State hospitality association leader talks COVID-19 and the future of the state’s industry

This has been a tough year for the hospitality industry and few organizations are more aware of that than the Pennsylvania Restaurant and Lodging Association (PRLA). The Central Penn Business Journal recently sat down with John Longstreet, president of the PRLA, to talk about how its members are coping with the pandemic and what the organization is doing to help. 

Q: As cases of Coronavirus rise, how can restaurants and bars protect their patrons and employees?

A: The Governor has guidelines that are very helpful at the Pennsylvania Department of Health website. We refer to those and guidelines created by the CDC and the National Restaurant Association. The ServSafe program developed by the National Restaurant Association has a COVID addendum added to it, which extends to all 52 states. We say that because we have a unified partnership agreement in Puerto Rico and DC.

The most important aspects of safety are sanitation of surfaces, masking and social distancing. There were many protocols already put in place prior to COVID due to regulations put out by the FDA, the Department of Agriculture and the Department of Health, so that the [hospitality industry] arguably has more safety regulations and protocols than any retail business

Q: How were business models tweaked to cope with this crisis?

A: The first thing our industry did was pivot to take out, delivery and curbside pickup. Historically, 50 percent of food purchased away from home is at restaurants. Some people don’t cook, others lack kitchen facilities, so restaurants became essential businesses. When restaurants reopened, they found ways to maximize their capacity, while making sure there was social distancing. For instance, Red Robin converted their waiting areas to seating areas to increase capacity and asked that customers wait in their cars.

Restaurant guidelines allowed for plexiglass barriers on the backs of booths and bar barriers, but bar seating is prohibited now, which makes it difficult to get to 50 percent capacity at some eateries

Q: Is ‘take out only’ going to carry restaurants through this difficult period?

A: No, it won’t. Restaurants operate on a 5, 7% margin. Before the pandemic, takeout was 10 percent, at best. Now some have gotten up to 30 percent, but that’s not enough to sustain businesses through the winter. They need two things: to open at a reasonable capacity and to receive a significant amount of financial help from the state—a tall order when we have 26,800 restaurants in Pennsylvania.

Q: Please talk about the July 15 mitigation order and some of the issues it created.

A: The mitigation order that went into effect on July 15 limited private parties to no more than 25 people. Most hotels ballrooms have the capacity to seat 2,000, so think about that.

In addition to that, restaurant capacity was reduced to 25 percent and bar seating was eliminated. This caused many restaurants to close to indoor dining. Imagine a 100-seat restaurant being cut down to 25 people and that includes the staff.

Q: What about self-certification—the optional program by which restaurants can assure employees and customers that they are adhering to COVID guidance?  

A: We heard time and again that some restaurateurs think that the Wolf administration is trying to entrap them. There’s no evidence of that, but because they feel targeted, they are understandably wary.

Q: Has the Wolf administration Worked with the PRLA?

A: Early on, we reached out to the Governor’s team and said we’d like to work with them in any way we could and it became a collaborative relationship, until a week prior to July 15, when we were on the phone with them again and at that time we talked about ideas to further stop the spread. Then, on July 15, we were scheduled to speak again and they said that they were thinking of doing some things which were different than those we had discussed a week prior.

They ended up reducing restaurant capacity to 25 percent and when we asked if there was evidence to justify the reduction they said, “We don’t want to become another California or Arizona.” CBS News later asked for data and never received any. 

At that time the Wolf administration also announced that private parties would be reduced from 250 inside to 25, so you can imagine all of the events that had to be canceled. This is when the restaurant industry began to lose faith in the administration. We heard stories about restaurants that had ordered thousands of dollars’ worth of food. You could also argue that pushing parties out of regulated places into unregulated places could also cause the spread.

Q: Has waiving liquor license fees helped?

A: It means almost nothing because the average fee is between $600 and $1,500. This year’s fees were deferred, but if they want next year’s deferred, they will have to pay this year’s fees. I’ve heard operators say that they could make that up in one evening at 50 percent capacity.

Q: Which types of restaurants have the best chance at weathering this storm

A: Quick serve, like McDonald’s, Wendy’s and Burger King since they are already set up for drive through. Some are eliminating overhead by keeping their dining rooms closed.

Q: How are mom and pop’s doing, compared to chains?

A: Both are in the same boat because they are all suffering and can’t spread money over their portfolio.

Q: How has the PLRA’s Advocacy Fund helped business owners through this crisis?

A: Initially, hotels were not included as essential businesses and we were influential in getting the administration to update that list. We learned quickly that information flow was very important. We became a news organization and published “The Daily Update.” We also created a weekly webinar to pass on information. We wanted to help furloughed employees, so we worked to expedite unemployment compensation and enhanced unemployment compensation. We also waived dues for non-members and have had 145 new restaurants join PRLA since the pandemic started because they recognize the value of what we’re doing and that’s been gratifying.

Q: How might another lockdown affect the hospitality industry?

A: The July 15 mitigation orders certainly hurt business. The administration thought they were doing the right thing, but I would be surprised if they go into further mitigation. Everyone knows that, for the most part, they are making it up as they go and so they keep trying new things but I’m not sure that a lockdown will happen again.

Q: What more would you like to have seen from the state and federal government?

A: There’s a billion dollars in federal money from the CARES Act that has yet to be distributed here in Pennsylvania and we’d like to see that expedited.

We are also watching HB2615 sponsored by Rep. Todd Stephens (R-Montgomery) which will provide community assistance grants for restaurants and will create a 250 million grant fund with up for 50 thousand dollars per location.

Q: How would you say the future of the industry has been affected and how will that affect other businesses?

A: Financing could be an issue for future restaurants. In the past, you saw a restaurant close and another new one would take its place, but that isn’t going to happen now. Cities could also be affected.  In Pennsylvania, 63 percent of the operators said that it’s unlikely that they would be in business six months from now if conditions do not change.