As news first broke of the coronavirus, restaurants were focused on communicating with customers about their sanitation policies and pivoting to takeout and delivery. But now, as the situation has grown into a global pandemic and more restaurants are forced to close dining rooms putting thousands out of work, restaurant CEOs are stepping up to help their employees.
The most common response to the sudden foodservice market labor crisis has been to offer emergency paid sick leave if employees are quarantined and/or sick. For example, after being criticized for keeping their dining rooms open with few options for sick employees, Darden Restaurants instituted emergency paid sick leave for the first time for its 180,000 hourly workers. Last week, McDonald’s announced that they would also be instituting emergency paid sick leave for employees at company-owned stores and Noodles & Company followed suit.
But starting the week of March 16, city and statewide lockdowns are on the rise. As restaurants are being forced to shut their doors completely to abide by local ordinances, suddenly the 14-day emergency paid sick leave policies for sick and/or quarantined employees are either irrelevant or not enough. Many restaurant owners are stepping in with creative emergency measures to take care of their employees.
For example, &pizza CEO Michael Lastoria is offering free pizza for all employees and their families, working with Lyft to make discounted rides available for employees traveling to and from work, and increasing the minimum wage by $1 for all store-level employees.
Other restaurant CEOS are implementing similar measures to protect their employees during a time of slowed business and out-of-work employees. Nick Kokonas, cofounder of Alinea restaurant group in Chicago and founder of the Tock restaurant reservation service tweeted that after they closed their restaurants temporarily, every employee received a $1,000 stipend ($500 for part-time employees) for the workweek of March 15, and that their benefits and healthcare will continue to be paid for “as long as possible” during the duration of this crisis.
Kokonas also committed to meeting “basic food and shelter needs” of any employee that finds themselves in a situation where they cannot make ends meet during the time that Alinea group restaurants remain closed.
“We are well positioned to [weather this financial storm] and started making contingency plans weeks ago,” Kokonas said. “Also, we have a financial position through our use of Tock that allows us to have sold reservations well into the future and known inventory. We cannot use that money for fixed expenses, obviously, in case we need to refund it later, but we do know that we have customers waiting to come in and a balance sheet that is good.”
Kokonas did stipulate that although “for now” their restaurants remain in a solid position to help keep their business afloat and their employees happy, if the COVID-19 situation continues for many months, “there aren’t many businesses that could sustain that.”
Wolfgang Puck is taking these measures one step further by providing weekly paychecks for all employees (whether hourly or salaried) as his 30+ restaurants around the world close or reduce hours. Although these measures will be re-evaluated every week to see if the paychecks are financially feasible, Puck is also offering free to-go meals for employees and their families, as well as free kitchen supplies:
"We're going to offer free to-go meals for employees, as well as extra supplies and produce—if they can't go to the supermarket, they can come to Spago," Puck told Food & Wine.
Other restaurants are quickly adjusting to changing circumstances. For example, just one day after Danny Meyer – CEO of Union Square Hospitality Group — tweeted that he would be foregoing his salary and creating a relief fund for affected employees, he announced that the restaurant group made the difficult decision to lay off 80% of its staff on Wednesday. He and other executives are still taking pay cuts, and the restaurant group will continue to pay for medical insurance of team members through April.
“Never could I have fathomed a time where the only path forward would be to lay people off so they can receive unemployment, while this company fights to see another day when we can return to our full staffing levels,” Meyer said.
“We have created a relief fund to help the employees affected by the layoffs today. To seed the effort, I’m immediately contributing my entire compensation, and our executive team is taking a meaningful pay cut. We will use these funds and other donations we collect to help those on our team that will face significant financial hardship in the weeks to come.
Through March 24, 100% of gift card purchases will go toward the relief fund, he said. The goal is to “hire back as many people as possible” when the situation returns to normal. Meyer joins other restaurants in offering similar gift card relief funds, like Chicago-based Japanese steakhouse, Roka Akor restaurants, which are donating $20 for every $100 spent on restaurant gift cards.
Meyer is not the only CEO to personally sacrifice for the greater good of his staff. Seattle, Wash.-based, six-unit Tutta Bella Neapolitan Pizzeria is also offering free meals for all employees during their shifts, as well as a 50% discount for employees and their families when they come into the restaurant outside of their shifts. Tutta Bella owner Joe Fugere is giving up his entire salary, and much of their executive team is giving up part of their paychecks as well to help their team members:
“We have 200 employees, and we want to keep them gainfully employed. I'm incredibly proud of how our team is tackling this crisis and how they’re thinking of the welfare of each other,” Fugere said in a statement.
But how are restaurant executives paying for these added expenses while their businesses are operating under severely reduced hours or have closed completely. Brown Bag Seafood, 13-unit, Chicago-based fast-casual seafood restaurant chain, is continuing to pay their employees 70% of their paycheck for “lost” work hours. Chief strategy officer Zach Flanzman said that it was not an easy decision:
“As we looked at the finances and looked at how much this will cost us without doing anything for our team its already s harsh picture, but as we looked at what it would incrementally cost us to [help out], it’s thousands of dollars,” Flanzman said. “It’s worth every penny because these people are our frontline and our family.”
Although at this moment, few national restaurant chains have jumped on the bandwagon to step up their employee support initiatives, the industry is evolving every day as the coronavirus pandemic continues to shake the economy and the foundations of the foodservice industry.
Contact Joanna Fantozzi at [email protected]
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