(Bloomberg) -- Former hedge fund manager and Goldman Sachs Group Inc. trader Sean Feeney knows it's important to have skin in the game during a crisis. That's why he is offering a share of profits to employees at Misi and Lilia, the restaurants he co-owns with chef Missy Robbins. While staff members are being temporarily let go so they can seek unemployment benefits, those who return when the restaurants are allowed to reopen are eligible for a percentage of the profits, he said on Instagram. Feeney also made a plea that government support businesses hurt by the Covid-19 coronavirus pandemic, just as banks were helped during the financial crisis.
“We can demand that relief comes to our industry the same way it did to the financial industry in 2008 in the form of TARP when I was trading high-yield bonds for a living,'' said Feeney in his post, referring to the Troubled Asset Relief Program. “I saw what that did to save our country, its people and companies on Wall Street. These same mechanisms should be used for all industries at this time again.''
Another banker-turned-restaurateur fears the situation is even more dire than 2007. Mark Barak, chief executive officer of New York’s La Pecora Bianca and former vice president of Media Corporate Finance at Deutsche Bank AG, says the current crisis is vastly wider in scope that the financial crisis “and much worse. It entails a massive disruption in demand and supply across almost all industries. It represents an economy freeze, not a credit freeze. The only way to deal with this and avoid devastating long-term consequences is comprehensive and aggressive government intervention.”
Restaurants around the U.S. are reeling after mandated closings and delivery-only restrictions that were ordered to stem the virus outbreak. The effect on the $863 billion-plus industry is already devastating. On March 18, Danny Meyer sent out a statement that Union Square Hospitality Group would lay off 80% of its staff, approximately 2,000 people, because of a near complete elimination of revenue. (If there’s a bright side, it’s that they are now eligible for unemployment benefits.)
On March 18, the National Restaurant Association sent a relief proposal to President Donald Trump that estimates losses to the industry of $225 billion and at least 5 million jobs. “Since Saturday—five straight days—our industry has been verging on economic catastrophe and there is no guidance from the federal government,” says Lee Jacobs, a partner at Helbraun Levey, a law firm that advises the hospitality industry. “We are four weeks behind on the health crisis.”
In response, industry professionals are circulating petitions to raise awareness locally and nationally. One started by 40 notable restaurateurs and chefs, including Will Guidara and Curtis Stone, asks leaders to focus on their unprecedented plight and provide emergency employment benefits to hourly workers who have had work reduced and to salaried workers who have been laid off. The change.org petition, which has garnered more than 50,000 signatures within 24 hours, also seeks waiving of the payroll tax and endorses rent and loan abatement for hospitality industry workers. The chefs ask that federal politicians work “with state liquor authorities to enable restaurants offering take out and delivery to also sell/deliver beer, wine and cocktails by the bottle” and waive permit restrictions so that restaurants can temporarily work as food and beverage markets to reduce the strain on grocery stores.
Following a meeting of top chefs in Chicago over the weekend, a different letter was sent out to state and local officials, demanding immediate action. Jason Hammel, the chef and owner of Lula’s Café in Chicago who helped organize the meeting, confirms that he spoke with Chicago Mayor Lori Lightfoot’s office and that it is working on assistance.
On Thursday, March 19th, New York’s biggest restaurant names, including Momofuku, Major Food Group (including Carbone), and Stephen Starr spots, announced the collective ROAR (Relief Opportunities for All Restaurants). Their petition to Governor Andrew Cuomo notes that of the 15 million people employed collectively in the restaurant business, two-thirds work at independently owned places; among the things they ask for is a mandated hospitality businesses shutdown, that would trigger insurance coverage.
Another petition stirred official attention. James Beard-award winning chef Gavin Kayson, whose Minneapolis restaurant group includes Spoon & Stable and Bellecour, decided to take action after he received an automatic email reminder that his sales and use taxes were due. It arrived the same day the government mandated closure of area restaurants. “I pay six-figure taxes every month, so I started a petition,” he says, asking local officials for tax relief on March 17th. One person who saw the petition was Minneapolis Mayor Jacob Frey, who called Kaysen directly. The mayor, says Kaysen, said he’d work with the Department of Revenue to find solutions for the small business community.
On the afternoon of March 18th came even more decisive action: Governor Tim Walz announced that Friday's deadline for sales tax remittances by Minnesota's businesses will be moved to April 20, with no penalty. “I want to thank Governor Walz and Mayor Frey for listening and responding to our petition for relief," says Kaysen.
(Adds info on New York initiative in 8th paragraph)
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