Voluntary or Mandatory Closures: Here's What to Do

Bars and restaurants are facing increased threats as local, state and federal government officials consider complete shutdowns.

Curfews, seating capacity mandates and “social distancing” recommendations have already slowed traffic. A mandated shutdown of dine-in service could put many operations in jeopardy.

New York City is enforcing a seating capacity mandate, ordering bars and restaurants to halve their capacity. Venues with capacity over 500 have been instructed to reduce capacity to 250.

Reportedly due to crowded bars and restaurants in NYC this Saturday, government officials are considering shutting operations down fully.

The speaker of the New York City Council, Corey Johnson, has deemed bars and restaurants “non-essential” businesses. Governor Andrew Cuomo on Sunday, March 15 tweeted the following:

Mayor Ravinder Bhalla closed bars that don’t serve food completely and banned all restaurants from dine-in service, along with a 10:00 p.m. curfew for residents. According to a press release explaining Mayor Bhalla’s mandate, a bar fight and long wait for an ambulance prompted the decision.

Similar bans are reportedly being considered by other governors and mayors. Illinois Governor J.B. Pritzker said on March 15 that a statewide mandate to close all restaurants and bars may be on the way.

In municipalities where delivery and/or takeout are still permitted, operators should certainly consider remaining open to leverage that revenue stream and keep employees working. But as the news of closures develop, even delivery and takeout may be taken off the table as options.

Perspective: Use it or Lose It

Before going any further, let me be clear that neither I nor Nightclub & Bar, Restaurant & Bar or Questex are questioning the wisdom of social distancing. Data on the best ways to stop the spread of coronavirus (COVID-19) is still being collected and reviewed, so we understand that government officials are attempting to make the best decisions possible with the information and guidance available.

However, we’re here to serve this industry and find solutions for owners and operators to protect their teams, communities and businesses. To accomplish this goal, we’re also seeking out the best information possible.

That said, this is a time for operators to have perspective. During a phone conversation today, March 15, Michael Tipps, co-founder of Invictus Hospitality, stated that the group was closing at least one venue either tonight or tomorrow.

Tipps’ perspective on this situation is informed by a sense of duty and professional dignity. He posed a hypothetical question to make his point: Would an operator recommend their elderly mother or father visit their bar or restaurant during this pandemic, potentially exposing an at-risk person to COVID-19?

Take away the food and drink, said Tipps, and a bar or restaurant is a box that asks people to go against the recommendation that people stay home to stop the spread of coronavirus. In his opinion, shutting down temporarily may be an operator’s civic duty to protect their team and community.

“We’re all trying to gain control in this situation,” says Tipps, which is leading to people panicking and hoarding supplies. Dealing with this situation requires calm, cool and decisive heads.

Shutting down operations voluntarily for the sake of the team and community is a proactive step. To be frank, said Tipps, doing so puts the dignity of the hospitality profession on display. Discussing this situation with Invictus Hospitality co-founder Homan Taghdiri, their conversation turned to the well-being of their teams.

Consider this situation: An operator remains open for dine-in service. One of their servers contracts coronavirus. They’re healthy enough to recover but they spread it to an older and therefore at-risk family member (according to the WHO, CDC and other public health experts). That family member dies. Setting aside any possible legal liability, does an operator want that on their conscience?

Now, there is another side to the civic duty coin: financial relief. It must be pointed out that should state and federal financial relief packages be offered in the wake of coronavirus, it’s possible that businesses that close voluntarily rather than due to mandate may be penalized and offered no relief.

Operators concerned with such a scenario do have options. They can be proactive and send employees uncomfortable with working their shifts due to the pandemic home. Operators can also declare a reduced capacity while staying open for business.

As always, operators should review what their lease agreement says to determine how low they can set seating capacity, contacting an attorney to ensure compliance.

Negotiate Now

Should a city or state declare a ban on dine-in service, delivery or a complete ban, that doesn’t mean operators can’t be proactive.

“Dealing with this situation can be summed up in one word: ‘negotiation,’” said Tipps.

Negotiating with landlords is a tactic with which the Invictus Hospitality team has experience. They’ve implemented it more than once as part of a strategy to save more than one business.

Providing an example of this tactic, Tipps and Taghdiri helped a business that was tens of thousands of dollars behind in rent. Taking a proactive stance, the Invictus Hospitality reached out the landlord and were completely transparent.

“We said, ‘Look, we can’t pay you $70,000 today. But we have a plan,” explained Tipps. That plan included telling the landlord how much they could pay on top of the agreed-upon monthly rent for a set amount of time until the business because current.

Tipps recommends that every operator facing a forced closure or voluntarily closing their business look at their numbers. They need to identify how much rent they can’t afford to pay and for how many months, calculate how much they can afford to pay each month for a set amount of months to come current, and contact their landlord and be transparent.

Being proactive is likely to not only impress a landlord, it’s likely to give them a sense of relief. They just want their money—if a tenant needs to defer a month or more but they have a plan to pay it back, most landlords will understand. For the most part, it costs more for a landlord to evict a tenant and find a new one than to work with one on a plan.

This advice also applies to an operator’s team members. Rather than ducking their landlord, Tipps advises individuals to contact their landlords and explain that their employer has either had to shut down or made the decision to do so out of an abundance of caution. Operators can provide a letter to their team members to give to their landlords so they know the situation is real.

Don’t Be Wasteful

I asked Tipps his thoughts on preparing employee meals if the decision is made to close doors temporarily (or if a mandate forces a closure). He said he absolutely believed that was the right thing to do.

With people panicking over resources, Tipps believes it’s unwise to let food spoil during a closure. He recommends deep cleaning kitchen surfaces, providing protective gear to kitchen staff, and making meals out of ingredients that may spoil during a closure. Then, deep clean the venue before closing the doors.

If food goes to waste, that’s irresponsible. And team members will appreciate the gesture. Should closures become SOP for cities and states, operators must do what it takes to remain calm and rational, making the best decisions they can for their teams, communities and business.