WILMINGTON — As Gov. John Carney rolled back indoor dining back to Phase 1 requirements of 30% of indoor capacity to slow the spread of COVID-19, Delaware’s restaurant industry faces difficult decisions this winter amid an estimated $900 million loss through the pandemic.
“Look, it means that full-service restaurants that rely on that in-person dining experience will be hit hard,” Xavier Teixido, owner of Harry’s Hospitality Group, told the Delaware Business Times. “You cannot make money at 30% capacity. The No. 1 decision restaurants are going to face is the value in staying open with staff there to serve 30% of the guests that were allowed versus the hit in closing restaurants.”
Gianmarco Martuscelli, owner of Klondike Kate’s in Newark and La Casa Pasta in Glasgow, said the industry was “disappointed” by the renewed restrictions. Martuscelli, who serves as treasurer for the Delaware Restaurant Association board, said that owners had hoped for a curfew, like Maryland has instituted, rather than reduced capacity because it would allow them to retain more of their dinner business. Now, however, some owners are deciding whether to scrap indoor dining altogether and return to curbside takeout only, he said.
Since June, Delaware has been operating in Phase 2, allowing 60% capacity of fire code capacity in restaurants although bar seating was restricted in many Sussex County beach communities in the height of summer. Carney eased those restrictions on beach bars in September — allowing patrons in if they reserved a seat and ordered food — and lifted them entirely this month ahead of winter.
Lisa DiFebo-Osias, owner of DiFebo’s Restaurants in Bethany and Rehoboth beaches, said her anger comes when she walks into a store and sees employees without masks on because they did not want to wear them. In comparison, the DiFebo’s staff works eight-hour shifts while wearing N95 masks without taking them off once.
“We’re already going through an arduous process to do what we do, and that’s fine. I’ve been a believer in this virus since day one,” she said. “We just want to see all businesses be met with the same standards so we can get through this. We can control our environment – paper menus, no contact even for tips – but Wawas are packed and you can touch all the clothes in Marshall’s.”
The Delaware Restaurant Association reported during Phase 1 restrictions that 40% of the state’s restaurants would be forced to shut their doors within a year without a financial lifeline. Before the pandemic, the industry supported 50,0000 workers, or one in 10 Delawareans.
Financial help has arrived in the past eight months, in the form of the federal Paycheck Protection Program, the state’s DE Relief grant program, as well as New Castle County’s Winter Ready Restaurant grant program. In conjunction with the increased restrictions, Carney announced this week that he would be extending the DE Relief Grant program another $25 million, doubling allocations for qualifying businesses.
Teixido, owner of Harry’s Savoy Grill and Kid Shelleens, pointed out that the financial programs available were a short-term lifeline, allowing restaurants to get through three to four weeks. But the governor’s announcement was still a “devastating blow” ahead of what normally would be a busy season for New Castle County establishments.
“In the winter, we’re typically ready for holiday gatherings and parties. Now we’re having another difficult decision about labor we need for the demand we’re seeing, like washing dishes that aren’t used for service or cooks for food that’s not ordered,” he said. “I’m not sure we’ll see mass layoffs, but some restaurants still haven’t gone back to full employment.”
Down in Sussex County, DiFebo-Osias said wintertime usually means tapping into the money made in the summertime to pay off bills and loans, while finding ways to keep the staff on a reduced schedule. That could be harder this year, as DiFebo’s made between 40% to 50% less than the previous year in the summer.
Thanksgiving and other winter holidays are going to look vastly different than before, but Caffé Gelato owner Ryan German pointed out that people are still patronizing restaurants, just the model has changed dramatically.
“We’re seeing more people choosing to-go services for home meals,” he said. “We have offered deals like two entrees for $25 or four for $39. People want that high-dining quality experience to treat themselves, to get out their wedding crystal and a nice bottle of wine. We’re expecting to sell 30% to 40% more for our catered Thanksgiving than usual, and we’re keeping our staff to help meet that demand.”
Restaurants have also turned to expanding outside four walls and onto sidewalks and parking spaces to take advantage of the warmer weather. But those expansions have racked up more expenses for restaurants, with some tent rentals reportedly reaching $2,500 a month and heating it for eight hours a day becomes costly.
German projects Caffé Gelato will be down 15% in revenue this year compared to 2019. He spent more than $10,000 in expanding outdoors with tables, chairs, potted plants and heaters, although some of that expense was covered by the county grant.
Next, he’s looking to bring small greenhouses to downtown Newark, each with enough space for one table. The Delaware Division of Public Health requires fresh air to be exchanged in the greenhouses twice per hour, so German is investing in a forced air heater and exhaust six times per hour.
“I think the direction we’re heading in is that we’re going to see more reservations for private rooms, and we’ll be full by 7 p.m., so we’re going to have to find ways to incentivize people to come in at earlier times,” he said.
But Teixido thought traditional outdoor dining would be a harder sell, with temperatures dropping as low as 38 degrees the week Carney announced new restrictions. With retail allowed to remain at 60% capacity, he noted that restaurants are “taking the tip of the spear” right now and with limited options to regain revenue.
“Part of the difficulty in this is the correlation with this comes at the colder months, and we’re an industry tied to consumer confidence,” he said. “We’re remaining optimistic that this is for a short time, and we need to just get through this. I’m grateful for what we have, and that we’re still in business.”
Martuscelli agreed with Teixido, noting that the reduced capacity would hurt an already-stung industry but the messaging from state officials was the bigger impact on consumer confidence.
“You could tell us tomorrow that we get out 100% capacity, but people just aren’t coming out,” he said.
By Katie Tabeling
