For Seattle restaurant owner Ethan Stowell, the change from bad to worse took less than an hour.
As late as Sunday afternoon, Stowell still believed he could keep all 16 of his Seattle area restaurants open even as the city dealt with the coronavirus outbreak. But on Sunday evening, shortly after Gov. Jay Inslee announced plans to restrict bars and restaurants to takeout service, Stowell knew he was operating “in a different world,” he said.
By Monday morning, Stowell had pared back to just two locations that were already equipped for carry-out — Ballard Pizza Company and Frēlard Pizza Company. Stowell thinks he could probably shift several other locations to takeout, but is wary of moving until he knows what other public health restrictions might be coming down. “Do we start up a new program just to shut it down in two days?” said Stowell, who calls the last few weeks the worst of his 25 years in the industry. “We’re totally in limbo here,” he said.
Limbo probably describes the majority of owners, managers, and staff at the Seattle area’s hundreds of bars, restaurants, brew pubs, caterers and other food service businesses as they face weeks and possibly longer of little or no revenue.
“We are just taking this day by day,” said restaurateur James Weimann, who, despite plans for a to-go strategy, fears he won’t have the funds to save all 11 of his Seattle-area bars and restaurants and is laying off 450 employees. His portfolio includes Rhein Haus and Bastille Café & Bar.
”I’m sorry, I’m just too emotional to talk at this time,” said Larry Kurofsky, owner of Heavy Restaurant Group, which operates 10 bar-restaurants and cut 600 servers, bartenders and cooks after the restaurant ban was announced.
As the layoffs and closures have multiplied, the scale of the impact has become increasingly clear. For King County as a whole, food services and drinking spots were responsible for 105,600 jobs and $6.3 billion in taxable revenues in 2019, according to King County’s office of economic and financial analysis.
In downtown Seattle, restaurants and bars generated some $1.5 billion in sales and around 23,000 jobs with an average salary of $32,325, according to the Downtown Seattle Association and Emsi, a labor market analytics firm.
Just as important, restaurants and bars have played a crucial role in stabilizing downtown and neighborhood economies where retail has recently been under pressure — in many cases, eateries and pubs have leased spaces that no longer worked for shop owners. “Food and beverage companies have really carried us when it comes to ground-floor occupancy,” said Jon Scholes, CEO of the Downtown Seattle Association.
The effects of the governor’s ban were especially noticeable on the city’s nightlife scene, particularly around the Pike/Pine corridor and the Ballard Brewery District, where people had been barhopping over the past two weeks, even after the coronavirus scare.
The new state restrictions, which also apply to places of entertainment and recreation (though not to grocery stores, banks, gas stations and other retail operations that can comply with public health rules) are only the latest blow to a sector that had already been hammered by dwindling sales as consumers react to fears about their health and, now, their jobs.
Long before the coronavirus outbreak emerged, the Seattle-area food and beverage sector, fueled by nearly a decade of rapid economic growth, had grown challenging as more establishments vied for customers while struggling with higher rent and other expenses.
“Seattle has always been a mixed bag” for restaurants and bars, said Jeffrey Shulman, a professor of marketing the the University of Washington Foster School of Business. “Yes, more people are going out and there’s more people with discretionary income, ” he added. “But rents just have been skyrocketing at a rate that’s not consistent with the revenue” many restaurants have been able to generate.
Shulman expects to see ripple effects from the outbreak and shutdown in other parts of the Seattle-area economy. One example: “Landlords who rely on the hourly workers and the small businesses to pay their rent in order for them to be able to pay their mortgage,” Shulman said.
More broadly, the bar and restaurant sector has also served as a powerful magnet for downtown and for neighborhoods and commercial districts, which may now see diminished traffic. The food and beverage sector “has come in and created a new level of vibrancy and new reasons to visit the downtown and the neighborhoods,” said Scholes, with the Downtown Seattle Association. “And it has just gotten completely whacked.”
Both Scholes and Shulman regard the Seattle economy, and its restaurant and bar scene in particular, as resilient and innovative, and expect it to come back once the outbreak is over. But they warn that uncertainty over the duration of the outbreak means that the comeback will likely be slow. One “lag factor,” Shulman said, is that “in times of uncertainty and crisis, people start to save. So discretionary purchases will be put on hold for some time.”
For now, many restaurant owners were confining their plans to the next few weeks and trying to calculate whether to stay open or not.
Dozens of bars across the city, including Seattle’s two most acclaimed cocktail dens, Zig Zag Café and Canon, announced Sunday evening they were closing temporarily instead of setting up takeout or delivery service since food isn’t their main focus.
The Heavy Restaurant Group management team reportedly concluded it made more economic sense to lock their doors and cut their losses rather than staff kitchens when the company has never gotten many take-out orders, according to a couple of workers in that meeting. Kurofsky confirmed he intends to reopen all restaurants when the crisis subsides.
Many were mindful that the governor’s order left open the possibility that the two-week ban could be extended beyond March, which several business owners warned could spell the end of many establishments that were already operating on thin margins.
James Beard award-winning chef Renee Erickson and business partner Jeremy Price, who own 20 restaurants together, have laid off 270 workers. Price fears they’ll need to close many of their cafes and bistros if the ban continues into summer, their busiest time of the year. “So much of our revenues come in the summer months,” he said. “It would be hard to get going without those months.”
Similar questions were being asked in the city’s large brewpub sector. Many breweries run on a shoestring budget, said Eric Radovich, executive director of the Washington Beer Commission, which represents the 421 breweries in Washington.
The two-week shutdown won’t force any microbreweries out of business, said Radovich, but “the longer this goes, the more difficult this becomes particularly for those breweries that rely on the revenues of their tasting rooms primarily.”
Many owners believe the industry will need considerable assistance — from local, state, and federal governments, who have already proposed relief efforts, but also from private parties, such as landlords.
“If we can’t open at all during the summer, we would need a lot of help” from landlords or a government bailout to reopen, Price said. “Not be to gloom and doom, but that’s the reality.”
Shulman, for all his concerns about ripple effects and lag factors, said he remains “bullish on Seattle to bounce back in the long run.” Seattle is a “boom and bust town,” he said, adding that although the recovery could take a while to start, “once it gets going, it could catch fire and come back pretty quickly.”
The story has been updated to correct inaccurate information provided by Downtown Seattle Association.