Come June 15, restaurant owners will have to make a lot out of a little: capacity limits on outdoor seating and eventually indoor seating are expected across New Jersey, which could reduce sales. At the same time, the cost of doing business is growing.
“It has to do with staffing. The biggest story is eliminating the ability to use your restaurant. Having a moratorium or a mandate that only allows you to use 25 percent of your restaurant doesn’t make it viable. You’re not making money,” said Turning Point Restaurants Chief Executive Officer Kirk Ruoff, who runs 10 brunch spots around the state. “The economics of restaurants are you’re busy and you have every table filled up on a Friday or Saturday night. We need every table filled up on a Saturday and Sunday eating breakfast.”
To break even, Ruoff said he has to fill 75 percent of his restaurant, which is unlikely at first – social distancing strictures will keep tables 6 feet apart when outdoor dining begins on June 15, and will likely do the same when indoor dining returns with the addition of projected capacity limits.
In today’s current to-go-order-only world, restaurants that are making a fraction of what they were before are paying a premium for packaging.
“Every one of the individual containers to put food in is 50 or 60 cents, which doesn’t sound like a lot unless you’re putting in a $12 dollar item and it’s a 5 percent cost,” said Tim McLoone, owner of various restaurants including several on the Asbury Park Boardwalk.
And they’re butting up against the supply chain: without the ability to use plastic bags, which more than 40 New Jersey towns banned for environmental reasons last fall—they represent a good portion of the beach trash nonprofit Clean Ocean Action picks up on their semi-annual beach sweep every year, picking up 20,069 bags last year alone—restaurant owners have to order paper bags. Now, they’re on back order for six months, Ruoff said.
Without the added sale of a view or the corner-sitting piano player, McLoone charges less for his items these days than he did when folks could sit in his restaurant.
“There’s a lot of downward pressure of price points, and we already have lowered prices,” McLoone said. “We don’t put the most expensive thing on the menu anymore because we don’t want people to get sticker shock. We don’t put the $38 filet mignon on the menu, with them not realizing it was $43 before.”
It’s a way to not scare customers off, and a recognition that there’s some level of budgeting going on in every New Jersey household, but “it’s a weird balancing act where we try to defend how we do things and people have a certain expectation of the McLoone restaurants. We want to defend that, keep it as professional approach to doing this. But in some cases, it’s cost-prohibitive,” he said.
Third-party delivery app charges add up as well for delivery orders, with Uber Eats charging restaurants 30 percent of what they make on an order, plus a 15 percent delivery fee. Senate Bill 2437, which would cap the fees these apps can charge restaurants during states of emergency, was approved in the Senate in late May and currently sits in the Assembly. Mayor Steven Fulop capped such fees in Jersey City earlier in May.
The empty seats are what’s costing … We’re losing our high season – we don’t make any money in the winter. The cost of single-use condiments, sanitizer, masks, is nothing compared to being closed. We just need to be open.
– Bob Cooper, Chef’s International CEO
Despite the costs they face now, and the costs that they expect to face upon opening—Ruoff noted that staffing enough people for tables to have a single point of contact (same person to take the order, bring the food, refill waters, etc.) is a real added expense—restaurant operator Chef’s International CEO Bob Cooper told NJBIZ that nothing compared to the loss he’s experiencing now.
“The empty seats are what’s costing. It doesn’t matter what that’s going to cost when we lose so many seats,” he said in response to a question about the increased costs for single-use condiments, menus and utensils. “We’re losing our high season – we don’t make any money in the winter. The cost of single-use condiments, sanitizer, masks, is nothing compared to being closed. We just need to be open.”
He has restaurants in Manasquan, Toms River, Point Pleasant, and Belmar; and in the latter, he said he has around 600 seats that remain vacant.
Business isn’t even a tenth of what it’s been other years, but right now, future concerns over compliance costs are secondary to Chef’s International’s millions of dollars in lost sales and 600-plus out-of-work employees, not to mention how it’s affected the supply chain.
“We’re not using the linen guys, the produce guys, we’re not using the fish guys, we’re not using the meat guys. We’re not spending the money on advertising we would be spending. It goes on and on,” Cooper said. “The beer companies, the liquor companies, there’s a lot of ripple effect to companies like ours. When you extrapolate it all over the state, this affects a lot more than just servers and busboys. The restaurant industry in New Jersey is a huge economic driver, especially down at the Jersey Shore.”