50% closure rate feared for New Orleans restaurants as crisis lengthens: ‘We’re teetering’

At various points during the coronavirus crisis, New Orleans restaurants have figured out the shift to takeout-only, how to manage limited occupancy, how to reopen after an employee tests positive and how to reconfigure without bar service.

Now, the question for many is simply how much longer they can hold on.

“We’re teetering, we’re taking it day by day and we’re all constantly living with this question of how long we can make it,” said Nina Compton.

The James Beard award-winning chef has reopened her Bywater American Bistro, while her first restaurant Compère Lapin remains closed. Operating at 50% occupancy per Phase 2 reopening restrictions, the restaurant is making enough to “barely hold on, one day at a time," she said. The future is more vexing.

“Back in March, I guess I was naïve, but I thought, 'This is America, we’ll be shut down for a month and then be back on track,'” Compton said. “But now we’re way behind. We’re still hopeful but we need more than hope right now.”

Four months into the crisis, restaurants stand at a crossroads, and in many ways the odds stacked against them seem worse than when the crisis first began. Reserves of cash and first-round emergency government relief have been drained. The long slog and whipsaw of changing business restrictions have sapped morale.

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Restaurants across the country are in trouble, though in New Orleans the economic disaster is threatening a sector ingrained as part of the city’s identity, from bucket list dining destinations to neighborhood po-boy shops.

The Louisiana Restaurant Association projects that one in four restaurants statewide could close permanently. For the New Orleans area that forecast is much worse, rising to 40% to 50% closing, due to the city’s heavy reliance on travel and events.

“I’m not being gloomy, I’m just going through the math,” said LRA president and CEO Stan Harris. “Restaurants don’t file bankruptcy. They just close.”

Some local restaurants have already closed, many temporarily, though others permanently. The closure of K-Paul’s Louisiana Kitchen this month sent shock waves through the industry as restaurateurs watched a famous destination for New Orleans food fold for good.

Many local operators did breathe a sigh of relief when Gov. John Bel Edwards recently decided to keep the 50% occupancy restriction for restaurants in place. White House guidance recommends tighter restrictions for a roster of states, including Louisiana, though Edwards explained that with social distance spacing between tables, 50% and 25% occupancy should be equally effective.

But with the virus again raging, returning to a point where “normal” business can sustain restaurants remains a nebulous goal.

Help from the top?

Stimulus bills making their way through Congress could bring some relief. The HEALS Act proposed this week by Senate Republicans includes $190 billion to extend Paycheck Protection Program funding, though this would be applied broadly across the economy.

There’s also the separate RESTAURANTS Act, pushed by the Independent Restaurant Coalition, a group formed during the pandemic and supported by the National Restaurant Association as part of its own blueprint to protect the industry.

The RESTAURANTS Act would set up a $120 billion fund specifically aimed at independent restaurants and bars, and includes measures to allow restaurants to pay staff, rent and other vital expenses even if they can’t yet reopen fully.

The bill was introduced in June on a bipartisan basis and has since picked up 145 representatives and 15 senators as co-sponsors. By Friday (July 31), Rep. Cedric Richmond was the lone member of Louisiana’s congressional delegation to have signed on in support.

Compton, who is part of the Independent Restaurant Coalition’s leadership team, said it would do more than save restaurants.

“The amount of money restaurants give back to other businesses is massive, from the farmers to the linen service, and those businesses can’t pivot to takeout,” Compton said. “If we’re not trying to save the restaurants that support all of these other businesses and jobs, then that’s very short sighted. We’ll never get the economy going without them.”

The National Restaurant Association says restaurants “experienced the most significant sales and job losses of any industry” through the coronavirus crisis, charting $120 billion in lost revenue just by the end of May.

By June, the group reported that 3% of America’s restaurants had already closed, while noting the full number won’t be known until government statistics are released in the months ahead. The group believes the number will be in the tens of thousands. For now, some 75% of restaurants the group surveyed don’t foresee being profitable again within the next six months.

Closer to home, Harris said more federal relief is a “critical bridge to when restaurants can return to more stable operations,” though he worries whether restaurants can marshal enough support from lawmakers facing needs across the economy.

“We need our folks in Washington to champion it, because of the impact of the restaurant industry in Louisiana," he said of the RESTAURANTS Act. "But we have limited time at the present to get these things done before recess. It’s going to be one of the hardest things to get through this Congress.”

He thinks the best hope for local restaurants is for residents to beat back coronavirus cases through compliance with rules and widespread face-mask use.

“The governor has been consistent and predictable with basing decisions on numbers," he said. "Good outcomes could get us to Phase 3 (of the state’s coronavirus response). That could increase capacity, and we could start building back some events."

Watching, waiting

Case surges and changing projections have kept some of the city’s restaurants closed and clouded their prospects for returning.

Antoine‘s, the oldest restaurant in New Orleans, dating to 1840, closed after dinner service on March 16. The restaurant announced it would remain closed through “the summer season,” though it’s still fielding inquiries for private dining in the future.

With its own dining rooms closed, Commander’s Palace has kept some business going by shipping signature dishes nationally, serving takeout and family-style meals through its front door and hosting weekly wine and cheese parties via Zoom. However, co-owner Ti Martin said the calculations she and her managers have been using to gauge reopening keep changing.

“Every time we think we have a target date, something else happens to push it back,” Martin said.

Across town in Treme, Li’l Dizzy’s Café has also been closed since March, and the outlook for this small neighborhood standby is no clearer today. Known for its Creole gumbo, fried chicken and garlicky trout Baquet, Li’l Dizzy’s is the third-generation continuation of a Black restaurant family legacy that goes back to the 1940s. It's a restaurant where presidents have dined and regulars from across the city convene.

But right now, all proprietor Wayne Baquet knows for sure is that he’s not reopening anytime soon.

“I’m hopeful but skeptical about the future,” said Baquet. “The way things are right now, I just don’t see how this would work. I don’t see it happening.”

He’s worried about the cost of preparing the restaurant for COVID-era service, restocking the kitchen and bringing back employees, only to have that investment wiped out if he has to close again. At 73, he’s also cautious about possibly exposing himself to coronavirus. He wants to reopen Li’l Dizzy’s but can’t rule out the possibility that the restaurant may not return.

“We’re going to watch and see what happens,” he said. “We don’t want to do anything now that will make matters worse and make it harder to come back.”

Some operators have decided to shut down temporarily. With their business limited and the virus risk high, they are hedging their bets on better times ahead. Those taking this route range from the upscale bistro Carrollton Market to the popular bakery and restaurant supplier Bellegarde to the downtown restaurant Johnny Sánchez, from celebrity chef Aarón Sánchez.

The Mid-City po-boy shop Avery’s on Tulane will join their numbers when it shuts down after service on Wednesday.

“This is our best chance to make it through for the long run,” said co-owner Justin Pitard. “If we put money into it now I feel like it’s for nothing if things keeps getting worse. We want to be able to put money back into it when things are coming back and getting better.”

Editor's note: this story has been edited to update the co-sponsors of the RESTAURANTS Act. 

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