Better to Stay Closed Than Offer Takeout? Belltown Bar Does the Math

With Washington’s stay-at-home order continuing through at least May 31, there’s still much uncertainty over when Seattle restaurants will reopen. Even when dine-in services resume, there will be many restrictions, and, of course, the city will still be in the midst of the COVID-19 pandemic, with a public likely wary about venturing out for a sit-down meal.

Many restaurants in the city have decided to pivot to takeout during the past couple of months — but it’s unclear whether that’s the most viable economic option.

Michael Malone, co-owner of Belltown’s popular neighborhood gastropub Some Random Bar, recently gave a detailed breakdown of his profit and loss margins for March and April, as he attempted such a pivot. After crunching the numbers, he found that — for the month of April — he would have lost $2,000 less if he had just closed down completely, rather than staying open for limited service, due to the costs involved. Even though this is just one business, and the numbers will likely look different for places in Seattle, the Facebook video Malone posted is still a remarkably transparent, in-depth window into the real numbers behind running a restaurant.

Malone also looks ahead to the time when Seattle enters “phase two” of Washington’s reopening plan, when restaurants can reopen dining rooms at half capacity, as well as further down the road. Even in the best case scenarios, Malone estimates that he would lose around $31,500, no matter what, over the next four months.

“There are not a lot of small businesses in America that have $31,500 just sitting in their checking accounts,” he says.

Changing the equation may be the addition of payroll protection loans (PPP). The initial rollout of the federal program was, by all accounts, a failure for restaurants across the country, as larger restaurant chains like Ruth’s Chris ended up landing loans, only to return them later. Anecdotally, at least, several smaller restaurants in Seattle secured loans on the second try, including each restaurant Eater asked for this article that noted the issues they had on the initial rollout.

But even getting the loan comes with its own set of complications. There are still questions regarding the forgivable portion of the money, since it requires businesses to hire back most of their workforce by June 30, a date that seems nearly impossible to meet given current stay-at-home orders and the fears many employees may have returning to the service industry workforce. It also requires businesses to use that money within the first eight weeks of receiving it, which would also pose a problem for many restaurants still in limbo. Though it appears the U.S. treasury department is considering some PPP rules changes, it’s unclear when that will happen.

Malone said he did qualify for a PPP, but hasn’t received the funding yet. He hopes that some of the PPP rules will change soon, and he suggests a certain compromise for the forgivable portion of the loan: extending the time period required to hire back all workers from eight weeks to four months. “This gives small business owners the flexibility to do what’s best for their business,” he says, adding that restaurants operating on such thin margins need to secure that forgiveness, rather than tacking on yet more cash owed to a bank. “A grant is relief. A loan is more debt.”

• Some Random Bar [Facebook]
• Seattle Chefs on New Restaurant Rules for Reopening: ‘It Will Never Feel Safe Enough Until We Have a Vaccine’ [ESEA]
• How the Federal Payroll Protection Program Is Failing Seattle Restaurants [ESEA]