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Q&A: Can Restaurants Overcome Coronavirus?

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Author(s)

Greg Glasgow

Sr. Writer

Analysis  •
Restaurants

The restaurant industry has been one of the hardest hit by the coronavirus pandemic. With public gatherings prohibited and concerns about social distancing rising, eateries in Colorado have been ordered to close their dining rooms until the crisis passes. Some are offering delivery and curbside pickup in an effort to keep money coming in.

David Corsun, director of the University of Denver’s Fritz Knoebel School of Hospitality Management in the Daniels College of Business, got on the phone to share his thoughts on the way coronavirus is impacting the restaurant business.

What is your initial reaction to the effect that coronavirus is having on the restaurant industry?

It’s completely insane. There is no basis for understanding this. This is worse than Black Friday; this is worse than 9/11. It’s unprecedented to have entire cities and states shut restaurants. It’s apocalyptic.

Many restaurants are carrying on with delivery and curbside service. What impact will that have on their ability to stay in business?

David Corsun
David Corsun

If you can do some kind of dollar volume — are you still going to be losing money? Absolutely. But your business interruption insurance probably isn’t going to kick in until the government says you can’t do anything. So you have to do what you can do. If you have a senior leadership team that you want to retain, and you want to be as loyal to them as you can, and provide them with some kind of work that brings in some revenue, curbside and delivery [are] all you’ve got. You also have to think about what brands are going to be doing a lot of curbside. Think about Chinese restaurants, where 50% or more of the business is to go. They’re going to stay in business.

Are people going to be any less likely to order curbside due to financial or health concerns?

Honestly, I think people are going to get tired of their own cooking. And they’re going to want a break. The experience is going to be different if you’re sitting home and eating it, but you’re not going to make that food yourself. And there are things that people want that that’s the only way they’re going to get it. We’re all craving whatever shreds of normalcy we can find.

On March 19, Gov. Jared Polis began allowing restaurants in Colorado to deliver alcohol and make drinks available for curbside pickup. How significant is that?

It was positioned as an effort to enable another revenue source for the restaurants that are only able to do delivery and pickup now, which longer-term the governor is hoping will preserve their ability to remain in business. What I was struck with immediately was, OK, so people who are buying mixed drinks don’t have access to a liquor store or don’t know how to mix a drink? I don’t get that, but I understand. It might be an impulse buy. It might be somebody who says, “I’m ordering in, and I’m getting Italian, and I really feel like having an Aperol spritz, but I don’t have Aperol. And I’m not going to open a bottle of prosecco just for a couple of drinks.” It might be that those are the buys that people would make. They’re going to buy something that they either don’t have or don’t have access to, or don’t want to buy an entire bottle of.

What would you recommend restaurants do right now?

Clearly, you do what you can. The state restaurant associations and the National Restaurant Association are doing a ton of advocacy work on Capitol Hill and in state legislatures. There needs to be some action that preserves this industry, because this industry will not survive without some really significant help.

What will that look like?

That’s a good question. It could be deferral of taxes; it could be working with lenders to forgive mortgage payments. I can’t imagine the government is going to pay restaurants’ rent, but who knows? It’s an unprecedented situation and requires an unprecedented response.

How will the restaurant industry come back from this? Can it? 

The rebound could be quick, but it’s not going to feel that way. It could be a V. But it depends on when we get to the point when we’ve hit bottom. And you listen to the CDC, you listen to Anthony Fauci [the country’s top infectious disease expert], we are not there yet. We are just beginning to see the economic and human impact — forget the health impact. After three months and change, China is just starting to open factories. I think we need to be more realistic and think about it in those terms.

Restaurants are not going to open back up and the floodgates are going to open. Restaurants that are closed right now, when they reopen — and some may not reopen — they’re not going to be what they were. The deepest pockets will win. Nobody’s lucky in this situation. This will have nothing to do with luck. It’s going to have to do with deep pockets.