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Restaurants Rattled by Second-Round Shutdown

Aron Celnick was relieved to see a “nice uptick” in revenue at his Canoga Park eatery Grandi Italiani last month after L.A. County regulators allowed restaurants to resume dine-in operations with limited capacity. But the recovery didn’t last long. On July 1, just weeks after authorizing indoor dining rooms to reopen, Gov. Gavin Newsom imposed another round of temporary restrictions for restaurants and other food service businesses in 19 counties, including Los Angeles and Ventura counties, in an attempt to combat a surge of COVID-19 cases. As a result, dining rooms in Los Angeles and Ventura counties were required to shut down. On July 13, as the pandemic worsened, Newsom extended the restrictions to cover the entire state. “We’re seeing an increase in the spread of the virus,” Newsom said during a digital news conference last week. “It’s incumbent upon all of us to recognize soberly that COVID-19 is not going away … until there is a vaccine or an effective therapy.” Regulatory ping-pong Celnick said bouncing between open and closed is wasting money, labor and time for restaurants that typically gain most of their income from dine-in customers. “Business started to improve,” he said. “I hired back a couple of employees who were working for us before. And then the governor slams the door in our face again. We went down into the tank. Business just dropped like off a cliff.” The guidance allows delivery and to-go orders, and restaurants can still seat dine-in patrons outdoors. Celnick said he added several outdoor tables along the sidewalk in front of Grandi, but it’s making little difference to the bottom line – he said revenue is less than half of what it was before the pandemic began. “Restaurants are not one-size-fits-all. Restaurants that have drive-throughs or large patios have an advantage over restaurants that don’t. In effect, Newsom’s policies are providing a distinct benefit to these types of restaurants,” he said. Ron Peskin, owner of Brent’s Deli in Northridge and Westlake Village, said reopening his dining rooms was “a whole lot of work for a whole lot of nothing.” He said Brent’s spent a few thousand dollars installing plastic dividers and hiring back employees to adhere to the guidance, only for regulators to walk it back weeks later. “They let you open for three weeks and then they close you down. So you hire all these people back. They lose their unemployment. They come back, they’re not making any money because there’s no business, and then we have to fire everybody again,” he said. Peskin and Celnick both said the PPP loans they received through the CARES Act likely won’t be enough to cover their losses. Following the state’s latest order, the California Coalition for Safe Re-Opening, a group of chambers and business associations throughout the state that jointly lobby for proposals to reopen California’s economy in a safe and effective manner, issued a statement: “The economy cannot survive in an environment of ‘open one month, close it down the next month. … There must be adequate access to regular COVID-19 testing and the state must pass legislation to fund the California COVID-19 Emergency Business Interruption Fund to cover losses related to all government and health department orders including forced closures, social distancing requirements and gathering limits.” Among the Coalition’s members are the California Restaurant Association lobbying group in Sacramento and the Greater San Fernando Valley Chamber of Commerce, the latter of which joined in reaction to Newsom’s latest order. Chamber Chief Executive Nancy Hoffman Vanyek issued a statement urging regulators that the inconsistent guidance is causing a misuse of resources and damaging the hospitality industry’s workforce. “Our businesses have vigilantly kept up with state, county and local orders, investing time and finances into rehiring employees and readying their businesses for reopening. Many restaurants invested heavily, hoping for a lucrative holiday weekend, but instead were met with food and financial waste as the allowed models highly restrict sales and production,” she said. Los Angeles City Controller Ron Galperin released an updated jobs map July 13 illustrating a citywide loss of more than 250,000 jobs since the pandemic hit. Food service is the hardest hit sector, suffering more than 75,000 lost jobs. “A lot of businesses are gone,” Celnick lamented. “These mom-and-pops, they’re not faring well.” Celnick and another owner-partner opened Grandi in the fall of 2018 as a spinoff of the popular Andre’s Italian Restaurant, a 57-year-old Italian comfort food staple in the Fairfax District. Andre’s and Grandi are both known for their cafeteria-style service, where servers dish out plates of prepared foods in a single-file line. Celnick said the coronavirus has rendered this model – and buffets, too – unfeasible, at least for the foreseeable future. When dining rooms reopened, he pivoted Grandi and Andre’s to an at-the-counter ordering system that will return when current regulations are lifted. While Andre’s is kept afloat by a large and loyal following, Celnick admitted, “the viability of Grandi is in doubt.” Breweries Also required to close under the state’s order are indoor bars, wineries, breweries and tasting rooms, which L.A. County regulators had allowed to reopen June 19 with a few operational caveats such as physical distancing between groups of patrons. When the Department of Public Health issued specific regulations, local brew masters were shocked – the guidance, as initially written, seemed to mandate bars and breweries to close down operations entirely. According to Bryan Olson, co-founder of 8One8 Brewing in Canoga Park, “When the Health Department mandate was announced, they said ‘breweries, tasting rooms, brewpubs, wineries are closed.’ We had to have a phone call with the Health Department (to ask if) we can still manufacture, sell to wholesale and sell to-go. They said, ‘Oh, yes, you can still do that.’ But it doesn’t portray that way when you read it.” It’s an important semantic clarification – Olson said 8One8 has had trouble making sales this month because customers think the brewery is closed altogether. “People don’t realize we’re open for to-go’s,” he said. Olson pointed out another issue with the restrictions: bars and breweries with kitchens are allowed to continue serving food and drinks to dine-in customers outdoors, but those without kitchens are banned from all sales on the premises. Also, the order prohibits breweries from contracting with third-party food vendors in order to resume outdoor service operations, closing a crucial line of business for 8One8. When bars and breweries were allowed to reopen tasting rooms in June, regulators required them to serve a “bona fide meal” with the sale of any alcohol. “They didn’t want people to sit and enjoy a beer in a bar setting. They wanted more of a restaurant setting,” Olson explained. To remain compliant during the opening, 8One8 partnered with an adjacent restaurant to serve food. The partnership isn’t allowed under the new guidance. That has resulted in a crushing environment for 8One8 at an already tumultuous time. “Five or six days into the new order, we’re 75 percent down on sales,” Olson said. He and the brewery’s other owner-partners wrote a letter to regulators explaining the disparities in the new order and pushing for reform. “This recent order was a kick to the shins for all of us who have put the energy and money forward to comply with this changing environment,” the letter stated. “The end result is our business and industry being shut down while similar businesses remain open because they can make a meal in their own kitchen.”

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