The bridge to the promised land…
BREAKING POINT!!! RESTAURANTS FADING FAST AS CONGRESS
DEBATES NEW STIMULUS PLAN
It has been the longest 4 months hasn’t it? Usually we are moving so fast and thinking forward and planning future projects that we don’t sit around dwelling on how slowly time is passing. But these past months? Molasses. We are in a slow motion nightmare of a confusing, unpredictable spiral toward some ambiguously safe world of the future. And what does that future hold? How will owners survive?
Let’s recap. Covid then panic then shutdown then paralysis then pivot, then PPP then open streets and here we are. We are running out of PPP funds, we are operating at 25% revenue if we are lucky and Landy is breathing down our necks. 50% capacity is not gonna happen and if it does, so what? It’s not going to really help. Outdoor seating and alcohol to-go gets some cash moving but, ultimately, it’s a short term shot in the arm. And some space cadet in a truck plowed into one of our clients street seating in Brooklyn. Luckily those barriers did their job.
Anyway, the only way out of this is for Congress to hook us up with some more money and that this round has to last us until we get to vaccine land. We know the money is coming and that this is probably the end of the line for assistance, but we don’t know how much and what conditions might be attached. Hopefully, some of the money will be earmarked specifically for restaurants and we will be able to use it as we need it.
And when is a vaccine coming? Even the most aggressive and optimistic forecasts lead us well in to 2021 before we have an effective vaccine that can be developed and distributed. So, we need enough money to pay rent for at least the next 6-12 months right? Without that kind of bread, we are toast.
Queen Bee and the Senate R’s and DT can’t seem to agree on what the stimulus plan should include from the R side. Remember, the D’s in the House have already submitted their plan (offer) and we are waiting for the R controlled Senate to respond with a counter. Then, Queen Bee and Speaker P have to hash it out and make the sausage. Lot’s of posturing, PR and polls later, we will know the details but it could take a week or two. If anything breaks, we will jump in and will let you know the deal.
I need a break from talking about Landy this week but we do have an update on Landy’s lawsuit challenging 1932A….
1932 A-Team Report by Maya Petrocelli and Joe Taylor
The Landy lawsuit challenging 1932-A is moving at a quicker pace than expected. Yesterday, Landy filed a motion asking the Court for a preliminary injunction and for a declaration that 1932-A is unconstitutional.
We expect a decision from the Court by mid-September. If the injunction is granted, it would prevent commercial tenants from using 1932-A to avoid enforcement of their personal guarantees until a final decision is made in the case on the legality of 1932-A. This final decision could take a while but the Court’s more immediate decision on the injunction will give us an idea of how the Court may decide on the legality of 1932-A. If they grant the injunction, it’s a bad sign. If they don’t, it’s good for us. We will continue to monitor the matter and update you as things progress.
And LA was hitting it’s stride and was a step ahead of us last we checked in but things have changed. Seems that the freedom lovin’ mask haters have created quite the shitstorm and LA is retreating…..
LA Report – by Adam Weisblatt
I feel like Covid has created its own version of Groundhog Day – but none of it is funny, serious consequences abound, and there is no Bill Murray or Punxsutawney Phil to make everything better. Here in LA, it feels like we’re starting over. Rumors are rampant that we’ll be sent back to Phase 1 (meaning only delivery and takeaway for restaurants, and basically nothing for bars) any day, and for who knows how long.
Despite the rising case and death count in LA and across the state, neighborhoods are hit or miss in taking the virus seriously. In some neighborhoods, everyone is in masks and keeping distance between themselves. If you were to stop by Manhattan Beach on a Saturday afternoon, you’d have no idea that we were in the middle of a pandemic except for masked servers and empty indoor dining rooms. The streets are full and the party is in full swing. It doesn’t breed confidence that we’re getting a handle on things. Not a bit.
Unfortunately, the flip flopping with operating restrictions has put plenty of restaurants even further into the hole. A number of local favorites have recently announced closures – it isn’t pretty. What’s maybe most upsetting is that nobody seems to be surprised. Leadership in LA has been wonky at best, and we’ve gotten to a point where we expect mixed messages and endless mistakes. Open. Close. Open outdoor. Open indoor. Close indoor. Outside dining is ok, but you shouldn’t go out, also make sure to support your local restaurants by going out but then don’t go.
One thing that Covid has proven is that drive-thrus are really valuable in LA. Some well situated developments have been able to create quasi-drive thru programs, but a lot of simple neighborhood joints with windows seem to be doing quite well. Waits for In-n-Out range from 30 minutes to an hour. It’s crazy.
Not much we can do but hang tough and hope things improve sooner than later. We’ll be back, it’s just a question of when and what does the industry look like when we return. Hopefully we have some cheaper leases to work with, at the very least.
Lots of luck and love from LA!
Now, because your accountant is someone who should be advising you, here are some things to think about regarding the future…
Accountant Rec’s by – Gary Edelstein, CPA & Glen Edelstein, CPA- Stuart, Edelstein, Linderman and Co. Inc
An important time for forward thinking. As accountants, specializing in the hospitality industry, we are pleased to share some of the action plans we have been working on with our clients.
In anticipation of colder weather, we want our clients to stay ahead of the crowd. Here is a list of some of the topics and issues we have been discussing.
– Outdoor patio heaters or other cooler weather products. You will want to buy or lease these before the prices rise or they are out of stock.
-Obtaining estimates for upgrades to your air conditioning filtration system. These upgrades will help your guests feel more comfortable and safer while dining indoors at your establishment.
– Collecting contact information of your current outdoor diners. Once outdoor dining is no longer an option you will need to communicate your continued delivery, take‐out services and indoor dining.
– Continuing to promote and improve your curbside and delivery options. We believe this revenue stream will only continue to grow.
– Building cash flow projections with various scenarios through year end.
With so much on restaurant owner’s minds, we understand that it is difficult to focus on planning now for future business. Hopefully, this list will help get you started making decisions that will save you valuable time, money and avoid unnecessary frustration in the coming months.
I am just so excited to be able to listen to or watch a baseball game. I’m no Yankee hater and Gerrit Cole will be exciting to watch but ….. Let’s Go Mets!!!