PRLA Restaurant & Lodging Matters Summer 2020

Summer 2020  •  PENNSYLVANIA RESTAURANT & LODGING matters  • 9 WHEN RESTAURANT DINING WAS SUSPENDED in March to slow the spread of coronavirus, operators were plunged into the unknown. The situation was unprecedented, so the answers to pressing questions were at best a stab in the dark. Were they looking at a crisis of two weeks, or two months? Could they stay afloat? How could they lay out money for rent and other expenses with so little revenue coming in? What forms of assistance would be available? What could they do to protect themselves from the virus? Some answers would emerge in time, but operators still haven’t found a reliable map to what they can expect, near term and later in the year. Here are some of the more pressing questions that remain, and what’s been revealed in recent days. 1 Will my business- interruption insurance come through? Operators have asked their insurance carriers to make good on business-interruption policies, noting that the shutdown of dining rooms was beyond their control and hence a catastrophe that should be covered under their continuity protections. Insurers have balked, either citing specific exemptions for pandemics or arguing that the places could continue operating as a takeout and delivery business. The refusal triggered a number of lawsuits as restaurateurs tried to recoup their lost sales. Now a decision in one of those cases has been handed down, and it’s not good for operators. A judge in Michigan ruled that a two- concept operator called Gavrilides Management was not entitled to the $650,000 it claims to have lost from the pandemic to date because its two restaurants did not suffer the sort of physical damage that interruption protections are intended to address. Indeed, Judge Joyce Draganchuk called Gavrilides’ argument “nonsense,” according to the legal newsletter Law360 . The newsletter says Draganchuk’s decision in favor of Gavrilides’ insurer was the first case nationwide to be decided on its merits. Other lawsuits, many from big-name restaurateurs such as Thomas Keller, are still pending. 2 Can I hold onto my off-premise business now that dining rooms are reopening? Chain operators say they’ve been surprised by how lightly their takeout and delivery business has been affected by the restart of on-premise service. Two or three points of sales may have shifted, but they report that most of the customers coming to eat at an indoor or patio table are patrons they haven’t seen since the start of the pandemic, and that traffic is overwhelmingly incremental to what was generated while dining rooms were closed. Curbside service has been particularly sticky in terms of holding onto customers, many have reported.  As the crisis enters its fifth month, operators are still looking for insight on these matters keeping them up at night. Six Questions THE PANDEMIC HAS YET TO ANSWER FOR RESTAURANTS By Peter Romeo, Editor-in-Chief, Restaurant Business A judge in Michigan ruled that a two-concept operator called Gavrilides Management was not entitled to the $650,000 it claims to have lost from the pandemic to date because its two restaurants did not suffer the sort of physical damage that interruption protections are intended to address.