What It Cost to Keep Two Restaurants Open During the Pandemic Without Outdoor Dining or Delivery

Annoyingly techie but excruciatingly precise, “pivoting” is now a loaded term in the restaurant world. The pandemic has demanded adaptation; since March 2020, restaurants and bars across the country have navigated through the COVID-19 pandemic by transforming into online groceries, outdoor dining destinations, meal-kit providers, and more. These pivots require time, resources, creativity, innovation, and, of course, money — and their success can mean a restaurant’s survival. In this series, Eater asks operators to open their books and explain how pivoting has (and hasn’t) worked, by the numbers. Next up: North and Big King in Providence, Rhode Island.

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For Big King and North, two restaurants in Providence, Rhode Island, 2020 was off to a great start. James Mark, the owner of both restaurants and the chef at Big King, says he made about $353,000 in sales in January and February alone. He started March with about $50,000 in the restaurant bank accounts, something he says is rare because he’s spent so much money in the last few years on renovations and equipment replacement.

“I felt really good going into March, like ‘Oh shit, we have money for the first time,’” Mark says.

On March 9, Rhode Island Gov. Gina Raimondo declared a state of emergency after three cases of the coronavirus were found in the state. At that point the outbreak had been limited to a few K-12 schools and had not yet become widespread.

On March 15, Big King and North made about $10,000 in sales, about double the nightly average. During dinner service at Big King, a 21-seat restaurant that serves seasonal, seafood-focused Japanese-inspired fare, Mark leaned over the bar to talk with a group of students from Brown University about the sake selection. After work that night, he was scrolling through Twitter at home when he saw local journalists reporting on confirmed coronavirus cases at Brown. That’s when he realized that if he kept his restaurants open, he’d have no way to protect his staff, their friends, or their families.

“We have immunocompromised staff,” Mark says. “We have staff who live in multigenerational households.” He shut down Big King and North the next day, the same day Raimondo banned all in-person dining in Rhode Island restaurants, bars, and cafes.

Mark hasn’t opened for any form of in-person dining since. Instead, he’s focused on no-contact takeout, limited to two pickups every 15 minutes per restaurant. While this method is relatively safe for staff, it has hurt business. Even with the pandemic-related loans and grants the two restaurants received, Mark estimates he’s lost about $75,000 over the past year. That’s a big loss — even though his restaurants made a lot of money in sales before the pandemic, Mark also spent a lot on rent, wages for his staff, insurance, equipment, and expensive seasonal fish. “As a restaurant owner, I’ve never made more than 30,000 bucks a year, maybe 35,” he says.

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Sales changes

Sales for Big King and North totaled nearly $2 million in 2019, with 65,000 in-person guests served. In 2020, total sales were closer to $1 million. Of that, $457,000 came in before March 15; since then, Mark says, his monthly average has been only $40,000 to $50,000.

Neither restaurant offered delivery before the pandemic — and they still don’t. Mark refuses to work with third-party delivery services like Grubhub or Uber Eats because he considers their business practices — such as regularly charging restaurants more than 30 percent of the cost of an order in delivery fees — “predatory.” Aside from that, he says, the cost of insurance and wages for drivers wouldn’t be worth the money made from added sales. That left takeout as the only option for the restaurants to survive.

Big King didn’t offer takeout at all before the pandemic, and North’s takeout represented only 5 percent of the two restaurants’ combined sales in 2019, so the move to a takeout-only model was a big change. Mark says alcohol, which made up about a third of revenue before the pandemic, was particularly difficult to adapt to takeout. Until late March, restaurants in Rhode Island were not allowed to sell to-go wine and beer, and they couldn’t sell to-go cocktails until May. During that time, Mark says, he lost about $10,000 in kegs of beer and open bottles of wine and sake that went bad. Now, only $4,500 of the two restaurants’ $45,000 in monthly sales is in alcohol. And the profit margin on that $4,500 is less than half of what it used to be because Mark cut prices to compete with liquor stores. Though Big King and North now offer to-go cocktails and a large selection of sake, beer, and wine, people just don’t drink as much with takeout, Mark says, and many people simply don’t want to pay for a cocktail that they’re going to drink at home.

It’s not just the pivot to takeout that’s impacted the overall sales data. Big King was completely closed for a week after its last night of service, and North was closed for about three weeks. After the restaurants reopened, COVID exposures would force them to shut their doors again, usually for a few days at a time, so the staff could properly isolate while waiting on test results. (Only one staff member has tested positive so far.) When Mark’s wife received a positive test result in June, he shut down Big King for two weeks to quarantine, though he never tested positive for the coronavirus himself. These closures naturally contributed to a loss in sales.

May and June are typically extremely profitable for North. Providence is a college town, and people buy out the restaurant for private graduation parties, where groups regularly spend $8,000 to $16,000 in a night. In 2019, North hosted 50 events. But all the reservations for 2020 graduation parties were canceled once the pandemic began.

Staffing

The day after Mark closed Big King and North, he held a meeting during which everyone on staff filed for unemployment benefits. In the first few weeks, Mark and Andrew McQuesten, the chef at North, worked as a two-person team to cook takeout bento boxes of rice, fish, and vegetable sides in the Big King kitchen. Within three weeks, Mark says, he’d hired back most of his staff to work five to 10 hours a week while also collecting unemployment.

But Mark didn’t hire back 10 part-time front-of-house workers, whose jobs no longer exist under the no-contact takeout system, something he says he feels guilty about. He also didn’t hire back two full-time cooks, who he says chose to leave the restaurant industry when the pandemic hit. Overall, Mark went from employing around 35 people, including part-time workers, before the pandemic to about 23 people since the restaurants reopened for takeout in March 2020.

In the summer, Mark enrolled his staff in a Rhode Island Department of Labor program called WorkShare, which lets everyone work at least 20 hours a week while remaining eligible for some state unemployment money. He’s been using this system ever since.

New costs

When the CARES Act Federal Pandemic Unemployment Compensation Program, which provided each of his workers with $600 per week, ended in July 2020, Mark was worried about his employees, so he increased everyone’s hourly wages, from $12 to $16 an hour to $25 an hour — essentially a form of hazard pay. While these extra wages help his employees, Mark says he’s spent about $94,000 more than he would have if he’d kept wages at pre-pandemic rates, and he plans to drop them down to $15 an hour when the pandemic is over.

Since Big King and North haven’t offered any on-site dining since March 2020, Mark hasn’t had to spend money on new ventilation systems or heaters, the way many other restaurants have. But he says his employees have been using hundreds of pairs of vinyl gloves each day. Because of increased demand, he says, it has cost up to $100 for a pack of 1,000 gloves at some points during the pandemic.

Relief

Money from the Paycheck Protection Program kept Big King and North afloat this past year. Marks says his biggest expense is payroll, which normally costs him 40 precent of revenue, so the roughly $240,000 he received in the first round of PPP at the end of July 2020 and the $330,000 he received in the second round in mid-February 2021 could easily be used for paychecks, making the loans forgivable.

He says he also received about $60,000 in grants from the state of Rhode Island and the Providence Chamber of Commerce. A GoFundMe set up by the managers in April 2020 raised about $5,800, which Mark says was distributed to the most in-need staff members.

Mark says he’s used about $50,000 of his second PPP loan so far and thinks the rest will keep his restaurants afloat until the end of April.

“Are we making money? No. But can we tread water? Sure,” he says.

Looking forward

Mark says Big King and North won’t open for indoor dining until every employee who wants a COVID-19 vaccination has one, and he might even wait for a while after that to get better data about the efficacy of the vaccines at preventing illness and community transmission.

But once his current front-of-house workers are vaccinated, which will hopefully be soon, he plans to start offering outdoor dining at North. Mark says he’ll be able to seat 32 people at eight tables of four, which he hopes will lead to a significant increase in sales, though he estimates the setup will cost him about $5,000. There isn’t any room for an outdoor setup at Big King.

As part of the American Rescue Plan, the $1.9 trillion pandemic relief bill President Joe Biden signed into law on March 11, restaurants will be able to apply for grants (not loans, like those available under the PPP) to offset losses in 2020. It’s the first federal pandemic relief aid specifically meant for restaurants. According to the Independent Restaurant Coalition, which helped develop the restaurant relief bill, restaurants that aren’t part of a chain of more than 20, or are publicly traded, will be eligible for grants equaling 2019 revenue minus 2020 revenue, with the amount of money a business received through PPP also subtracted. By Mark’s calculations, that would equal over $340,000 for Big King and North. Though he’s unsure whether he’ll receive any money through the program, if he does, it could change everything for the two restaurants, which have not been independently sustaining themselves since March 2020.

“If it wasn’t for federal aid, we’d be closed,” Mark says.

Jade Yamazaki Stewart is a freelance food writer and journalist.