Food
for

Thought

 written by
Pam McElroy

Wondering how you can support your neighborhood
restaurants? Laurie Thomas—Executive Director of the Golden Gate Restaurant Association—fills us in below.

What started as a personal love of food and a side business venture as a restaurant investor turned into a full career for Laurie Thomas, owner of Nice Ventures, which owns and manages Rose’s Café and Terzo, in San Francisco. Thomas is also the executive director of the Golden Gate Restaurant Association, serves on the board of SF Travel and as an honorary board member for Meals on Wheels of San Francisco, and is a member of the newly convened San Francisco Economic Recovery Task Force.

Pam McElroy: Will outdoor dining and distanced indoor dining be enough to sustain San Francisco restaurants?

Thomas:  With the very tight margins that full-service restaurants have, we really need to get back to normal—meaning back to 100% capacity indoors before restaurants can even start to make any profit. This means no more six-feet social distancing, private dining being allowed again, etc.  Many restaurants have lost hundreds of thousands of dollars this past year. Many of them still have a chance only because of the significant federal relief dollars in the form of the Payroll Protection Program round one and now round two, and now the $28.6 billion Restaurant Relief Fund (RRF) that was part of the newest relief bill signed into law by President Biden on March 11.

McElroy: Are restaurants doing anything differently this time around? What was learned before the second closure?

Thomas: Many restaurants are taking a more conservative approach to reopening.  While San Francisco allowed outdoor dining again on January 28, we waited to reopen our two restaurants until February 10. Of course, part of this was because of the bad rainy weather, but the other part was to be cautious. As of Wednesday, March 24, San Francisco is allowed to operate in the Orange Tier, which takes restaurants to 50%, and allows drinking outside without having to have a meal.

McElroy: How have the requirements changed for this second reopening? Are the guidelines clearer?

Thomas: Dr. Susan Philip took over as Acting Health Officer in January 2021. She has been amazing in working with the business community and with the Office of Economic Workforce Development (OEWD) to provide clear, early information.

On Wednesday, February 24, she and the Acting Director of OEWD, Anne Taupier, hosted a very informative webinar that gave businesses in all sectors (not just restaurants) a one-week heads up that we were planning (as soon as the state designates San Francisco County RED) to move immediately to reopen on March 3. They were also planning to have signage and any new/additional requirements clearly communicated in writing by March 3. For this most recent move into Orange, they also gave a detailed webinar the week before. This advance notice is critical to allow businesses to bring back employees and plan to reopen. We are very appreciative of this approach.

McElroy: Is there a restaurant or bar that has been particularly successful in adapting? If so, how? What can we learn from them?

Thomas: Not a specific one, but I have seen reports that restaurants that had a to-go and/or delivery business model pre-COVID-19 have done okay. For example, pizza delivery restaurants are doing okay. And, of course, larger fast-food chains are doing fine, too. Restaurants in the neighborhoods where people live and are now spending more time working will start to do better as we can start to move to more indoor dining again.

McElroy: Which businesses have struggled the most? Where have you seen the most closures? And why?

Thomas: Smaller cafes, coffee shops, and lunch places in downtown San Francisco where workers have not returned are still closed or are dying. Large high-end restaurants that relied on tourism and business expense dinners are struggling.

Businesses down in the financial, downtown area and businesses near Union Square and around the Moscone center have suffered the most. There has been so little foot traffic as offices were mostly closed and leisure travel has been nonexistent due to the restrictions and closures.  Hotels, tourist attractions, arts and entertainment venues, and of course cafes and restaurants of all sizes are hurting. Also really hurt are the catering businesses that have not been allowed to operate to do events of any size, and their lunch catering business from local companies dried up, too.

McElroy: Do San Francisco restaurants face any unique challenges or benefits, compared to other major national and international cities?

Thomas: San Francisco has, I think, the only mandated per hour health care spend of a major city. This is the HCSO ordinance, which mandates this year that businesses with up to one hundred employees (full or part time) spend $2.12 per hour worked for health care, and those with over one hundred employees (full or part time) spend $3.18 per hour worked for health care. Also, we have a minimum wage currently at $16.07 (which will go up to $16.32 per hour), which does not allow a tip credit. So all tipped employees get the minimum wage plus get to keep tips. We also have a nine day a year (72 hours) sick pay policy that accrues and carries forward. I am not saying there is anything wrong with these policies, except they are very costly for employers, particularly for small business.

McElroy: What has the general experience been for government-issued small business loans or grants?

Thomas: Personally, I’ve applied for many for my smaller restaurant, Terzo, which qualifies for the very small business size criteria that a lot of businesses applied for (having sales in 2019 of $2.5 million or less). I only received one private grant for $2,000 from Facebook, and I didn’t receive any San Francisco grants or the California small business grant that was recently announced.

This is because there has been so much need and so few dollars available for relief, relative to that need. We did receive Payroll Protection Program (PPP) round one and round two loans, which have been a lifesaver. Without these funds, we would not be able to operate. Again though, these are very document-heavy and have a complicated application processes that make actually getting the funds (assuming the programs are funded sufficiently) very hard to access. 

The good news is that President Biden put in a two-week pause on the PPP round two to focus on smaller businesses of up to twenty employees. We are seeing that there is still enough funding in the PPP round two to give out loans to businesses that qualify and apply.

McElroy: Will restaurant and food service employees be required to get vaccinated? Will you require your employees to get vaccinated? What is the general opinion of those in the industry regarding the vaccine?

Thomas: Super exciting news was as of Wednesday, February 24: food and agriculture workers qualified in San Francisco County to start to receive the COVID-19 vaccines. Many sites are now offering sign-ups online—including private pharmacies and health care providers, in addition to the citywide sites. Go to sf.gov/get-vaccinated-against-covid-19 and look at the individual site options. 

As to your question, it is legally up to the employer to decide and set the policy on requiring employees to get the vaccine in order to work. There definitely needs to be allowances for medical and religious exemptions. We are about a month into our workers having the vaccine available, but so far, most employees and owners/operators/chefs are very interested in signing up and getting vaccinated.

McElroy: The San Francisco Chronicle reported that a group of restaurants are suing the city over permit fees. Can you tell us more about this?

Thomas: I have heard it is one or two restaurant owners, but I am not aware of who it is. We, the Golden Gate Restaurant Association (GGRA), are definitely not involved. I don’t believe lawsuits are the right approach to solve most problems.

The good news is that a lawsuit was not needed. As of Tuesday, February 23, the Board of Supervisors unanimously approved a fee relief package that waives the fees for restaurants and other affected businesses with up to $25 million in 2019 gross receipts for all of the unified license fees (the invoice of all fees due a restaurant or business) and the business registration fees for 2020.

McElroy: What are your thoughts on the newly proposed permanent zoning for open containers and parklets?

Thomas: We are so supportive of making these shared spaces more permanent. We’ve been participating for weeks in discussions around outstanding issues on this program. We are supportive of Senators Wiener and Dodd’s legislation on the open containers and to-go alcoholic beverages. We are so excited that the Mayor, along with co-sponsors Supervisors Mandelman, Safai, Stefani, and Haney introduced on March 16 legislation for the Shared Spaces program to become permanent.

McElroy: Are there any other design or service elements that were implemented as a result of COVID-19 that you think will continue after we return to normalcy?

Thomas: We are very hopeful that the Shared Spaces program will continue, allowing us to help our restaurants and retail spaces have a better chance at survival, and allowing us to help our city appeal to tourists as well. We are also hopeful that the cap on delivery application commission fees charged to restaurants will continue.

McElroy: As a restaurant owner, what has been the biggest problem you’ve faced? What has been your biggest success or innovation?

Thomas: Trying to make money to help us stay in business and cover all our costs. It has been exceedingly difficult to get grant money and even the Payroll Protection Program was really hard to get approved for. Restaurants need cash to be able to order food, beverages, pay their utility bills, and—most importantly—to bring back employees and make payroll.

The most impactful change that we did was the Shared Spaces. There really hasn’t been any big “a-ha!” innovation. I think the biggest success is the ability to keep operating—opening your doors each day and bringing back as many employees as you can.

McElroy: With new COVID variants coming to the United States, do you think there could be a third closure? What would that do to the industry?

Thomas: We are hoping the ability to get as many of our employees vaccinated as soon as possible will be key to preventing a third closure. None of us can handle a third closure—not the operators or the staff. It would seriously mean so many of us would not be able to reopen our doors again. We are just hopeful that people will continue to wear masks when out dining, practice safe sanitization, and practice social distancing—even after receiving the vaccines—until we understand if a booster shot will be required, or how the variants will impact us.

McElroy: Is there any word of conventions returning to the city?

Thomas: Unfortunately, not yet. This is not a San Francisco decision; this is being governed at a state level. I know there are many conversations on this, but we just don’t know when smaller conventions, let alone citywide ones, will be allowed again.

McElroy: What advice do you have for restaurants trying to stay afloat right now?

Thomas: Get as much financial help as you can—apply for the Payroll Protection Program and the ERTC credits, apply for the state’s $25,000 grant program, apply for the San Francisco loan programs as they continue to be available, and apply for the RRF grant from the Federal government when that becomes available. Keep your spending as low as possible. Make sure you follow the health directives.  Encourage your staff to get vaccinated as soon as possible.

McElroy: Is there anything you would like to communicate to commercial landlords? Patrons?

Thomas: To landlords: Please work with your restaurant tenants. I know many of us received some rent relief from landlords last year, but we’ve been hit again. Realize you are in partnership with us and that it will take a long time for financial recovery. 

To patrons: Please be patient with us. We need you to put on your mask whenever staff approaches your table. If you are not up for that, please order takeout and dine at home. Please follow the guidelines to leave on time when there is a curfew. Please follow guidelines by not standing up while drinking, and not congregating in groups in the parklets, inside restaurants, or in bar areas.

McElroy: What advice do you have for commercial renters at this time?

Thomas: Work with your landlords if you need relief and help.