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Short-order squeeze

Shutdowns and COVID-19 are endangering locally owned restaurants

Short-order squeeze

Inside République (Sophia Lee)

On a typical day, République’s Gothic-style dining room hums with the din of clinking glasses, scraping forks, and conversations over eclectic fare such as kimchi fried rice with beef short rib and heirloom tomato salad. As an all-day restaurant in Los Angeles that shifts from morning pastry pick-ups to business lunch breaks to celebratory dinners, silence is a rare guest at République—until a pandemic completely shut down the city’s dining scene. 

Today, République still opens for takeout and delivery services, but the space is quiet and bare. Gone are the long lines trailing out the door. Gone are the valet attendants, the frustrated drivers circling round the block in search for parking. Gone are the midday customers hunched over their laptops with a cup of drip coffee. Gone are the servers and bussers pirouetting from kitchen to tables. Gone are the clings and clangs and buzz and laughter. 

Instead, all the chairs and stools sit in the corner. The bar no longer lubricates customers with French wine but offers grocery items such as apples, lemons, oat milk, and flour. It also serves as a waiting area for pick-up orders, where customers can stand 6 feet away from each other. The staff is strict about social distancing— when a man walked too close to another customer, a staff member gently reminded him to step several feet back. 

These are tough times for every restaurant owner, but République owner Walter Manzke is having a particularly challenging year. Five weeks before the COVID-19 pandemic terrorized the nation, prompting many governors and mayors to close businesses and order people to stay home, Manzke had been at the hospital’s intensive care unit after a car hit him while he was walking. He was only just beginning to recuperate from his injuries when on March 15, without any warning, L.A. Mayor Eric Garcetti ordered bars, nightclubs, movie theaters, and fitness centers to close. Restaurants had to halt all dine-in services. “It was a huge shock,” Manzke recalled. “Everything happened very rapidly. We weren’t prepared for it.” 

Then five days later, California Gov. Gavin Newsom issued a mandatory order that all Californians stay home until further notice. That same day, Garcetti also ordered LA residents to shelter in place until April 19, but as the number of confirmed coronavirus cases in California shot over 4,200 and the number of confirmed cases in L.A. doubled overnight, Garcetti warned residents that he’ll probably extend the emergency order for “at least two months.” 

On March 15, République had still been bustling with customers, though Manzke and his wife Margarita (the pastry chef) had noticed that some people seemed more skittish about hygiene. By then the restaurant had already ceased ordering food from overseas. But with the sudden order from the mayor to halt dine-in services, they faced hard decisions: Should they stay open for takeout and delivery? Who among their staff do they let go? How would the restaurant survive, when almost 100 percent of its revenue comes from dine-in services?

JakobLayman

Walter and Marge Manzke (JakobLayman)

Even though some business—such as pizza delivery restaurants—need more help to keep up with demand, many local restaurant owners are doing whatever they can day-to-day to survive. Most restaurants operate on narrow profit margins and will likely run out of money within a few weeks. Owners try to discern between bad and worse options: Some are reopening sporadically. Some are cooking solo. Some have closed indefinitely because takeout revenue barely pays for overhead costs. Many owners are taking no pay so they can pay their staff.  

The National Restaurant Association estimates that half the restaurants across the country are already completely closed. Economists predict that the coronavirus shutdown will decimate millions of jobs and ravage the local dining landscape. Celebrity chef Tom Colicchio foresees that up to 80 percent of restaurants won’t reopen even after the pandemic blows over. People are trying to support their favorite eateries by purchasing gift certificates and ordering takeout or delivery, but owners wonder how long that generosity can last before their customers worry about their own bills as the economy heads toward recession. 

“This is the biggest hit we’ve ever faced,” said Benny Yun, owner of Yang Chow, an iconic Chinese-American restaurant that opened in 1977 in L.A.’s Chinatown: “Even the 2008 recession wasn’t this bad.” For decades, crowds lined up to try Yang Chow’s famed “Slippery Shrimp,” a deep-fried shrimp treat drenched in goopy, sticky-sweet sauce.

Yun has been working at his family-owned restaurants since he was 17. Longtime customers know him: They even watched him slim down and plump up and slim down again during his teenage years. But even those loyal customers are too scared to leave their homes or order takeout. Even before the mayor’s emergency order, the number of visitors to Chinatown had dropped precipitously, and some employees volunteered to take two-week vacations. Now Chow has had to lay off most of them. Some have been working at Yang Chow for decades. “If this goes on for months, I’ll have to take it out of my own savings,” Yun said. “That’s my last option. 

That night on March 15 when the mayor ordered restaurants to shut down dine-in services, neither Manzke nor his wife slept much. By early morning, Margarita had made a decision. She went into her restaurant’s kitchen and baked her usual assortment of pastries—bombolinis, meaty hand pies, muffins, fruit-jeweled Danishes. She figured, “Everyone still has to eat somewhere.” After a weekend of panic-hoarding, most grocery stores were out of bread, so why not provide Angelenos with an alternative option? They spread the word on social media, lifted the takeout window, and passed pastries, bread, coffee, and orange juice through the window until everything was sold out that day. That comforted the Manzkes somewhat, but baked goods would not be enough to keep them afloat. 

That day, the husband-and-wife team sat down to calculate all their expenses through May. It didn’t look good: If the shutdown lasted for several months, their restaurant could sink half-a-million dollars in debt. They had to do something. The next morning, the Manzkes called all their managers into the restaurant for a meeting and asked who felt comfortable working. Some chose to stay home. Some said they live paycheck to paycheck and couldn’t afford not to work. So the next day, the Manzkes set up a new schedule without knowing how they’d pay their staff, developed a different menu without knowing what customers wanted, and opened for takeout and deliveries without knowing whether the new business model would even pay for their overhead costs. 

When I talked to Manzke over the phone, it had been less than two weeks since the big change. He was at home, still recovering from his injuries and watching his two young kids whose schools had closed, while his wife manned the restaurant. 

Each day, they learn by trial and error: They decided to shut down the takeout window, since people were leaning in to grab their order—not good social distancing. They partnered with GrubHub and Postmates. They learned customers craved hearty comfort food like roast chicken and potatoes, not exotic cuisines. Customers loved their fresh-baked crusty breads. They realized their farmers were suffering too, so they opened a mini-market selling produce straight from the farms. They’re slowly adding more staff and have discussed temporarily cutting managers’ pay and reimbursing them when business recovers. They are still paying medical insurance for all 170 of their employees but aren’t sure how much longer they can. Most of their staff are currently seeking unemployment benefits.

The Manzkes shoulder many people’s livelihoods: “The goal is not to make a profit right now. It’s to take care of my people—that’s the priority.” Some days he wakes up wondering if he should close his restaurant to keep his family and staff safe. Other days he wakes up knowing he needs to keep it open so he can at least pay for his employees’ health insurance—and feed his own family: “The thing is, I don’t really know what will happen. It makes this extremely difficult. I’m anxious, scared, stressed—everything. I can’t wait for this to be over.”

For now, restaurant owners tell me they’re taking it day by day and hoping for the best, even as they nervously await the possibility of the mayor shutting down even takeout and delivery service options. Leni Kumala, owner of Simpang Asia, an Indonesian eatery and mini-market in West L.A., said she considers herself “blessed” that her business can still stay semi-open, even though she’s lost a lot of revenue. Almost all the businesses around her have closed by mandate—a nail salon, a dry cleaner, a fitness center, a tattoo shop, a game store.

Despite promises from local and national leaders to help out small businesses—and Congress passing the CARES Act last week—exactly what sort of help restaurants will get is unclear. Preparing for the worst, Kumala called her insurance agent but found out that her insurance doesn’t cover pandemics. Nevertheless, she tries to stay positive each day: “There’s nothing we can do, just worrying. This situation will stay here for the next six months or so, so let’s put that energy into finding something to survive this.”

And that’s all Yuko Kitchen owner Yuko Watanabe is doing right now: Surviving. After laying off most of her staff, she now scrambles between her three Asian-fusion restaurants, doing the work of five employees. Every morning, she’s at the kitchen at 4 a.m. by herself to bake all the cookies and bars for her restaurants. At 9:30 a.m., she’s dashing out to the wholesale market in downtown L.A. to stock up on fresh produce, meat, and dairy. Because many markets are now closed due to the virus, she has to visit several before she finds kale and broccoli that are not wilting. She drops off the supplies at each restaurant, then spends the rest of the day washing dishes, taking orders, chopping and dicing vegetables, stirring soup, and managing the few remaining employees she has. Late afternoon, she pops home for 30 minutes so she can walk her dog, then she’s back to work until she crashes into bed at 10 p.m. 

 

Sophia Lee

Yuko Watanabe of Yuko Kitchen (Sophia Lee)

“I’m so exhausted!” she exclaimed over the phone while walking her dog. “I’m worried about everything, but I tell myself, I can do this. I’m doing whatever it takes.” Whatever it takes includes selling toilet paper for $2.50 per roll as well as creating an impromptu market that offers fresh produce, sacks of rice and sugar, homemade dressing, and 32-ounce containers of “Quarantine Soup.” She’s posting regularly on social media, thanking her customers and reminding them she’s still open for business. 

Watanabe is used to hustling. She moved to L.A. from Japan 20 years ago and worked from dawn to night for 10 years to save enough money to open her first restaurant with only one employee. Today’s situation feels like a step back, but Watanabe said she’s finding positives: “It’s actually fun. We’re financially in big trouble, but I also feel alive. When you have everything OK every day, you don’t realize how hard it is to survive. Today, every day is just surviving.”

Sophia Lee

Sophia Lee

Sophia is a senior reporter for WORLD Magazine based in Los Angeles. Follow Sophia on Twitter @SophiaLeeHyun.