Charlotte restaurant owners say post-COVID recovery will take years

Why it matters: The restaurant industry runs on thin margins. Even small disruptions can cause big issues. The pandemic was a major disruption.

• Now that restrictions are lifting, getting customers to restaurants and bars isn’t the problem, but supply chain and staffing issues are presenting new hurdles.
• We’re already seeing longer-term changes through employee pay increases to attract workers, and hikes in menu prices to compensate for the increase in pay.

What’s happening: We surveyed a couple of dozen Charlotte restaurant owners about how they’re recovering financially, handling staffing shortages, and planning for the future.

While all restaurants had to overcome certain COVID challenges, some were naturally better equipped for the pandemic.

• Higher-end restaurants, where diners go for the experience and the food, have been harder to maintain because owners couldn’t get customers in seats for most of 2020. Restaurants that served easily transportable food via takeout were able to pivot faster.
• Location played a big role too. Restaurants in Uptown are still struggling as many corporate offices are remote, but business in South End is recovering faster.

Restaurants in smaller spaces with close seating didn’t work well for COVID safety. Plus, operating an already small restaurant at 50% capacity isn’t profitable in most cases. Venues with spaced-out seating and/or outdoor seating were naturally able to make guests feel safer.

• Jamie Brown, who owns multiple Charlotte restaurants including Supperland, faced this issue at Crepe Cellar. “It’s cozy, and ‘cozy’ has been tough in a pandemic,” Brown said.

The nationwide staffing shortage has impacted Charlotte. Some restaurants have decreased their hours or put a cap on reservations because they don’t have enough staff. Many businesses have increased their pay and or benefits to attract more employees. [Go deeper]

Joseph Huang of Bang Bang Burgers says he’s never had such a hard time finding employees, especially for kitchen jobs.

• “Restaurants have always been a challenge to run, but not being able to find skilled people to work makes everything that much harder,” Huang said. “How do you run a successful business without good people?”

Food price increases and shipping delays are impacting the restaurant industry as well, and in turn the recovery process is delayed as owners spend more money on ingredients and equipment.

Rob Duckworth of Link & Pin and Duckworth’s estimates it could take six to 12 months for the supply chain to catch up.

• “Financial recovery will depend on how and when our food costs will stabilize,” he tells me. “It really would be impossible to pass along all of the cost increases in terms of menu prices to our guests because I think it would make some of the items out of reach.”

Jay and Miketa Davis of Lulu’s Maryland Style Chicken and Seafood specifically cited issues with a crab meat shortage—a significant hurdle considering their crab cake is the most popular in Charlotte.

• Despite the COVID obstacles, the Davises were in the minority of restaurants that made a significant 2020 profit. The couple says they grossed over $2 million last year, and were able to expand.

The recovery process will vary from business to business, but for most it’ll be slow. Restaurant owners that we spoke to reported peak loss of about 60% of what they made in 2019.

Bruce Moffett reported that Good Food on Montford was down $900,000 between March 2020 and March 2021 compared to the previous year, and Stagioni was down $800,000.

• Moffett says the PPP loans were a lifeline, but recovery will take time. “I think there was financial and emotional trauma for the entire industry.”

Lewis Donald of Sweet Lew’s BBQ and Dish estimates that it could take as long as 2023 to fully recover.

• “Unfortunately, increases in revenue don’t necessarily outweigh the other current challenges,” he said.

The upside: Paul Manley of High Tide Hospitality (Ace No. 3, Sea Level, the Waterman) believes that once the recovery process is complete, the industry will be better for it.

• “Our industry will come out this pandemic stronger, and more equitable than before,” he said. “This crisis has exposed the sins and weaknesses of our industry. Those who don’t adapt will continue to suffer.”

The bottom line: Restaurants still need our support, and more than ever customer-facing staff need our patience. Be nice, and tip well.