‘We’re definitely concerned about issues we’ll be facing this winter': SPB Hospitality CEO

Jim Mazany, SPB Hospitality CEO, joins Yahoo Finance’s Zack Guzman to discuss the restaurant outlook amid the stimulus stalemate and indoor dining challenges.

Video Transcript

ZACK GUZMAN: Meantime, want to dig down a little bit further into one of those sectors that has been struggling, no doubt showing up in majority numbers here when we talk about jobs that have been impacted by the pandemic. That would be the restaurant sector. We continue to see restaurants struggle with reopening plans and staffing issues. And we saw yesterday with Chipotle a shift towards delivery impacting different restaurants differently.

So for more on that, I want to bring on our next guest here. Jim Mazany is the CEO of SPB Hospitality, the parent company behind Logan's Roadhouse and Old Chicago Pizza and Taproom and many others. And he joins us now.

And Jim, I mean, this is something we've been discussing for a while here. It's also very much being closely watched in terms of where these stimulus talks are going between Republicans and Democrats. Because we know how helpful the PPP funding was in helping restaurants weather this storm. So what are you seeing play out right now? And how bad has it gotten here as we wrap up October?

JIM MAZANY: Well, Zack, how worried today, and thank you for having me. And I really would like to start by, first of all, saying to the 10,000 SPB Hospitality team members on the system every day that wear a mask and take care of our guests and do that every day, I want to thank them for that.

Our industry has been hit very hard this entire year. We have seen tremendous job loss in the beginning of the March time frame, coupled with some recovery time through the course of the second quarter to the third quarter. We currently, today, in our brands, are experiencing a pretty resilient consumer base coming back to our restaurants.

But with the change in weather and some of the challenges that we face to operate and doing a really good job with safety protocols across our entire system, I'm really proud of the work that the team has done as far as the safety protocols that we've put in place. We face some challenges as we go into the colder months here, as we lose some of that outdoor dining, that outdoors-- fresco-- alfresco space that we currently are able to utilize as we're going into the colder months.

ZACK GUZMAN: Yeah, we've talked to a few restaurant owners here in New York City as well. Obviously, indoor dining still remains capped at capacity constraints here. But when we think about some of those restaurant owners telling us there's not even an economic reason to reopen indoor dining since it doesn't make sense, and you think about overhead costs, staffing costs tied to that, with such capacity limits in place, that they might not make sense.

And for you guys, specifically when it comes to cost on the delivery side, I know that that's helped Logan's Roadhouse and some of your other properties here. But talk to me about how that shifts the fundamentals, the financials here, in dealing with all this as well.

JIM MAZANY: It is a big shift in the way in which we were operating previous to how we have to operate in a post-- or in a post-COVID world here. What we have experienced on the margin side, we have experienced some pressure from the delivery and to-go fees. But we have had some help with certain states regulating those costs and helping control those costs of what the third party partners can charge us.

The model itself, because we have seen consumers coming back to the segment, which has been good, we've experienced some really nice sales growth in the Logans Roadhouse business specifically, where we're performing much better than anticipated for this time of year.

But as mentioned in the previous segment, the job losses that have hit our industry are pretty substantial. When you look at the September data, the numbers, I mean, it's over 2.3 million losses of restaurant employee positions or restaurant related positions.

As the second largest employer in America that our segment is, it's pretty substantial for us to weather those. And as we start to think about the winter months and what's ahead, we're definitely concerned about what kind of issues we're going to be facing.

ZACK GUZMAN: Yeah, I know the labor issues have been drastic when we look at the numbers as you're describing them. But moving forward, I mean, it sounds like the progress that we're hearing on the stimulus front here sounds promising when you hear Nancy Pelosi saying that she likes where she's at in terms of the negotiating position here. She likes the chances of getting a deal, saying just about there in seeing something come through.

So as the operator of one of these giant restaurant groups, talk to me about how much longer you can really sustain where you're operating right now and what those job losses might look like if you don't get some sort of a bill coming through here on the short-term here, and maybe potentially, as some people are saying, depending on where the election results go, maybe even having to wait into '21.

JIM MAZANY: Well, I think when we look at brands like SPB Hospitality, we are positioned to have fortified and changed our business model to be able to compete in this down sales environment. So I'm not as concerned for our longer term health or ability to weather through this winter.

I'm more concerned when I think about the team members that are out in each one of the restaurant companies throughout the US. They are substantially hurt or impacted by this, and everyone that's in the restaurant economy. This is a big impact to our entire industry. And it's a big concern for me.