What Does It Cost to Run a Restaurant During the Pandemic?

Detroit-area restaurants began welcoming customers back into dining rooms and onto patios in June in a bid to curb severe financial losses incurred during three months of dining room closures. But reopening on its own won’t deliver a simple solution to the economic price of the global health crisis: Businesses that already operated on thin margins are now taking on new supply and maintenance costs during the novel coronavirus pandemic, in addition to the mental burdens of protecting the health and safety of customers and employees.

Purchasing face masks, maintaining a supply of gloves and sanitizer, investing in more rigorous cleaning regimens, and restocking kitchens for higher volumes of service are just a few of the costs of doing restaurant business at this pivotal moment. For some, the challenges of replenishing this now-essential equipment are nearly insurmountable.

Restaurants like Ivy Kitchen and Cocktails on Detroit’s east side are having trouble jump-starting dine-in service after several months feeding frontline workers and the homeless. Owner Nya Marshall is currently participating in a crowdfunding campaign matched by the Michigan Economic Development Corporation to help Ivy adjust to the new state regulations for service and bring furloughed employees back to work.

Omar Anani, chef and owner of the award-winning Saffron De Twah in the McDougall-Hunt neighborhood, has been serving the community’s frontline workers throughout the pandemic despite closing for business on March 17. As that feed-the-frontlines effort started to wind down, Anani began to refocus his energy on restoring his popular Moroccan-influenced Gratiot Avenue restaurant. It hasn’t been easy.

Saffron De Twah reopened in mid-June for service after a week’s worth of food prep; Anani’s building is simply too small and narrow to make it worth the added cost and work of serving dine-in customers at 50 percent capacity with social distancing. “I would have to bring back servers just for one party at a time, and it just financially doesn’t make sense,” he said in an interview ahead of the reopening.

Two large wooden tables, window seats, and a wood-framed walk-up counter at Saffron De Twah.

Saffron De Twah’s dining room has been closed since the second week of the pandemic in Michigan. The restaurant recently reopened for carryout service but faces substantial new operating costs and can’t use its dining room.
Gerard + Belevender

The upfront cost of replenishing his food and equipment was also tremendous. Anani estimated he’s spent between $8,000 and $10,000 to get Saffron De Twah up and running again after the temporary closure. “We’re having to reorder everything,” he said, pointing out that his shelves were mostly cleaned out after several months volunteering for feed the frontlines programs. In addition to having to repurchase food, prices have also increased due to disruptions in the food processing and distribution network. This led to some particular “sticker shock” upon reviewing a recent $2,000 meat order. “We had a meat delivery and my employees looked at the bill and was like, ‘Holy cow! Did we just spend this much money on meat?’” As a result, Anani and his small team have had to make adjustments to the summer menu to cut costs while continuing to offer the items customers have come to expect, like the chicken sandwich and cauliflower shawarma. “Everything right now that we’re doing is completely abbreviated,” he said, noting that Saffron avoided items using beef. “At the end of the day, no one’s going to pay 20 bucks for a dish they used to get for $10.” Things like a zero-proof cocktail program that rolled out last winter have been put on hold. “We don’t have the bandwidth to do them,” he said.

The restaurant is also incurring new costs for equipment like sanitation stations, gloves, and face masks. Anani spent some of the time during the closure redesigning the kitchen to make it safer including adding more sinks. Add to that the cost of replenishing masks and gloves for staff and the bill gets even more daunting. And it’s new costs that aren’t going away as long as the virus is still circulating. Anani sees that, but is still reluctant to raise prices. “I’ve always been very focused on being able to serve our community, which is a community that requires a lower price point,” he said. “We know that some prices are going to have to go up, but if we do have to take them up, I’m very vehemently adamant that we’re only doing it by the bare minimum possible.” The chicken sandwich should probably be raised by $1, he said, but its price will more likely only increase by 50 cents.

Lester Gouvia, owner of Norma G’s Caribbean Cuisine in Jefferson Chalmers, chose to stay open for carryout during the pandemic and avoid some of those high reopening costs. His was among the first restaurants in the city to reopen for dine-in service, a move that he said has been successful thanks in part to the restaurant’s large dining room and patio seating areas. Gouvia was able to get help installing plexiglass dividers between seating areas for relatively little money, but it’s the other now-vital equipment and food costs that add up. “It’s just a constant buying of things you think you need. It wasn’t a heavy hit of this large dollar amount. It was just a consistent spend.”

Things like the price of oxtail and goat have increased. “It may not seem like a lot per pound at the time, but because I’m buying large quantities, yes, the number is there,” he said. So far, he’s avoided increasing prices and is instead focused on controlling his food waste by making sure he and kitchen staff are carefully monitoring portions during food prep.

Personal protective equipment (PPE) is another new cost being absorbed by the business. Norma G’s received two cases of free PPE supplies through a program put on by DTE Energy and the city of Detroit. That initial supply helped, but it’s only a matter of time before Gouvia will have to purchase more. Things like gloves are now changed more frequently and used by all staff rather than just those in the kitchen. Each box of 1,000 gloves costs around $50. “You’re going to go through a couple boxes of gloves sometimes in a couple of days. That cost is going to just continue over the course of time,” Gouvia said. He estimates the equipment could add at least $200 to his monthly operating costs. At the same time, the business is operating at a lower capacity. “That’s that’s the catch here,” he said. “We have to do these things whether I have five customers or whether we have 50 customers.”

Chef Mike Ransom, owner of Ima, has been struggling to find his footing, like all restaurant owners in the pandemic. Early on in the dine-in closure period, Ima laid off its entire staff, with the exception of managers, after business declined by roughly 90 percent. Ransom did not want to completely shut down, for the same reasons that Anani pointed to: It costs nearly as much to reopen a temporarily closed restaurant as to open a new one from scratch. However, the lack of staff made it difficult to continue operating all three restaurants, so Ransom elected to temporarily close Corktown and consolidate his workforce. Ima’s management team then had to navigate getting online ordering and delivery set up, options that the business had not engaged in prior to the pandemic.

While Ima was the recipient of a second-round Paycheck Protection Program loan (the only self-identified Black-owned restaurant in the state to receive one), Ransom has mostly avoided spending the money due to the confusing rollout and terms for paying it back. He chose to continue making his rent payments, rather than deferring them until a later date as some landlords had offered. A member of development group Midtown Detroit Inc. generously stepped in to cover the costs of one month’s rent for every tenant in the building Ima’s Cass Corridor restaurant occupies. Ransom said that assistance came at just the right time, and helped the restaurant stay open during the height of the health crisis.

Now that restaurants are starting to reopen, Ransom is cautiously ramping up service again. With the limited space in the original Corktown location’s dining room, management opted to reserve the indoor space for carryout and only offer seated service on the patio. Ransom worked with his landlord to lease additional space on Ima’s corner of Michigan Avenue and expand the outdoor seating. “Ramping up our patios was a cost I didn’t expect to have,” he said. “We were able to sit five picnic tables out there that are still six feet apart. That has been that a big help in push to get people to feel comfortable about sitting outside or sitting at a restaurant and eating again,” he said, adding that many customers right now feel more comfortable in an open-air dining situation than an enclosed space. The Madison Heights restaurant already had a patio and is open for outdoor dining only as well. Cass Corridor was the first location to welcome customers back inside the dining room this week, thanks to its larger space.

Ransom is attempting to hire back staff in proportion to the volume of business the restaurants are doing. When Eater spoke with him in June, the restaurant group was still at between 40 and 50 percent of its normal, pre-coronavirus staff. Ransom says that as of July, Ima is operating at between 60 and 65 percent of normal staff levels and 40 to 45 percent of its normal restaurant volume. Ransom said he and his managers tried to avoid making workers feel pressured to come back by notifying more people than the restaurant needed, so that those who didn’t feel comfortable coming back to work could remain at home. “We wanted to stress the fact that if they weren’t comfortable, we didn’t want them to feel pressured to come back, because then that just adds to the stress level of everybody else,” he said.

Ransom is cautiously optimistic that the restaurant group has made it through the initial economic downturn, but he still worries about the possibility of another partial shutdown. “My biggest fear is, what if there’s another outbreak where they want people to taper off again?” he said. “I’m not going to be able to weather that storm again, because we went from being a healthy business to now being a business that’s just trying to trying to meet our base costs.”

Nik Cole of the Kitchen, by Cooking with Que in New Center, has been helping run the restaurant alongside owner Quiana Broden throughout the pandemic. In June, the pair were working to get the business prepped for limited service. “It’s not like we have to completely replace our produce or our groceries, but obviously you have to buy more [in preparation for more traffic],” Cole said. “Just imagine if someone had been closed this whole time, and they have to actually buy all new stuff.” The restaurant also had to balance the cost of PPE as well as hiring and training new employees for the reopening. Items like face masks are costing the restaurant around $600 per case, with 12 boxes per case. The restaurant also invested in contactless thermometers to take employee and customer temperatures, each costing around $150. “We’ve gone through so many more gloves over the pandemic — like so many more gloves — and getting gloves and all that kind of stuff at first was kind of hard. Even now, it’s kind of hard,” Cole said.

Broden says the restaurant spent roughly $1,500 on an initial “top-to-bottom” deep clean and sanitizing of the restaurant ahead of the Kitchen’s patio opening. “And then you also have to keep it up,” Broden said, noting that the restaurant now brings in a company to deep-clean and sanitize every other Monday. “That biweekly fee could be — depending on the size of your location — that could be 300 to 500 bucks,” she said. “Hand sanitizer that might have cost you a buck is now $4 or $5.”

Broden estimates that all the new costs of the pandemic have increased the Kitchen’s operating costs by around 35 percent — a huge amount for an industry known for its slim margins. However, Broden sees the importance of investing in those small measures to create safer service. “I miss serving people on plates,” he said, “but now it’s easier to serve on disposable, because it’s less contact. I always have to look at protecting my team.”

The increased costs do pose challenges, though. Businesses like Broden’s are now operating at 50 percent capacity or less in some cases, meaning fewer opportunities to generate profit. In this respect, the Kitchen has been fortunate. Broden pivoted to offer customers weekly meal prep in November — something she had always resisted. Customers can orders batches of pre-portioned meals for breakfast, lunch, and dinner. When the pandemic hit, the Kitchen was able to place more emphasis on that option for customers as an alternative to cooking and going to the grocery store. Broden estimates that the restaurant has 111 subscribers for its meal-prep service, with options for contactless delivery. The restaurant also bolstered its business by working with local feed-the-frontlines programs to provide health meals to first responders and health care workers.

Now, the Kitchen is looking for other ways to help support its employees’ health and ensure their long-term wellbeing during the crisis. Broden told Eater that since starting the business, she’s been working toward the goal of providing employees with a 401k and health benefits. “Working in the restaurant industry doesn’t have to be crappy. You don’t always have to be sad and depressed,” Broden said. “We all work a lot of hours; when you are working, if you’re doing something that you love, it’s not work.” In June, the company launched a Patronicity crowdfunding campaign with Lake Trust Credit Union to help fund that goal. The project raised $1,170 toward its goal.

While financially burdensome for a new business, Broden sees the additional costs from the pandemic as a worthwhile and “necessary” measure to keep people safe. “Even though it may cost more, I always tell people, you can’t put a price tag on your life.”

Cole also hopes that customers patronize restaurants with more understanding for the precarious situation many food industry workers are in, noting that many of them do not have health insurance or paid time off if they’re sick. “I hope patrons really understand how much work we’ve had to do to get open,” she said. “So that if you are uncomfortable in any kind of way eating out, [or] you’re grumpy, you should probably stay at home. For sure if you’re sick,” she added. “Just remember that you’re passing those germs off to us. If you don’t feel good, please stay at home.”

Eater is tracking the impact of the novel coronavirus on the local food industry. Have a story to share? Reach out at detroit@eater.com.

Detroit Restaurants Take Cautious Steps Toward Dine-In Service [ED]
Rising Food Costs and Labor Concerns Hamper the Reopening of Ann Arbor Restaurants [ED]
Northern Michigan’s Chaotic Restaurant Reopening Offers Lessons for the Rest of the State [ED]
How Coronavirus Is Impacting the Detroit Food and Beverage Industry [ED]

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