Commentary: For many restaurants, this may be their last call

By Joe Nocera / Bloomberg Opinion

Ken Aretsky runs a classic New York joint, a restaurant called Aretsky’s Patroon on East 46th Street in Manhattan. It serves modern American food, with a clientele that veers toward power lunchers in the afternoon and devoted regulars in the evening.

Aretsky, who is approaching 79 — and a man, in the words of The New York Times, for whom “the word ‘dapper’ is hardly dapper enough” — has been a restaurateur most of his adult life. He opened Patroon 24 years ago, after a stint as the head of the 21 Club. He’s been through difficult times before — 9/11; the 2008 financial crisis; plus that unforgettable time the feds arrested him for buying Cuban cigars for his cigar bar — but he had never been forced to close his restaurant. Until Monday.

“Three weeks ago, I was at a dinner honoring Richard Grausman, the founder of C-CAP,” Aretsky told me on Tuesday, referring to the Careers through Culinary Arts Program. “There had to be 1,000 people in attendance,” including Danny Meyer, the chief executive officer of the Union Square Hospitality Group, and most of the rest of New York’s restaurant elite.

“Everyone was in a good mood. Everyone left on a high,” he said. “Fast forward three weeks — three weeks! — and the world is upside down. Nobody could have foreseen any of this. I certainly didn’t.” He sounded both resigned and stunned.

Aretsky was speaking to me from his Manhattan apartment, self-isolating like everyone else with Patroon shut down. He had let all of his employees go. He was hopeful that he would be able to reopen, but he had no idea when; or even if he would be able when the time comes.

I’ve known Aretsky for years, and I wanted to hear what a restaurateur like him was going through with the coronavirus crisis taking such a toll on his business. Like many small-business operators, he had hoped to avoid a complete shutdown, knowing how devastating it would be for both the restaurant and his employees. But beginning early last week, it started to feel inevitable.

“The first thing that happened is that our private party business stopped. I don’t mean 60 percent or 75 percent of it. Every private party canceled,” he said. “That is a big part of our business.” His wife, Diana, chimed in: “For three consecutive weeks, our business fell in half.”

For most New York restaurants, the first quarter is usually the weakest as diners recover from the holidays. Thus for restaurants, the timing of the crisis could not have been worse. Aretsky thought the odds of weathering the crisis would be higher if it had taken place in, say, early January, when restaurants still had money in their coffers from all the Thanksgiving meals and Christmas parties.

On March 13, New York Gov. Andrew Cuomo ordered restaurants to cut their capacity in half and put more space between tables. The next day, two of the city’s most prominent restaurateurs, Meyer and Daniel Boulud, preemptively shut down all their New York restaurants, 27 in all. On Saturday, the Gotham Bar & Grill announced it was closing permanently after 36 years in business.

All weekend, Aretsky and his team debated whether to close. He spoke to other restaurant owners who were having the same agonizing discussions with their workers. Many of his employees thought they had no choice but to close, but Aretsky resisted. “We are social animals,” he likes to say; that’s why people need restaurants.

He recalled the 9/11 attack in 2001. He owned three restaurants at the time, one of which was also on New York’s East Side. He, his wife, and many of his employees gathered there. They concluded that the best thing they could do for the neighborhood was stay open. To feed as many people as possible, Aretsky decided they would only cook one thing: hamburgers. “We were mobbed that night,” he said. “People wanted to be together.”

But this is obviously a different kind of crisis, and finding comfort in restaurants was not going to be a part of it. On Sunday night, Aretsky conceded that closing was the right call. The next day, Mayor Bill de Blasio ordered all restaurants and bars closed. “He did the right thing,” Aretsky said.

Then came the hardest part: laying off his staff, many of whom had been with him for nearly 20 years. “It was heartbreaking,” Aretsky told me. “We were all crying.” At any well-run restaurant, the staff becomes a kind of family; at Patroon, some of the young employees told Aretsky that because of his age, he should go home, and they would take care of things. The last week the restaurant was open, business was so slow that the only way Aretsky could make payroll was to use some of his own money.

Unlike a big company like, say, Microsoft, which can afford to continue paying all the contract workers who clean the offices and work in the cafeterias, even successful restaurants don’t have the money to pay workers when they are closed. Indeed, on Wednesday, Meyer’s group laid off 2,000 employees, about 80 percent of its workforce.

As Aretsky thinks about the short-term future, he’s most worried about how his employees are going to get by. “The government has to get money into the hands of employees,” he said. “And they have to have a forbearance plan” so they can afford to pay their rent.

But it isn’t just his employees; it is all 154,000 people who work in the city’s restaurants, bars and food trucks. According to the Times, they collectively earn $4.7 billion a year in wages. And what about the restaurant suppliers? And the construction workers who get work every time someone wants to open a new restaurant? And everyone else who is part of the restaurant ecosystem?

My Bloomberg Opinion colleague Conor Sen made the point in a recent column that “big business has all the advantages in a pandemic,” as the headline put it. He was talking mainly about how big companies could use the crisis to enhance their labor force, which small businesses lacked the resources to do.

But it’s also true about survival itself. The airlines are in a world of hurt, but none of the big U.S. carriers are in danger of going out of business. That is exactly the threat facing millions of small businesses, however. And restaurants, a precarious business in the best of times, are the most endangered of all. It is critically important that laid-off employees get access to cash, and it is good to see that the government has finally awakened to that necessity.

But there also needs to be a plan to help small businesses like Patroon get through this crisis. “The restaurant community is a great community,” Aretsky told me as our conversation was ending. “I’m proud to be a part of it.” He can only hope that when this finally ends, that community still exists.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast “The Shrink Next Door.”