a debt overhang. Her rent for one bedroom in a two-bedroom apartment in a far from stylish section of Brooklyn are outrageous. I have no idea what will become of her as Corona grinds on. I help as much as I can and worry for what will come after July. I imagine a very large portion of the young people living in Brooklyn face prospects little different from those my daughter faces. I am also concerned that the next time I’ll be able to visit my daughter there will be a lot more empty store fronts in her part of Brooklyn.

    Restaurants are known as easy-entry easy-exit businesses as you might discover if you talk a little while with a SCORE volunteer at the Small Business Administration. Talk a little longer and you’ll hear about the many licenses, and fees you would need to open a restaurant, the costs for leasing a space, equipping a kitchen, for insurance, and a long list of other costs. If that is “easy-entry” I lost interest in trying to start my own business. From what I could gather most small business start-ups were either restaurants, or small retail shops, or service providers to existing larger businesses — a kind of business that as far as I could tell seemed to depend on having some ‘in’ with the larger business served. [Web business was just beginning the last time I looked into starting a business and by the next time I looked the Amazon consolidations and predations were well along in their progress.] The uncertain future for restaurants, their uncertain profitability for the future as costs and potential income fluctuate, promises to close the door for an uncertain amount of time on one of the few kinds of business individuals might be able to start an enterprise without very deep pockets. And so many jobs will be lost with no sign of any replacement … perhaps for a generation or more … long enough to fall under the shadows of Climate Chaos.

    Where I live there are very few restaurants and none to interest my tastes since I don’t especially savor badly done “Italian” or diner food. The restaurants in other places I’ve lived or that were within reasonable travel distance had been one of the joys of living in those areas. I enjoyed the many different foods to try as well as the surroundings, and people around me when I ate. I can fondly recall the many times I enjoyed a fine dinner sitting on a porch or terrace near a river or sitting on a balcony over looking the Pacific Ocean, or sitting at the top of a sky-scraper overlooking the lights of a great city. Although I go out seldom now that I’ve retired and have a smaller income … I still deeply regret that I might never again be able to enjoy these pleasures of life as the restaurants I once enjoyed die and are replaced by empty spaces.

    Reply
  14. ewmayer

    In my town in Marin, north of the Golden Gate, starting last weekend the town is making each weekend (Fri 1pm – Mon 6am) a pedestrian-only affair on the blocks-long main street with its numerous restaurants. The lack of vehicles allows the eateries to spread their tables outdoors along the street next to their existing small patios, so they can move many of their inside tables outdoors while maintaining social distancing. It made for a pretty cool sight last Sunday evening. Of course this is strictly a fair-weather option, come winter we shall see.

    Reply
  15. Ana Claybourne

    Here in Sacramento Calif, to help the foodie type eating places, the city government hired a wide variety of restaurants to use donated or institutional quantity packaged foods (such as 50 lb sacks of onions) that they would normally use for customers to instead make meals on wheels for seniors, school kids and so forth while they are closed.

    They already have the very large kitchens and experienced staff needed to make a lot of meals. A herd of volunteers plus some non profits such as United Cerebral Palsy with large wheelchair transport vans (that otherwise cannot be used due to the need for distancing which cannot be achieved in a van) to deliver the meals. Here in my senior only apartment building of 120 apartments and about 125 residents, a UCP transport van the size of a small school bus pulls in at lunch and is literally full to the roof with the meals each of which is in a large box or bag with the individual components in smaller take out boxes (the cardboard waste is staggering).

    This system was jury rigged early in the pandemic in part to keep people out of lines at the local food banks in an attempt to decrease the rate of infection among the poor and elderly. It has been available for the asking without means testing though so that the restaurants don’t die, bulk food is not wasted, there is no paperwork or chaos about who is or is not economically “deserving”, and to prevent even more people thrown out of work.

    It will terminate July 10th and there is no Plan B in case no one goes back to eating out again. Our local infection and death rate is slowly but surely climbing and most of the people I talk to, middle aged and old, have no desire to go back to eating out. Locals are very much afraid of restaurants as places of infection. Even so, we do have college age young people who think that only “old people” get it, and they are on the river partying every weekend. Perhaps they will return and fill up the fun times micro beer brew pubs we have downtown.
    Ana in Sacramento

    Reply
  16. eg

    I worry more for all those who were employed in the hospitality industry — what will they do now, since the government has yet to accept its responsibility as “employer of last resort” via a Federal Job Guarantee?

    And think of the demand destruction and all of the dominos …

    Reply

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