Cheers to the City CouncilBy David Helbraun
on May 13, 2020 in Coronavirus
CITY COUNCIL COMES THROUGH!!!
The NYC City Council showed up today. They made a loud statement that they are willing to stand up for us and that they are on our side in the fight to keep restaurants in business. They passed a bundle of bills, including 1932, delivery fee caps and harassment protection, all which help keep us alive a little longer. Also, 1932 which affords personal liability protection, allows us to consider the option of cashing in our chips, taking a break and coming back later, post “crystal ball” phase of understanding the future.
Out on the front lines where we are all stationed right now, having the government on our side as we mix it up with our landlords is crucial. Landies (I have trouble having to type the word “lord” every time I refer to them so I won’t) are not the enemy, but they are certainly the biggest threat to our existence. If they know that the city is on our side, it changes the setting of negotiations and 1932 may be the matchbook that fixes the wobbly negotiation table. And isn’t it just so much more pleasant to sit at an even, sturdy table with Landy?
We still have lots of questions about how 1932 will actually be interpreted and implemented and the Mayor has not signed it yet and lawyers haven’t sued the city to block it yet so we can’t fully celebrate until it’s a done deal which hopefully should be in short order. We will be analyzing this and reporting back to you as we start to get answers to our questions. Oh, and if the Mayor does not sign this into law by Friday, we will have get vocal about it. Our voices are being heard and our activism is paying off.
We are hospitality people so we understand the value of a well-placed “thank you”. Let’s thank the City Council and let them know that that we appreciate their efforts when they do nice things for us. I’ll bet they don’t get thanked nearly enough for their hard work.
Please send a sweet email to the following Council Members:
Carlina Rivera, the sponsor of 1932: District2@council.nyc.gov
Speaker Corey Johnson, he co-sponsored and was very supportive of all the bills in the package. SpeakerJohnson@council.nyc.gov
Mark Gjonaj, Chair of the Small Business Committee, he pushed everything through his committee. MGjonaj@council.nyc.gov
You can thank them and other Council Members for passing the COVID-19 Relief Package and also let them know that this is not the end and that we will certainly need more help in the future.
Now, our friend Adam Weisblatt, owner of Found Oyster and Last Word Hospitality and husband of Leah Bunch who is the DO of Bestia and Bavel (LA’s coolest, under-the-radar restaurant power couple), reports from LA and tells us how restaurant people are dealing.
Notes from LA by Adam Weisblatt
Things aren’t particularly bright for restaurants here in LA, but comparatively to what I’m seeing in NYC – it’s not as heavy. Although every dining room in the city is shut down, pick up and delivery have been able to carry quite a few venues. Some brands may be doing better than with their previous full-service model.
Maybe the most positive adjustment to living in LA during the time of Covid has been the massive reduction in traffic. You can drive here now – freely and quickly from pretty much anywhere to anywhere. This has lead to a willingness to cross town to pick food up from favorite restaurants that would have been unimaginable during typical traffic-filled days. A number of places that closed during the initial shock of the pandemic have re-opened with creative menus or full-blown Pop-Ups. Shameless promotion: check out Found Oyster’s soon to launch Overboard! concept.
Operating in a contactless way has also been mostly possible here. Tock is seeing a huge boom in their business, and has proven to be a successful model for a number of restaurants. Fees are no where as bad as the delivery sites, and although it’s limited to pick-up only – exact pick up times most be chosen to complete an order. No payment is taken on-site and many places will bring your food out to your care and put it right in the trunk.
The PPP is as fucked for us as it is for everyone else, so that still sucks. A lot of places will not have successful pivots and failure rates will still be significant. It still sucks. However, LA’s reliance on the car has suddenly proven to be an unexpected bright spot – which is crazy to say. If we can keep the traffic down, I think restaurants will spread further and further from densely populated areas where they can get significant outdoor space and low rents.
Hoping that summer brings some relief and that things back East improve. Good luck and best wishes from the west coast.
I will leave you now with uplifting and encouraging words from my partner and brother-in-arms, Joey Regs.
Joey Regs Says:
I can’t believe I’m actually saying this, but are things starting to look up. Man I hope I didn’t just jinx us. I was just thinking to myself this weekend, that I was hitting a wall – just emotionally exhausted. We’ve been at this, in emergency mode, for almost two months now. And I know that many of my hospitality industry friends and clients have been feeling the same way. We’ve given all that we can give; we’re running on fumes here; and the fact that we’re not getting any real, meaningful outside help is what’s really taking it’s toll.
I feared for all of us and hoped for something – anything – to change. I hoped that if we could get a couple of meaningful sparks from outside sources, we could restoke this fire and find some new life. Just throw us a bone, and we could easily be re-inspired to press on. This is a game of passion after all.
Congress is hard at work this week, trying to show us that they are in fact HEROES. That helps. City Council stepped up in a major way today. That helps. We’re hearing and reading about people mobilizing re: reopening plans – city agencies are putting together focus groups and task forces specifically to support the hospitality industry. Now we’re talking. Now that we’re starting to get those sparks, let’s shift our focus to the things that WE can control for OUR own businesses.
Many of you out there have gotten your PPP funds already. Each and every one of you needs to make the best, smartest, most strategic decisions for your own business. Much like how the PPP loan was not a great “one size fits all” solution to the problem, neither is employing the same strategy for how to use the funds. For many of us, this is going to be one of, if not the single biggest financial/business decision that we’re going to have to make: “How and when do I spend this PPP money?”
There are many answers to this question, and only you will know which strategy best suits your business and your specific needs. I will highlight a few of the more popular strategies here, in the hope that I give you some food for thought.
The Traditional Approach
Upon receiving their funds, people employing the “Traditional Approach” will begin planning immediately, and look to hire back their entire staff, at full pay, to ensure that they can hit that 75% payroll threshold by the 8-week mark. While employing this model isn’t necessarily the most efficient (as many of their employees will be getting paid in full to sit at home on the couch for at least some of this period), it will get you that peace of mind that you can spend the extra 25% of your loan on rent and utilities, and should likely see close to 100% of the loan forgiven.
This approach works for the conservative, and for those that just absolutely cannot risk taking on any more debt. This approach also makes sense for those of you who are actually finding a way to do meaningful business right now – and yes, I know that some of you guys exist!
The Sock it Away Approach
Not everyone can afford to subscribe to this model, but if you can afford to, there is definitely something to be said for it. These folks collect their PPP funds and just sock ‘em away. And have absolutely zero intentions of spending a dime of this money until they are able to open up in a way that makes sense for their business-forgiveness be damned. And that could potentially be another 4-5 months.
These folks will be sacrificing the possibility of having their loan converted into a grant and thus be forgiven, in exchange for having a real cushion in their operating accounts for when they are actually able to generate real revenue again (at a lower interest rate than you will ever find from any source out there). They’re valuing the future reserves and security blanket over the short-term forgiveness and potential inefficiencies of forcing yourself open sooner than it would otherwise make sense to. These are generally your bigger operators – the ones that have more to lose with a hasty, forced half-assed re-opening, and the ones that have a bigger machine to get humming, so to speak.
The Wait and See Approach
Not everyone falls into either of the first two buckets here. The majority (probably) of operators are somewhere in between. And the fact that the SBA has dragged its feet on issuing that final forgiveness guidance has really screwed you. So, you’re hedging. You’re going to try and plan to delay spending any actual money until the last minute, but you are planning the shit out of this – figuring out when that last minute is, how you can ramp things up quickly if guidance changes (or doesn’t), keeping all of your options open.
You want the ability to kick spending into high gear on a moment’s notice, in the event that that 75% threshold stays that way and is strictly construed, while not shooting yourself in the foot and spending all of your money unnecessarily, if that 75% is relaxed – or if the 8-week spending period is relaxed to 12 or 24. This is most of us. This is for the people in the in-between: are you open or could you open now? Sure. Would it be your preference? Not really. Could you afford to have even a portion of this loan not forgiven? Sure. Is it your preference? Not really.
Joey Regs out.
Cheers to all the City Council Members and good night.
David Helbraun is the Founding Partner and Chairman of the firm. He is a lifelong entrepreneur who has been running successful businesses in New York City for years.