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Facing serious COVID-19 costs, end of federal loans, SC restaurants still struggling

  • Updated
Testing at Halls

Workers from a private lab test employees of Hall Management Group for COVID-19. Provided

The owner of Village Idiot Pizza in Columbia spent $800 on a sanitizing fog machine that deep cleans every surface in his restaurants.

Home Team BBQ in Columbia and the Charleston area is adding a 4 percent surcharge to its orders to pay for gloves, disposable utensils and other supplies that have proven necessary during a pandemic.

And the owners of Halls Chophouse, which operates locations in Columbia, Charleston and Greenville, estimate they have spent nearly half a million dollars buying masks and bottles of hand sanitizer, testing employees for COVID-19 and covering payroll for employees at their nine restaurants over the past few months.

Such unforeseen costs and headaches are becoming more routine for restaurants that are open for dine-in or takeout service during the COVID-19 pandemic. And they’re taking a toll.

Gov. Henry McMaster fully lifted restrictions on restaurants — and issued guidelines for limited capacity — in May, but restaurants across the state are facing tens of thousands of dollars or more in losses even after getting forgivable federal loans to meet payroll. Those costs have been exacerbated as many restaurants have temporarily closed again when employees test positive for the virus.

At the same time, restaurants are starting to exhaust their federal payroll loans. Some warn that their businesses, which typically operate on thin margins even when times are good, will suffer without further government assistance.

Some are suggesting that small businesses — including restaurants — should be eligible for some of the $1.9 billion in federal COVID-19 aid that lawmakers are doling out this fall.

But lawmakers also are grappling with other pressing needs, including replenishing the state’s unemployment fund and reimbursing government agencies and hospitals for their COVID-19 related costs.

None of the $1.2 billion they authorized this week was earmarked specifically for restaurants, but the industry will likely push for more government help before lawmakers reconvene later this year to dole out the remaining $668 million in federal aid.

No matter what funds are allocated, the elevated cost for restaurants to do business will persist.

The bottles of hand sanitizer that Hall Management Group buys in bulk for its nine restaurants cost $1.50 a pop, and guests at Halls Chophouse often swipe them on the way out. Masks for the company’s more than 900 employees cost about $8 each. The company splurged on comfortable face coverings that employees wouldn’t mind wearing all day.

The company had more than 400 employees tested for COVID-19 at once last week, at $70 each, and is testing another 470 this week to make sure its employees and customers aren’t at risk.

Those costs can snowball quickly, even before factoring in payroll and cleaning costs.

“It’s an expense most of our restaurant friends can’t afford,” said Tommy Hall, owner and proprietor of the Charleston-based steakhouse chain.

Other restaurants have also found it costly to adapt. Brian Glynn, the owner of Village Idiot Pizza, estimated he has spent anywhere from $10,000 to $20,000 responding to the pandemic, even after getting a federal loan and a grant from the city of Columbia.

He guessed he buys about 10 times more hand sanitizer and gloves than he did before the pandemic. The fog sanitizer machine he purchased to deep clean his facilities works like a charm, but the liquid the machine uses costs $100 a gallon, and each gallon lasts about two weeks.

“It’s not devastating, but it’s a cost that we’ve never had to incur before,” Glynn said.

Indeed, Glynn considers himself lucky. To-go orders made up about 35 percent of his business even before the pandemic, so Village was already positioned to quickly adapt to carryout only, which now accounts for the bulk of its business. Though there is limited dine-in seating at the Olympia location, the Five Points restaurant, the flagship of the three Columbia Villages, remains closed.

Bobby Williams, the CEO of the Midlands-based Southern diner chain Lizard’s Thicket and the chair of the S.C. Restaurant and Lodging Association, said he has paid almost $100,000 for sanitization supplies over the past three months. Some customers have walked into Lizard’s Thicket locations and pumped the store’s hand sanitizer into their own personal containers, Williams said.

Staffing costs are up, too, he said, as restaurants must pay employees to monitor guests and sanitize door knobs, bathrooms and tables.

The 15-location brand also put the brakes on a new location due to the virus’s strain on business, Williams said.

South Carolina allows dine-in service with guidelines for 50 percent capacity, but even well-performing restaurants are barely breaking even with just half of their dining rooms full, the CEO said.

“How much longer can we go?” Williams said. “How much can they last just breaking even? This PPP money will be running out, then you gotta pay ’em out of their own pocket.”

Some restaurateurs say the limited reopening has come with other headaches, including the hassle of shuttering and opening again when workers test positive for COVID-19 and having to police customer behavior.

Since McMaster allowed restaurants to reopen their dining rooms, dozens have closed temporarily after employees have contracted the virus.

Restaurants are not legally required to notify customers when an employee tests positive. But many have posted updates on social media announcing why they are closing and when they might try to reopen.

Slightly North of Broad, that the Hall Management Group operates in downtown Charleston, has closed twice this month after employees tested positive for the virus. Halls Chophouse in Charleston closed June 21 to clean the facility as employees were tested, owner Tommy Hall said.

More than 12 of the company's workers have tested positive for the virus so far, said Jim Wahlstrom, the company's head of human resources and operations. 

“The starting and stopping, that’s the hard part,” Hall said.

Some restaurant owners say it has been awkward trying to enforce social distancing guidelines. Usually their mission is to ensure customers are having a great experience. Now they have to break up large groups and remind people to wear masks in close quarters.

“I’d almost rather we don’t do it,” Village Idiot’s Glynn said of dine-in service. “You’re almost playing referee the whole time. You have 85 percent of the people (respecting social distancing guidelines). … But the 10 to 15 percent that aren’t, it becomes a thing.”

Feeling the weight of all this, some owners are calling for more government help, especially as state lawmakers decide how to divvy up $1.9 billion in federal aid.

Restaurants that are close to spending the last of their federal payroll loans are soon going to be on their own. One industry advocacy group, the Independent Restaurant Coalition, conducted a study that concluded up to 85 percent of independent restaurants and bars could close without further government help in the form of a stabilization fund.

“The rubber is going to meet the road after this (federal Payroll Protection Program) is over,” said Aaron Siegel, owner of Home Team BBQ, which in addition to multiple South Carolina locations has a restaurant in Aspen, Colo. “When you’re doing 50 to 60 to 70 percent of your sales it’s going to be tough.”

Owners worry the pandemic will continue to drive down tourism and customers’ appetite to eat out.

Eddie Wales, owner of the Columbia fine-dining staple Motor Supply Co. Bistro, said his restaurant is earning about half of what it normally would currently and has spent about $1,200 on sanitation supplies. He worries that the fall could mean restaurant closures if things don’t improve.

“Even if we go to 75 and 100 percent, losing concerts, football games (and) conventions will eventually take its toll. It’s just a matter of how long you can stretch it out,” Wales said. “That goes way past any state leadership, it goes to consumer confidence and a vaccine and a lot bigger things to happen.”

Williams said certain segments of the hospitality industry will need government assistance, including venues and caterers.

This week, Sen. Marlon Kimpson and Rep. Marvin Pendarvis, both Democratic state legislators from Charleston, suggested spending some of the federal aid money to help Black-owned businesses, including restaurants, that COVID-19 has left hobbled.

“The federal programs so far have not been targeted at helping Black, small businesses. What I was doing is simply carving out a portion of that money targeted to that group,” Kimpson said. “I’m cautiously optimistic that the people in control of the budget strings for the state heard my impassioned plea and look forward to working with me on crafting a solution to this problem.”

In West Columbia, True BBQ was already using takeout as its main outlet for sales and has fared relatively well throughout the pandemic, said co-owner Milton Zanders.

He thinks more can be done to assist small restaurants that may be struggling more than other larger ones. Often, they may not have the amount of dining space to compensate for restrictions, he said.

Any amount of funding could help, or, Zanders proposes, an official check-in to see how the restaurant might be able to better meet health standards.

“For small restaurants, this is our livelihood. We’re doing whatever we can do to protect ourselves and our consumers from COVID,” Zanders said.

Reach Avery Wilks at 803-374-3115. Follow him on Twitter at @AveryGWilks.

Projects reporter

Avery G. Wilks is an investigative reporter based in Columbia. He was named the 2018 S.C. Journalist of the Year by the S.C. Press Association. He grew up in Chester, S.C., and is a 2015 graduate of the University of South Carolina’s Honors College.

David Clarey joined Free Times in November 2019 as a food and news writer. He's constantly fighting competing desires to try cooking food at home and spending his entire paycheck on Columbia restaurants.

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