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Without a Clear Plan for Reopening, SF Restaurants Rack Up Worrisome Debts

“Not everyone should reopen,” one local restaurant consultant says

Coronavirus Pandemic Causes Climate Of Anxiety And Changing Routines In America
Locanda has closed for good, but other SF restaurants are sinking money into just trying to hang on
Photo by Justin Sullivan/Getty Images

After six weeks of low-to-no business at Bay Area restaurants, it seems like there’s a light at the end of the coronavirus tunnel. The question now is how long that tunnel is, what’s waiting on the other side, and if it’s a good idea to go into massive debt to get there.

It seems like the entire state tuned into Governor Gavin Newsom’s press conference Wednesday, an update that had been pitched the media as an announcement on when the statewide shelter in place might be lifted. Of course, it wasn’t that easy. During the update, Newsom even said, “You’ll be left wanting if you woke up to this discussion and (thought) we’re going to hear that we’re reopening large sectors of our society. We are not prepared to do that today,” and later added, ”I wish I could prescribe a specific date to say when we can turn on the light switch to return to normalcy. We’ve tried to make it crystal clear there is no light switch. There is no date.”

It’s not the worst thing that Newsom keeps reiterating that there isn’t some sort of magical deadline after which life will return to normal. Better that than the actions of other leaders, who in the past have bandied about dates like Easter as though viruses take the weekend off.

One of the best — and perhaps only — ways to figure out when things might begin to reopen are projections from the Institute for Health Metrics and Evaluation (IHME) at the University of Washington. It’s their statistics that are routinely cited by the White House, and the agency has been tracking COVID-19 deaths and hospitalizations across the country since the pandemic began. In its most recent update, on April 21, the IHME has a chart that, state by state, suggests when “relaxing social distancing may be possible with containment strategies that include testing, contact tracing, isolation, and limiting gathering size.” Based on that chart, California’s “relax date” is May 17 at the very earliest.

Agreeing with the IHME, Newsom, says that California won’t be able to reopen without increased testing for COVID-19. Newsom said Wednesday that California is processing 16,000 tests a day, but “we want to have a minimum of 60,000 to 80,000 tests a day,” though he didn’t give a timeline toward that goal.

That said, there does seem to be progress in testing expansion, at least when it comes to San Francisco restaurant workers. In an announcement on Wednesday, SF Mayor London Breed said that the city’s testing facilities, which were previously reserved for first responders and other city workers, are now open to all public and private essential workers, including restaurant employees and drivers for food and grocery delivery services.

“Our goal is for every San Francisco resident who has symptoms of COVID-19 to have access to testing,” Breed said in a statement. “We want to ensure all frontline and essential employees that leave their homes every day to serve our residents have a fast, easy, and accessible option for testing.” Restaurant workers and others who need the test can schedule it here.

Perhaps even more frustrating than the lack of a reopening date is the lack of visibility into what new regulations California’s restaurants might face. Instead, restaurateurs have had to try to decipher Newsom’s passing remarks to see how even a gradual reopening might change how they do business. Here is what Newsom has said so far regarding restaurants, all from a press event on April 14:

We talk about what the new normal will look like, as I said normal, it will not be. At least we have a vaccine. As someone like myself who looks forward to going out and having dinner with a waiter wearing gloves maybe a face mask. Dinner where the menu would be disposable. A table where half of the tables in the restaurants no longer appear, where your temperature is checked before you walk into the establishment. These are likely scenarios as we enter the next phase.

As of publication time, that’s it, a couple of sentences rife with “maybe” and “likely.” Once again, it’s better to have someone say “we don’t know yet” than make random assertions, but the vagueness is such that it leaves the future for dining hazy, at best. Speaking with Eater SF, chef Peter J. Hemsley, the owner of Palette — a restaurant that’s made a massive shift in its future plans based on potential industry changes from the pandemic — says, “We’re all just guessing how things will be in the future, at least until there’s a vaccine, which could be years away.”

And the clock is ticking, at least for the lucky few who scored Payroll Protection Program loans. One local restaurant owner, who asked to remain anonymous, told Eater SF that to fulfill the loan’s forgiveness staffing requirements, their restaurants will have to be generating over 75 percent of what it was making prior to the shutdown. Otherwise, the company will have to start repaying the loan within a few months — something he says they cannot afford.

It’s the same scenario for most Bay Area restaurants that were able to get the coveted loans, restaurant consultant Laurie Aaronson tells SF Gate. “So what’s going to happen in December, early December? I’m guessing the government’s going to somehow refinance these, because no one’s going to be able to start paying back massive loans over the next 18 months,” she says.

According to Aaronson, as opposed to taking on debt — as many restaurants are still clamoring to do — restaurant owners “need to be really honest with [themselves] and say, ‘Can I create a plan to operate more profitably?’ If not, [they] need to think about how to responsibly wind this business down, because not everyone should reopen.”

It’s blunt, brutal advice, but worth considering if the alternative is taking out a loan to support a spot that won’t be able to make money for — perhaps — years to come. “You need to have a plan, because you need to make the decision now about whether you’re getting back in the game or not,” Aaronson says. “And you can’t just expect to get back in the game: The rules have changed, so you can’t get back in the way you were before.”

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