One man's creative way to help local restaurants and charities
Of the many businesses suffering because of Wuhan virus shutdowns, restaurants consistently appear at the top of most lists. People are being urged to help them out, and one Virginia man has come up with a creative solution.
Restaurants are a huge part of the American economy. The National Restaurant Association has some useful statistics about their role in keeping America working:
- $899 billion: Restaurant industry's projected sales in 2020
- 1 million+: Restaurant locations in the United States
- 15.6 million: Restaurant industry employees
- 1.6 million: New restaurant jobs created by 2030
- 9 in 10 restaurant managers started in entry-level positions
- 8 in 10 restaurant owners started their industry careers in entry-level positions
- 9 in 10 restaurants have fewer than 50 employees
- 7 in 10 restaurants are single-unit operations
- Restaurants employ more minority managers than any other industry
- 63% of consumers would rather spend on an experience than purchase an item
- The number of middle-class jobs ($45K-$75K) in the restaurant industry grew 84% between 2010 and 2018, more than 3 times faster than in the overall economy.
What those numbers don't include is the fact that restaurants, other than the big chains or those offering celebrity chefs, have one of the smallest net profit margins of any business, averaging 2–6%. Restaurants are now trying to stay afloat by increasing their takeout game. The problem for restaurants is that if they try to expand their at-home customer base by using Doordash or other third-party delivery services, the restaurants pay heavily for that convenience:
Third-party delivery platforms typically take a large commission fee from restaurants. Doordash just slashed its delivery fees in half, but those still amount to about 15% of each order. Other delivery platforms take as much as 30%.
And when you order through third-party platforms, the restaurant can also lose out on tips. Altogether, losses may be as high as 45%, according to Jeremy George, who co-owns Smokin J's in Poway, California with his brother Josh.
Restaurants are hoping to benefit from the $1,200 stimulus checks that recently went out. Still, that won't help restaurants in lockdown regions.
Dan Best, a Virginia resident, has come up with a creative idea to help both restaurants and charities. (Full disclosure: Best is a good friend of mine.)
Dan Best, who retired to Winchester in October, recently bought and delivered 100 sandwiches to the Winchester Rescue Mission on Cameron Street. His hope is that others will do the same.
"I realize right now there's a huge push to sell food through the retail industry since people aren't going out to eat anymore," said Best, who had a career in the food industry before retiring. "But restaurants are sitting on a lot of inventory and they need turnover. They're trying to adapt and get more into takeout. So, I thought it was a win-win to help those in need in the Winchester area."
Best was put in contact with the Winchester Rescue Mission to find out how many meals the mission would be serving for one sitting and then worked out a deal with Roma Casual Italian and Greek Dining in Stephens City to purchase meals.
He then followed all protocols the Rescue Mission had set forth and provided the meals for them to hand out.
The large donation from Best, Thomas said, allowed staff members who have been working "60 to 70 hours a week" go home early the night of the donation.
"If groups of people can band together and fund just buying one meal for any of these missions to help both the restaurants and the folks who utilize the missions, it's a win-win."
Dan is on to something here. Government is always going to be a blunt instrument that is over- or under-inclusive and very slow.
The Shake Shack kerfuffle reveals government's limits. The restaurant chain got $10 million from the Paycheck Protection Program. It returned the money following an outcry, but don't blame it for being greedy. Its management explained its logical decision-making:
[I]n a statement, Danny Meyer, Shake Shack founder and CEO of Union Square Hospitality Group, and Shake Shack CEO Randy Garutti said they applied for a loan because they were open to any individual restaurant with no more than 500 employees.
"The PPP came with no user manual and it was extremely confusing," Meyer and Garutti said. Because Shake Shack and Union Square Hospitality Group had already furloughed and laid off workers, they thought "the best chance of keeping our teams working, off the unemployment line, and hiring back our furloughed and laid off employees would be to apply now and hope things would be clarified in time."
Meyer and Garutti said they will "immediately return the entire $10 million," now that they are aware "the first phase of the PPP was underfunded and many who need it most haven't gotten any assistance."
The glaring problem isn't that Shake Shack mistakenly applied for the money. It's that some government bureaucrat approved its request. Governments have one-size-fits-all solutions for an anything-but-one-size nation. As Dan Best realized, we know our communities better than any government could, and we can provide the most useful, appropriate help.