COVID-19 infection rates become weekly ‘nail-biter’ for local businesses: Can they outlast pandemic? – The San Diego Union-Tribune

As the countys public health officer this week methodically reeled off the latest COVID-19 case rates, it quickly became clear that business owners greatest fears of yet another shutdown of indoor operations would not be realized.

We made it through a nail-biter here today, county Supervisor Jim Desmond said of the news that San Diego had escaped having to leave its red-tier reopening status for the states most restrictive purple tier. Its kind of a small victory.

But was it? After six months of navigating the dips and surges of the novel coronavirus and nervously monitoring Californias ever-changing rules for what is and isnt safe to reopen, local restaurants, bars and gyms are questioning how much longer if at all they and their employees can outlast the pandemic.

Since March, theyve weathered a cycle of government-mandated closings and subsequent reopenings, as the state wrestles with the challenge of containing the COVID-19 contagion without crushing local economies. The latest set of rules, guided by a Byzantine color-coded system tied to positivity rates, covers more than three dozen business sectors, with some able to widely reopen once the virus substantially recedes and still others limited to operating at no more than half their original capacity.

While businesses like hair and nail salons, retail stores and shopping centers can continue to operate indoors albeit at reduced capacities even under the states most restrictive guidelines, restaurants, wineries, bars, gyms, movie theaters, and some personal care services like tattoo parlors cannot.

And as San Diego moves into cooler weather, making street-side dining and outdoor workouts less appealing, and federal loan assistance is exhausted, the future feels more perilous for those businesses.

Lets face it, as bad as the pandemic has been on people and their health, it has been equally devastating or even more so to a lot of small businesses, said Greg Cox, who chairs the county Board of Supervisors. The one concern I have is we really have to guard against a kind of yo-yo effect where this week were in purple (tier) and then we have to close things down for three weeks and then open them back up and close them back down. That not only is not going to protect the public health but it will have an adverse impact on any ability to recover from this economic crisis.

Lesley and David Cohn, in this 2017 photo, are the founders of the Cohn Restaurant Group.

(K.C. Alfred / San Diego Union-Tribune)

The Cohn Restaurant Group, San Diegos single biggest independent restaurant operator, currently has been able to keep all but two of its 23 local dining venues open for a combination of indoor and outdoor service. That indoor service, though, is limited to just 25 percent of a dining rooms capacity.

Come October, once the company runs out of the more than $560,000 in loan money it received from the federal Paycheck Protection Program to help cover wages and rents, its very possible the company will have to close a few more eateries, founder David Cohn said. Since being allowed to partially reopen, the company has hired back about 1,200 of the 1,800 employees it initially had to lay off, said his wife and co-founder, Lesley Cohn.

As we enter the fall and winter months, our restaurants cannot survive on 25 percent (capacity) even though we in California do have the ability to serve almost year-round outside, Lesley Cohn said in an interview this week. Based on the current color-coded system, it will be difficult to reach 50 percent occupancy, and were frustrated that theres no current state plan to get beyond 50 percent. How is that sustainable?

Unfortunately as of today, everything weve built over the past 38 years is in jeopardy.

Tensions in the business community have been building in recent weeks, to the point where a week ago some owners threatened to defy state mandates, as signs initially pointed to even tighter restrictions, prompting some owners to say they would continue operating indoors if faced with a shutdown.

Patrons Barbara Lartigau (left) and Deedee Simmons (right) enjoy lunchtime at Eastbound Bar and Grill on Thursday, Sept. 24, 2020 in Lakeside.

(Eduardo Contreras / The San Diego Union-Tribune)

Ben Clevenger, who owns two East County restaurants, said he was prepared to keep his Eastbound Bar and Grill in Lakeside open for indoor service if San Diego County had moved into the purple tier that would have barred dining inside.

We believe the metrics have to be changed, said Clevenger, who is also president of the San Diego chapter of the California Restaurant Association. This back and forth, its been too much and were tired of it. We understand the severity of the virus. Were all about the sanitation but we dont think the numbers are increasing because restaurants are open to 25 percent capacity. Its stressful telling your employees, Weve got hours for you, and then saying, Sorry were getting shut down again and were going to take your hours away.

While there already have been some permanent business closures related to the pandemic, experts predict in the months ahead a tsunami of shutterings amid a virus that shows no signs of a rapid retreat.

Yelp, the crowd-sourced ratings website for restaurants and other small businesses nationwide, reports that between March 1 and Aug. 31, more than 1,900 San Diego County businesses formerly listed on the site have permanently closed, Since it began tracking temporary and permanent business closures in March, Yelp found that 61 percent of all the restaurants that closed temporarily across the country have transitioned to permanent closures. For bars and nightclubs, its 54 percent, and for fitness centers, 43 percent.

While there are no recent stats for restaurant closures alone in San Diego County, as of July 10, there were 226 eateries in San Diego County listed as permanently closed since March 1. A recent report from the National Restaurant Association offered an even more sobering statistic: Some 100,000 restaurants nationwide are already out of business due to the coronavirus. In California, the restaurant industrys trade group predicts that eventually, 30 percent of restaurants will close permanently.

As San Diegos economy continues to reel from the abrupt shutdown in March, the losses have been staggering, even as the county has seen some recent signs of improvement. As of early August, there were an estimated 250,000 San Diegans without jobs five times more than at the beginning of the year, according to the San Diego Association of Governments.

The countys gross domestic product is now forecast to decline between $10 and $15 billion, said SANDAG economist Ray Major. Thats a 4.5 percent drop, which he says effectively erases all of the gains of the last two years. The leisure and hospitality sector, which includes the $10 billion a year restaurant industry, has been especially hard hit.

This is going to fundamentally change the restaurant scene in San Diego, Major said. If you ran a deli in a downtown highrise, for example, and depended on those office workers to patronize you, thats completely dried out. The person who ran the deli in our building downtown has told me theyre not going to make it. They ran through their life savings.

Inside North Parks Tiger!Tiger! tavern in 2016.

(K.C. Alfred)

One of the more surprising casualties of COVID-19 is the North Park gastropub Tiger! Tiger! The popular beer bar and restaurant permanently closed Sept. 18. Owners of the 9-year-old restaurant bar say they couldnt see a path forward in the limited-seating, uncertain times the industry is facing.

The ownership, however, will continue to operate its Blind Lady Alehouse, as well as Panama 66 at the San Diego Museum of Art.

Co-founder Clea Hantman, who launched Tiger! Tiger! with her husband Jeff Motch and Jenniffer and Lee Chase, declined to comment for this article but they posted a message on their Facebook page.

COVID-19 did us in, they said. Running a restaurant historically has razor-thin margins. Attempting to run a restaurant in the middle of a pandemic with mounds of debt piling up is nonsensical. We tried many different paths for this business over the last six months and each one took us down a dead end. With the end of our lease approaching fast, we all really believe we had no other choice.

Led by Junior Leoso, Pacific Beach Training currently offers both group classes and private lessons at its indoor facility at the state-required rate of 10 percent capacity.

(Courtesy of Pacific Beach Training)

Fitness centers, hit with one of the most stringent caps on occupancy under the states new tiered system, face especially challenging economics, given that they can only fill their buildings up to 10 percent of their total capacity. While many, if they have the space, have expanded to outdoors, it isnt a sustainable solution, say some.

You wouldnt know it by talking to him, but Junior Leoso is in a tough spot. The 40-year-old owner of specialty fitness gym, Pacific Beach Training, took on a new, much pricier lease in March for 2,500 square feet of indoor workout space.

Shortly thereafter he was forced to close his doors and become extra resourceful. And with no adjacent usable outdoor space available to him, his creativity has continued, meaning in-person classes were replaced by online classes and later supplemented with outdoor classes at not-so-nearby parks.

Currently, the gym can serve no more than 12 people per class inside the facility. To pay the bills, Leoso has needed to lean heavily on his side business, Dedicated Dads, a hybrid fitness and mental health program for fathers that has thrived online during the pandemic.

If we dont reopen the doors, or we cant go full bore and advertise by the new year, which is only three months away, were going to be in big trouble and will have to really reassess what the plan is moving forward, Leoso said. We cant sustain it on 10 percent capacity.

Michael Hamanaka (arms out middle), owner of The Movement Warehouse in Pacific Beach, works outside with clients.

(Eduardo Contreras / The San Diego Union-Tribune)

Five blocks east, The Movement Warehouse has fared far better for one simple reason: ample outdoor space.

Weve never done better, said gym owner Michael Hamanaka, who added that memberships shot up when he reopened with outdoor classes. With access to 3,500 square feet of turf and limited competition, Hamanaka was able to sign on a record 45 new members in July.

He even raised prices knowing that his high-intensity weight-lifting gym was pretty much the only option in town. The Movement Warehouse is in a relatively cushy spot, with Hamanakas business far more immune to frequently changing government restrictions that have simultaneously crippled his friend Leosos similar-but-different fitness venture.

I think I sound OK because Ive definitely had my nights of kicking and screaming, and trying to figure this stuff out. Now its about survival, Leoso said. Its about doing everything we can and only worrying about the things we can control.

Flamin Pho & Sushi Bar

(Courtesy of Flamin Pho)

As stressed and anxiety-ridden and overworked as many restaurateurs are right now, many say they are determined to vanquish the fallout from the virus without sacrificing their businesses. Some, like Afghan immigrant Tariq Wasimi, are working long hours, filling in as servers and food runners, as a way to save money on labor.

Weve been able to break even because my business partner, Stavro Yousif, and I have put in 12-hour days for the last six months, said Wasimi, owner of Flamin Pho & Sushi Bar in downtown San Diego. Before COVID, his restaurant could seat 72. Now its been slashed to 28, all outdoors. We havent had a server, just he and I.

Here you go, Wasimi said to a customer, who was picking up an order, as he spoke with a reporter. Hi, can I help you, he asked another.

This year was on pace to be the 2-1/2-year-old restaurants best. But after taking in $650,000 in sales last year, Flamin Pho is currently at only a quarter of that revenue. Loans from family members have helped keep the business afloat, and despite the lean times, Wasimi remains determined to not let his business slip away.

Its nerve-wracking because Im just about to finally open inside dining and hire people, but I dont want to be in that stage where two weeks from now I have to let people go, he sighed. Im scared if the (coronavirus) rate goes up by a couple numbers and Im shut down again. But Ill be damned if I give up on this place. Ill do whatever it takes to survive.

Like Wasimi, longtime restaurateur Terryl Gavre has been working much longer hours, intent on keeping her venues open without incurring major losses. In a move to buy some time for the 10-year-old Bankers Hill Bar + Restaurant she owns with chef-partner Carl Schroeder, they are closing temporarily after this weekend.

While they were able to do enough business to break even, that was no longer possible when their federal loan money that amounted to less than $250,000 ran out a week ago, Gavre said. The temporary closure of Bankers Hill is possible, Gavre said, because of the willingness of their landlord to give them free rent over the next several months as they regroup and await a wider reopening of restaurants.

Its all been very stressful. You are constantly running things through your head day and night, what if this happens, OK, then Ill do this, and what if this happens. You dont get any peace, said Gavre, who also owns Cafe 222, a small breakfast and lunch spot in downtown San Diego. Every time they make a change in the rules, you have to react by either finding your staff or laying them off again. So right now, with Bankers Hill, wed rather wait and hold onto all our assets until we have a fighting chance to make a profit. I know well be itching to get back in there.

Even more daunting is the road ahead for the many bars in San Diego that have never served food and have made no arrangements to do so in order to comply with the current state guidelines that would let them open indoors at 25 percent capacity.

Jasper JJ Sciuto is the lead bartender and manager for the Lamplighter, which has remained mostly closed during the pandemic.

(Jarrod Valliere / The San Diego Union-Tribune)

At the Lamplighter in Mission Hills, the lights are off and the mood seemingly even darker at one of San Diegos most well-known dive bars.

We would be so screwed if my dad didnt have other things going on, said Jasper JJ Sciuto, who helps run the bar with his brother Joe. The family business the senior Sciuto bought the bar in 1994 has been closed since March, save for a two-week window in late June when bars that dont also serve food were allowed to open.

For now, the Lamplighter must remain closed until San Diego enters the next tier, when the county is deemed to be at a moderate risk level and daily new COVID-19 cases are between one and 3.9 cases per 100,000 residents. Although without outdoor space, Lamplighter may have to remain closed until the county hits the even more seemingly out-of-reach yellow tier that means minimal COVID spread.

As a result, Lamplighters entire staff has been let go even the brothers, who are collecting unemployment. Still, Joe Sr. is able to make the rent payments, meaning the bar, best known for its late-night karaoke and stiff drinks, is in no danger of permanently closing anytime soon, JJ said.

We just keep waiting it out. My brother and I depend on this for jobs, JJ said. Were now at the point where we need to find (new jobs).

Zak Higson, left, his brother, Nate Higson, center, and friend and business partner, Grant Tondro, are the founders of 3 Local Brothers restaurant and brewery group.

(San Diego Union-Tribune)

North County restaurant owner Grant Tondro understands well the roller coaster ride that has defined the COVID-19 landscape for local businesses. Not only did he and his two partners, Zak and Nate Higson, have to temporarily close or reduce operations at a few of their dining and drinking venues in Carmel Valley, Rancho Bernardo and San Marcos, but they also had to abandon plans for a major expansion that involved seven new projects.

This last six months has been absolutely insane, between the constant changing restrictions and the overall public sense of fear, said Tondro, who co-founded the 3 Local Brothers restaurant/brewery company. Weve all got pivot fatigue because we have to reinvent our business every single day. Im not sleeping, Im eating too much and Ive been stretched in ways I didnt realize I could be stretched.

As the prospect of increasingly vacant storefronts becomes an unfortunate reality in the coming months, the question becomes, how will that affect the daily life and character of San Diegos mature, once vibrant neighborhoods.

There will be a big difference between how things look like in one year vs. in four years, says Bill Fulton, a former city of San Diego planning director and director of Rice Universitys Kinder Institute for Urban Research. In one year, its pretty grim. Were going to see huge, permanent closure of all restaurants, bars and gyms. But once the system swallows all that, I see no reason why restaurants, bars and gyms would not come back, but it will take several years.

Staff writer Gary Warth contributed to this report.

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COVID-19 infection rates become weekly 'nail-biter' for local businesses: Can they outlast pandemic? - The San Diego Union-Tribune