Underlying Conditions…

Originally Published : June 26, 2020

Dear Washington: Send Money STAT! 

I’m really happy to see the pop-up construction sites in front of most of our restaurants and bars.  It’s gonna be nice to have some action and get that flow of cash moving again.  And good that we got the PPP extension and delivering big batch booze has been a ball and July 3rd we get to 50% inside and things are looking up, right?  We are gonna be just fine, right? 

Well, in order to properly prognosticate we have to first reflect and admit that we have had serious underlying conditions for some time that need to be addressed.  These pre-existing conditions make us quite vulnerable and if we don’t watch our step, Jack’s Wife Jill will come a tumblin’ down Lafayette and it will be curtains for many NYC restaurants and bars. 

And I disagree with pontificators who opine that Covid will cause a “shakeout” and that it will be “good for the industry” to keep only the strong.  Bullshit.  A shakeout happens during a recession or other difficult financial time. Restaurants that can’t adapt to a common occurrence like an economic downturn, we can afford to lose. We know this because we have lived it.  But this virus is a worldwide tasmanian devil and it’s not slowing down and it is not going to just fade away and we can’t wish it gone and ignoring it and pretending it isn’t there is immature so perhaps we should look at what’s happening without rosé colored glasses and talk about what ails us and how we can heal.

We know that we were not well before the hurricane.  We had high blood pressure due to staffing issues and a shaky, unreliable labor market. We suffered from panic attacks as we feared the slap of ADA and employee lawsuits.  We were anemic as rents and food costs were eating away at our profits. And our eyesight and sanity were certainly on the decline because we stuck with it anyway. 

Now, in our already fragile state, we get hit with this life changing illness and we don’t how long it will last (thanks DT and rest of the country for not handling your shit), if it will come back to NYC and how bad it might ultimately get here. We are still in critical condition and our landyitis is acting up again and the frustrating thing is that there is medicine available but our dearly elected are not gonna just give it to us.  They are gonna make us beg and plead and they will watch some of us die and then, maybe, they will consider giving us the money we need to survive.  Can’t they see that we need attention STAT?  And Mnooch, remember when you and your begloved were photo opping it up with the sheets of dollar bills in the mint?  More of those sheets please.

You know, there is a bipartisan bill called the RESTAURANTS Act that was introduced in congress and the IRC is behind it and would provide 120 Billion to restaurants to “revitalize” the industry. We are on life support.  We are in cardiac arrest.  We don’t need mere revitalization.  That’s for quaint waterfront districts. We need the big daddy defibrillator to send currents of cash into our waning bank accounts and we need it soon. Queen Bee and Madam Speaker need to mend a fence and find some fun in agreeing on this one thing.

And there’s Landy  who continues to obfuscate and obliterate.  They are still slow rolling negotiations for the most part and I hear that REBNY (the big Landy lobbying group in NYC) is preparing a lawsuit to challenge 1932A on constitutional and other technical grounds. 

Let ’em sue.  Might as well get it over with.  And if a judge finds the law valid, then guess what Landy?  You just went all in and lost and now we will have even more leverage.  So go ahead, file your lawsuit and make your arguments and lose.  Then you can shut up about it and come back to us with a deal that works for everyone.

And who is Landy anyway?  Why are they so cold hearted?  Are they all descendants of the old school, NYC schmatta business garmentos.  Those cigar chomping, toots calling, big personality egotists who would Mike Tyson your ear off for a dollar.  Every negotiation is sheer bloodsport for these dudes and they are just the worst kind of money hungry, immoral, uncaring humans.  They stand at the very opposite pole from hospitality people.  Maybe that’s why we will never get along.

Joey Regs says:

Welcome to the second installment of our version of a reopening guide.  And this one comes courtesy of our in-house team. This week, we will focus on licensing and permitting issues; and more specifically what you should be thinking about in the short-term and long-term.

Licensing and permitting has sort of taken a back seat during the first three months of the pandemic, and it’s completely understandable as to why:  A) You got the benefits of the emergency mandates issued by the State and City, without having to do too much anyway; B) To say that our businesses or operations were a bit uncertain would have been the understatement of the century; and C) Why would anyone have spent any money unnecessarily when we had no idea when we would actually be able to reopen in any kind of meaningful way?
It would have been really hard to argue with any of those points two weeks ago.  Today, however, is a slightly different story.  And everybody better start seriously planning for the future IN ADDITION to just getting your immediate ducks in a row.  Things are changing and evolving, and they will continue to do so – with you or without you.  So let’s make sure that we’re ready to roll with whatever the world throws at us next. 
The Governor’s executive order, allowing all restaurants and bars the ability to sell bottles of wine and spirts, as well as  mixed drinks for “to-go” or delivery service needs to get extended every 30 days for it to continue.  Did you all know that?  It’s not just in place until further notice.  And guess what? The current order was set to expire this weekend, and as of this AM, Andrew C had not yet pulled the trigger on an extension.  I don’t even own a bar and I was panicking.  Luckily, a short while ago, he finally got to it, and extended it for another 30 days.  So we’re in the clear…for now.  BUT my point is, these things could change on a dime, so let’s control what we can actually control and be ready.
Outdoor Seating
For those of you who haven’t already, MAKE SURE THAT YOU APPLY FOR THE NYC TEMPORARY OUTDOOR SEATING ALLOWANCE ASAP. The City has worked hard on this plan, and it will only be in effect for a limited time.  Once the end of October hits, you’re gonna have to fold everything back up and figure out what to do next.  Presumably indoor dining will be back by then, but at what capacity? Will people immediately feel comfortable being at restaurants again? We just don’t know.
We have no expectation that this NYC Outdoor Seating Allowance will be back for an encore next year, and we truthfully have no idea how indoor dining is going to play out for everyone.  So, it makes a lot of sense to do whatever you can, to lock up your ability to consistently have outdoor seating of some kind, however you can. And to do so in a way that is not predicated on the City taking some sort of emergency action.  So, there are really two action items here:

  1. If you have a roof, rear yard or any other outdoor space that is within your landlord’s property line (and it’s zoned appropriately), approach your landlord IMMEDIATELY and try to get this space added to your existing lease.  You’re going to want to get exclusive control of this space ASAP and we can help you to prepare all of the appropriate paperwork in the “off-season,” so that as soon as outdoor dining resumes, you’re licensed and permitted to do so LEGALLY.  This will require some Landy negotiations, City and State filings, and we know just what to do.   
  1. If you are zoned for it, you should start applying for your Sidewalk Café Permit NOW.  Yes, the DCA is currently closed and they’re not working on new applications at the moment, BUT as soon as they reopen, you’re going to want to be in that first batch that they process.  The permits can take up to 6 months to get.  So, if you are in that first batch, you should be good to go as soon as the seasons turn.  Waiting on this is a mistake.  We always send email blasts out to our clients in the Fall, urging them to get the sidewalk café permit applications together so they don’t miss the following season. But most people don’t really think about their outdoor seating, when we’re in Autumn and they can’t immediately use it.  THIS YEAR IS DIFFERENT.  If you’ve enjoyed seating people outside under this new City allowance, you should probably think about doing something to ensure that you can lock up the ability to do so in the future.  Do I hope we’re back to normal by next spring? Of course. Is there a chance we’re not though, and outdoor dining could make or break you?  You bet.  We know it’s hard to have this be top of mind right now, but please think about it, so you’re not caught flat-footed later.  And as an extra incentive to get things going right now, we’re offering to do these applications for you at a significant discount.  It’s a flat fee, we have a streamlined process, we have a great track record with these applications, and we will be doing them at a reduced rate from now through Labor Day.

New York State Liquor Authority Compliance:

Short term

NYC did a terrific job of coordinating their efforts with the State Liquor Authority re: the curbside and sidewalk seating initiative.  Once you make the single DOT online filing, all info automatically transmits to the SLA and gets immediately added to your existing, allowable method of operations.  So don’t sweat any extra State follow-ups to serve food AND booze outside legally at the moment.  HOWEVER, this is all temporary, and when the City program ends, so does the special SLA allowance.

Also, the SLA has been super lenient re: enforcement during these dark times -which we all appreciate.  But that won’t last forever either.  And you can be sure that as soon as the Governor gives the go-ahead, those enforcement agents will be out, in force, and most operators will be in trouble.  Why? Because your floor plans, methods of operation, menus, DBAs, ownership structures, to name a few items, from pre-Covid 19 times will be what you all will now be measured against.  And I don’t have to tell you how many of those items HAD to be changed for you to even survive this nightmare.

Long term

Let’s take stock of our licenses, and really see what’s what. We can use this opportunity to conduct a little SLA self-audit – you know, the kind that you know that you should do, but normally don’t have time for with the hustle and bustle of the normal bar/restaurant flow?  You can either do this yourself, or we can help you, but the idea is that you should check in on at least these top 5 key items:

  1. Corporate Name & DBA – Your current, real-life corporate entity and DBA MUST match what the SLA has on file.  If you changed either one over the years for whatever reason, no problem.  BUT we must proactively make the change/update before it’s brought to the Authority’s attention, or you could actually lose your license.
  1. Approved Method of Operation – This is a biggie.  If you originally said you were going to be a restaurant, you better still be one.  If you originally said that you would only allow background music, that better still be the case. If you originally said that you’d only stay open ‘till Midnight, well, last call better still be at 11:45 PM.  If there is a disparity with any of the above (or countless other aspects of your MOO) your license could be in jeopardy.
  1. Approved Layout/floorplan – The original floorplan that you provided to the SLA should be what you’re still working with UNLESS you’ve subsequently filed an alteration of some kind with them.  If not, they’ll want to see exactly what you drew a picture of likely before the place was even built.  Especially in light of the way that your premise layout has likely had to change to even survive right now, we better all be updating our diagrams.
  1. Ownership Structure – Investors come and go; operating partners sometimes too.  Maybe your GM or chef’s sweat equity has finally vested.  All of these changes need to be memorialized with the SLA or you’re in trouble.
  1. License Type/Class – A frightening number of people are surprised to hear what type of license they have or what it actually allows you to do, after many years of operating.  Let’s nip this one in the bud immediately and make sure you have what you think you do, or let’s make the necessary change(s) to get you what you need.

*Potentially all of the above items would require a community board notice of some kind as well.  Yes, that’s annoying, but now is actually a perfect time for that, should any of your issues be potentially contentious ones.
This is a heavy lift for people to do on their own. We get that, and we’re here to help.  Feel free to contact us for help with any of the above items.  We have a full licensing team in place, chomping at the bit to get back out there, to help you with whatever you need.  We can do your sidewalk café application for you, so that you’re locked and loaded for next season.  We have a quick and painless [flat fee] process in place to conduct these SLA audits for you.  And of course we can take care of making any and all of the NY State Liquor Authority applications for you, to bring you into full compliance and/or to set you up for success in the future. Contact our licensing team today.

Frontlines Update:  by Jake Trissler and Alexa Santory 

As we continue to navigate the Covid-19 waters, we at Helbraun and Levey are keeping a look-out for questions or instances that come up that may help you along in this uncharted territory. Unless you’re a cartographer, in which case, awesome, and chart ahead! For the rest of us, let’s take a look at some tips and updates from our Corporate, Real Estate, Licensing, Litigation and Employment Practices Departments.
Our Corporate department reminds us to consider revising your force majeure and cancelation clauses to cover Covid issues if you plan on hosting events at your venue in the future. Family time! Keep your investors informed of your reopening plans and contingencies. Better communication equals better results. Finally, remember to consult your operating agreement before making any structural changes to your company. Not just during Covid, but especially as you plan for the future of your company during and post-reopening.
Real Estate department chairs are happy to report that they are seeing activity in the buy and sell market in terms of key money deals. Also, renegotiating of rent relief has been constantly steady with landlords continuing to provide abatements of rent, and steering away from percentage deals.
Let’s talk licensing! DCA-say what? The DCA has now waived all 2020 consent fees for *unenclosed* sidewalk café permits that were filed prior to March 2020. Any new applications filed after March are still subject to third and fourth quarter consent fees. The standard processing time for a Sidewalk Café Permit is about six months. The most optimal time to apply will be late fall-right around the time the temp. outdoor seating permit will expire.
Lastly, our Employment Practices Group is hard at work creating and implementing new ways to make sure your business is compliant with any and all regulations. Now, every business currently operating is required by NYS law to develop a written safety plan that formally outlines the steps being taken to prevent the spread of COVID-19 in the workplace, a physical copy must be kept on the premises at all times. You are now required to immediately report any positive COVID-19 test result received by your employee your state and/or local health department. According to the NYC DOHMHM, you should submit your report via email to the NYC Test and Trace Corps at [email protected].

Don’t forget! All laws relating to tips/gratuities remain in full force and effect. So, whether you’ll be reopening at a limited capacity or have changed your operations otherwise, you’ll likely need to change your tipping procedures to account for those changes and notify your staff in advance by giving them a copy of your new policy in writing. Arguably the most important reminder on this point… there are absolutely NO circumstances in which a manager or a back-of-house employee can receive tips. It doesn’t matter if they’re the only ones working during that shift, it’s simply not permitted under NY law (though, of course, we wish this weren’t the case). Have questions? Reach out! We’re happy to help!

The Litigation Department is starting in with Landy battles and there has been a spike in wage/hour case so watch out for that.

Webinar Update: 

Our friend and client. Beatrice Stein,who has been training FOH staffs for everyone for years is hosting a webinar where she will discuss various aspects of the guest experience and where guest and staff comfort align and fall apart and how to deal with it all as we contemplate reopening.

It’s on Tuesday, June 30th, from 2:00 to 3:00.

Register here: https://us02web.zoom.us/webinar/register/WN_xAqLgmZGT2S5uvz7ecJoFQ

HL Update: Four Day Work Week

All of us at HL have been operating in overdrive for the past 3 months and working from home has resulted in many additional hours in front of the computer and on the phone so before the deep vein thrombosis kicks up, we thought we would take a little break. For now and for the rest of the summer, we are going to be working 4-day weeks. Most of us will be off on Fridays. Of course, we are checking emails and of course we are available for emergencies and we will continue to work hard but we gotta keep the team fresh so you always get our best.  Thank you for understanding.

RIP Nix, The Finch, Highlands, Aqua Grill, Oxbow Tavern and Chubby Princess. 

If you want to hear a tune that will make you feel the energy of this moment in our country, listen to Coltrane’s “Alabama” and soak it in and then read about it.  https://www.youtube.com/watch?v=WIZHCfAXOb0

Good Night,