U.S. markets closed
  • S&P 500

    4,662.85
    +3.82 (+0.08%)
     
  • Dow 30

    35,911.81
    -201.79 (-0.56%)
     
  • Nasdaq

    14,893.75
    +86.95 (+0.59%)
     
  • Russell 2000

    2,162.46
    +3.02 (+0.14%)
     
  • Crude Oil

    84.64
    +0.82 (+0.98%)
     
  • Gold

    1,817.00
    +0.50 (+0.03%)
     
  • Silver

    22.97
    +0.05 (+0.21%)
     
  • EUR/USD

    1.1412
    -0.0048 (-0.42%)
     
  • 10-Yr Bond

    1.7720
    +0.0610 (+3.57%)
     
  • GBP/USD

    1.3670
    -0.0040 (-0.29%)
     
  • USD/JPY

    114.2350
    +0.0550 (+0.05%)
     
  • BTC-USD

    43,179.82
    -177.05 (-0.41%)
     
  • CMC Crypto 200

    1,037.76
    +12.03 (+1.17%)
     
  • FTSE 100

    7,542.95
    -20.90 (-0.28%)
     
  • Nikkei 225

    28,124.28
    -364.82 (-1.28%)
     

Restaurants seeing ‘massive slowdown in dining’ due to Omicron, Happy Cooking Hospitality CEO says

Happy Cooking Hospitality CEO and Founder Gabe Stulman joins Yahoo Finance Live to discuss the dining drop-offs and labor shortages due to Omicron, the need for government support and stimulus for the struggling restaurant industry, and the personal risks owners are resorting to.

Video Transcript

[MUSIC PLAYING]

ALEXIS CHRISTOFOROUS: US restaurants are struggling as the pandemic continues. In fact, a new survey out by the Independent Restaurant Coalition shows that out of nearly 1,200 businesses, 42% say they are in danger of filing for bankruptcy without federal relief. With more on that, we are joined by Gabriel Stulman, CEO and founder of Happy Cooking Hospitality. That's a restaurant group based in Manhattan's West Village. Also joined by Yahoo Finance's Dani Romero.

So Gabriel, thanks so much for being here. I know that your group has four restaurants. Now that the winter has set in and outdoor dining is not really so much an option anymore here in New York City, what are you seeing in terms of demand for eating out?

GABE STULMAN: Well, for starters, Alexis, thank you very much for having me on. And thank you for shining some light on this very important subject. What we're-- to directly answer your question, what are we observing right now and I would say for the last four weeks is a massive slowdown in dining. We're seeing that for a multitude of different reasons.

We're seeing that as a direct relation to Omicron. We're seeing that because some of our staffs that are vaccinated and boosted are still contracting the virus. And we are being forced into situations where we don't have enough staff to open the restaurants. We're seeing a slowdown-- and so that would result in a slowdown.

We're seeing it as a result of diners canceling parties, canceling New Year's reservations plans, canceling holiday plans. A slowdown in diner interest. And then exactly as you pointed to, with the temperatures dropping, a lot of diners that were more comfortable dining outside, that option is also being removed away. So we're seeing a massive dropoff as a result of and the continuation of this pandemic, unfortunately.

DANI ROMERO: And, Gabe, you know, it's Dani over here. Restaurants have done so much to really adapt. You kind of highlighted that, right, from takeout only to outdoor dining. But I guess, how much more can the restaurant industry really take, especially under the circumstances we're in right now?

GABE STULMAN: Not much more. You know, and I don't think that that is unique to restaurant industries. I mean, we look at what's happening in the hospitals and nurses and medical professionals. And you look at what's happening in transportation and, you know, all of the trucking. People are fatigued.

I don't think that this is a matter of continuing to look at restaurateurs and ask us to keep pivoting and innovating. We've been doing that and we've demonstrated some of the most amazing grit and fortitude and perseverance amongst most industries in this country throughout this pandemic.

There's not much more we can do, right? What we need is we need government support. We need the government to replenish the Restaurant Revitalization Fund. We need them to make good on what was, so far, an empty promise.

Over 200,000 restaurants that initially filed for the RRF are left without it. That is 2/3 of the applicants. And so essentially, by the way that the government has fumbled the RRF so far, it's created a situation of winners and losers. And those that have the financial support that the RRF was supposed to provide are in a much more secure position to pay back logs of rents, to keep their employees employed through slowdowns of dining, to not have to go through layoffs, to be able to continue to offer competitive wages. And those that don't, the 2/3 that don't, are left behind and at risk of closing. And when we are at risk of closing, it has this massive domino effect, right? Sorry to interrupt. Please go ahead.

- No I was just going to say that, you know, I think it's also important to note at least in the reporting that I've done when I've spoken to restaurant owners, they're really trying to do their level best to keep businesses open because they recognize they have a responsibility to their staff and to their families as well. So some of these owners, it's not just affecting their own business, but it's affecting their personal finances as well, right? Some of them declaring bankruptcies, so many taking on additional debt.

GABE STULMAN: You're absolutely right. And I love the way you framed that, actually, how you said so many restaurant owners feel a sense of responsibility to our teams. I wish our government felt that same sense of responsibility to us as businesses and citizens and the impact that we have on this economy. It would be great to feel the responsibility sent back to us that we give to our teams.

You're absolutely right. I mean, people that did not get RRF are taking out personal loans. They're literally taking on new investors and liquidating themselves out of their own businesses. They're trimming down and canceling services. Because if you can't get enough of a healthy staff or you don't have enough of a dining population, we are eliminating breakfast and lunch services and only going towards dinner service, which is chopping at revenue.

And the more that we chop at revenue, then we buy less. We buy less beverage. We buy less coffee. We buy less dairy, fruit, fish, meat. And when we buy less, then the third party distribution companies, they've got less work to do. So then they're laying off people. And then the farmers that they buy from are selling less product.

The trickledown effect of a restaurant shrinking goes so beyond the waiters, bartenders, and cooks. And there is this blindspot that the government I don't think is recognizing about how restaurants generally $0.90 out of every dollar goes back into the economy in one way or another. And so when you give us RRF, it actually goes out to everyone else in one way or another.

DANI ROMERO: And Gabe, let's just say the Restaurant Revitalization Fund does get replenished, right? What do you expect, what changes need to happen? Because according to reports, it seemed like there was a mishandling on how and who got those funds first, right? So what are you expecting this time around? Can you wrap that up real quick.

GABE STULMAN: Yeah, I mean, just at a very basic, I just think the nearly 200,000 applications that were in the portal before it expired should just be funded at the same pro-rata rate that everyone else was. It creates some quality and equanimity. It allows us to all offer competitive wages to people. It allows us to all survive through this downturn.

The reality is we are still in a crisis. It's not over. People are at home. People are getting sick. Staffs are wearing masks. We're requiring proof of vaccination.

These are not signs that this thing is over. So that's-- we just need to make good on everyone else and recognize that the impact that restaurants have on the economy as a whole is so much greater than our immediate steps.