Iowa, Illinois Restaurant Leaders Share Industry Issues in Quad-Cities Chamber Webinar
LaTisha Howlett, owner of Bayside Bistro, at 1105 Christie St. in the Village of East Davenport, has had a crazy past year in business – like many restaurants and countless organizations in the Quad-Cities.
At a Quad Cities Chamber legislative webinar Friday morning, with leaders from the Iowa and Illinois restaurant associations, she shared her perspective on the unprecedented challenges of the past year and what assistance she and other small business owners may need moving forward.
“Covid has been difficult for everybody, especially small businesses,” Howlett said. “Having the governor of Iowa make changes for us in the month of June caused a huge spike in business and was a nice time for us when the weather was changing for everybody. We saw a lot of outdoor business.
“We had a heavy hit in March, April and May, so June was a time to regroup from that,” she said. “You really had to be connected to the pieces of the puzzle and be part of the chamber, part of your restaurant association, the health department, to have information flowing to you.”
Last June, allowing 50 percent capacity indoors was “a game changer,” Howlett said. Later, Iowa lifted indoor capacity restrictions, while Illinois banned indoor dining from early November to mid-January, when it again allowed service limited to the lesser of 25 guests or 25% capacity per room, with tables spaced six feet apart.
Howlett said her restaurant didn’t have to lay workers off last year, since they’re small and efficient, and she may need to hire more. “It’s a challenge looking for people who have that experience or are new to the industry and excited about working in hospitality. I definitely feel that.”
Bayside Bistro will soon open its popular patio back, and they still do a lot of takeout, Howlett said. Indoors, before Covid they seated up to 42, and now cap it at 22 to 24, she said. “We’ve remained that way, what we’re finding is, it’s the customer who determines how they want things to be. They want to sit six feet apart.”
“You have different kinds of business models, and one thing you should know – business like mine that have been business for three years,” Howlett said of her current location. Her first full year was 2019 and for every business, the first year is the hardest.
In 2020, they improved business until mid-March, when they had to close down and do business differently, with takeout. “In the last part of the year, it was very difficult, not just for our restaurant, but for many, many restaurants.”
“If you are a new business and your second year is 25 percent worse than your first year, you are a dead duck, darling,” Howlett said.
Restaurants play an essential role in advancing our region’s economy and quality of life, according to the Q-C Chamber, which has promoted its “Keep It QC” campaign to support local businesses – in part by dining in and ordering out from local establishments.
Jacob Ford of the chamber government affairs staff moderated Friday’s Zoom discussion with Jessica Dunker, President/CEO of the Iowa Restaurant Association and Matt Quinn, Assistant Director of Government Relations & Communications of the Illinois Restaurant Association.
Before Covid, Illinois restaurants and bars were the largest private-sector industry in the state, with over 588,700 jobs. There were 124,000 restaurant and hospitality jobs lost in Illinois from March to December 2020, Quinn said.
“It’s been a constant struggle to keep restaurants open and to keep them open safely,” he said. At the state level, the association led the charge to reopen indoor dining, and worked to pass “cocktails to go” in Illinois, Quinn said.
Now, they’re working with the state to allow restaurant and hospitality workers be eligible for Covid vaccine distribution, to provide “enhanced protection for our essential workers,” he said.
They’re working with the National Restaurant Association to pass a Covid relief bill on the federal level for restaurants, Quinn said, noting things are looking good for that $25-billion package.
That’s part of the $1.9-trillion Covid relief bill that the U.S. House passed – food and beverage businesses with 20 locations or fewer would qualify for grants equal to the difference between 2020 and 2019 revenue, up to $10 million per company and $5 million per physical location. The grants may cover such items as payroll, rent and utilities, operational expenses, paid sick leave, food and beverage expenses, maintenance expenses, and more.
Additionally, the fund earmarks $5 billion for applicants with revenue of $500,000 or less and $20 billion for “eligible entities of different sizes based on annual gross receipts.” During the first 21 days, the application process will prioritize restaurants owned by women, veterans, and socially and economically disadvantaged individuals.
“We’re also focused on bringing back tourism – conventions, events and the like,” Quinn said. “We all know how crucial they are to the hospitality industry. We’re really urging the state to work with us as stakeholders, for an innovative solution.”
Limiting public gatherings is really stifling that convention and event business, he said. The restaurant industry was helped in the second round of PPP (Paycheck Protection Program), with getting loans forgiven, Quinn said.
“I think there’s always room for improvement and unique challenges that our industry faces,” he said. Even in a good year, restaurants only see a 3-to-5 percent profit margin.
Prior to Covid, the biggest challenge was that Iowa restaurants couldn’t find enough people to work, Dunker said. They had 155,000 people employed – the second largest private-sector employer in Iowa next to health care.
About 27,000 jobs were lost in Iowa restaurants and bars due to Covid, Dunker said. “In urban areas, we’re kind of back to the problem of finding workers again because people are trying to ramp back up,” she said.
“To be honest, our biggest issue in hospitality is trying to find people to work again,” she said. “Particularly in areas like the Quad-Cities and Des Moines, we need them back.”
The restaurant industry in January employed 9.8 million people nationwide, according to Labor Department data. That was the lowest since August, and restaurants employed 2.5 million fewer employees than they had in February 2020, before Covid-19 led to widespread closures of dining rooms that devastated the industry.
The sector got good news Friday, as the Labor Department reported nonfarm payrolls jumped by 379,000 for February 2021, and the unemployment rate fell to 6.2%. That compared with expectations of 210,000 new jobs and a 6.3% jobless rate, according to CNBC.
Nearly all the job gains came from the battered leisure and hospitality sector, which saw an increase of 355,000 amid a relaxation of dining restrictions in some areas, CNBC reported. Bars and restaurants gained 286,000 jobs while hotel-related hiring totaled 36,000 and amusement, gambling and recreation businesses added 33,000.
Addressing grants and third-party delivery
Dunker credited the state of Iowa Economic Development Authority $9-million grant program, that provided up to $25,000 to many bars and restaurants.
Now, 2,200 Iowa-based restaurants will get new grants of up to $15,000 to $20,000, Dunker said. “We went for money whenever we could find it,” she said.
Gov. Kim Reynolds also allocated $40 million in federal CARES Act funds to provide financial relief for eligible restaurants and bars impacted during the pandemic due to closures and other mitigation efforts.
Dunker and Quinn promoted a relief program through the National Restaurant Association, where businesses are eligible for employee retention tax credits (ERTC).
Eligible restaurants can access them for eligible employee wages as long as these specific payroll wages and/or group benefits were not directly paid with Paycheck Protection Program (PPP) loan funds. Employers can access up to $5,000 per employee for a calendar quarter in 2020, and up to $7,000 per employee and per quarter for January 1 – March 31 and April 1 – June 30, 2021.
Restaurants can now receive up to $19,000 per eligible employee in tax credits across 2020 (up to $5,000) and 2021 ($7,000 in both the 1st and 2nd calendar quarter). Employers that used a PPP loan can claim ERTC as long as credits are not taken on direct PPP payroll expenses. Learn more at RestaurantsAct.com.
Dunker said that pre-Covid, the average Iowa restaurant had a net profit of $97 a day, and that has disappeared. “What we have asked people to do, even though restrictions are off, you’re starting to slowly see no restaurant turned over and brought all tables back in, masks off their staff, and said everything’s better,” she said.
“What it did do by lifting restrictions is allow businesses to decide, how is it going to work for us,” Dunker said. “How are we gonna determine what our customers are comfortable with?” she said.
Quinn said restaurants encourage patrons to come in at off-peak hours, and pick up their own food, along with emphasizing the importance of wearing masks and social distancing.
“On the more government and regulatory fronts, encourage any local municipalities to cap third-party delivery fees,” he said. “Delivery services – you can’t live with them, you can’t live without ‘em. They provide a crucial service, especially during Covid, but there’s vast amount of room for improvement in the way delivery services treat restaurants.”
Cocktails to go was also passed in Iowa, Dunker said, and businesses are seeking alcohol distribution relief. What they got sidelined by was third-party alcohol delivery, which has created difficult situations, she said.
A new Senate bill would allow grocery stores, breweries or distilleries to use third-party services to deliver alcoholic beverages to customers.
“Our industry has been dealing with third-party delivery services for several years and we have literally been at their mercy. And it’s a nearly unregulated gig industry,” Dunker has said previously.
Delivery services can falsely represent themselves as being associated with the restaurant. “They can co-opt your menu or your store offerings online and start taking orders,” she said.
On Friday, Dunker called the third-party vendors “predators.”
“They prey on our industry; they have no standards related to food safety,” she said. “They can have animals in the car; they can vape in the car. They don’t have to have temperature control.”
“The biggest message that legislators didn’t know that we’ve been fighting on, because alcohol delivery came out of the blue – they think we are choosing these relationships and paying people to do this,” she said. “They don’t understand that there’s never a situation where the restaurant pays them.”
“That is a huge conversation this next legislative session,” Dunker said. “We’re asking restaurants across the state to explain how difficult it has been and how many people take your menu without your permission, and don’t identify themselves and how it’s hurting your business.
“I am on a soapbox because I’m passionate and I’m angry,” she said.
Howlett has had problems with third-party delivery services like GrubHub.
“Typically, they were charging upwards of 30 percent, so how do you pass that on?” she said of delivery fees from a total bill. “If you’re gonna charge me 30 percent, and we’ve got problems with how it gets there, when it gets there, what you look like when you’re delivering it.”
Drivers come up and disrupt service, often without uniforms of their delivery service, Howlett said, relating one nightmare story, noting food temperature and safety also are issues. “How my customers know you’re representing who you say you are?”
Bayside has an issue with being charged 30 percent on their product, and was told they could make up the difference by charging more. “I’ll tell you what, that for me does not work,” Howlett said. “We have a lot of repeat customers and they notice that kind of thing.”
Looking to outdoor dining and QC Restaurant Week
Quinn said that like last year, cities should figure a way to make more outdoor dining work.
“On your sidewalks, closing down streets, parkways, alleys, whatever it might be – really encourage your local government to come up with innovative solutions,” he said. “Break down whatever barriers there are to expanded outdoor dining. That’s what people expect, what they’re
excited for and that’s what restaurants are going to be relying on for the next several months.”
Ford of the Q-C Chamber noted an upcoming annual promotion through Visit Quad Cities — QC Restaurant Week, which is March 22-28.
“Several establishments will have a special offer to celebrate, others will be serving up something delicious from their menu,” according to the website. “Whether you choose to dine in, order take out, or curbside service, help us support our friends, family, and neighbors during the celebration of our local culinary scene during QC Restaurant Week!”
As a reward, you can enter the contest to win a smorgasbord of local restaurant gift cards, from which several winners will be chosen.
To enter the contest, all you have to do is purchase a meal from one of the QC Restaurant Week restaurants between March 22-28 and show a receipt or a photo of you at the restaurant. Deadline to enter the contest is Friday, April 2.
For a list of participating restaurants and more information, visit https://qcrestaurantweek.com.
Small Q-C businesses, nonprofits and sole proprietors also have through Wednesday, March 10, to take advantage of exclusive access to Paycheck Protection Program (PPP) loans.
The Biden Administration in conjunction with the U.S. Small Business Administration (SBA) announced the changes recently to ensure the smallest businesses (fewer than 20 employees) have time to work with lenders and community partners to submit their applications. Larger PPP-eligible businesses may apply for a PPP loan between March 11 and March 31, when the program expires.
For more info on that, click HERE.