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.

Bill to open up Pa.’s real estate industry heads to Gov. Wolf

A bill to declare real estate as a life-sustaining business in Pennsylvania is heading to Gov. Wolf’s desk for signature after being passed by the state house and senate.

House Bill 2412, introduced by Rep. Todd Polinchock, R-Chalfont, would allow for some level of in-person real estate in every county in Pennsylvania.

Pennsylvania is the only state with a ban on most in-person real estate, however some activity has been allowed in counties that have been declared “yellow” zones in the governor’s COVID-19 reopening plan.

“We’re pleased to see that state House members reaffirmed their support of House Bill 2412, recognizing that shelter is essential and real estate is life-sustaining,” said PAR President Bill Festa. “The Pennsylvania Association of Realtors’ 35,000 members and their clients strongly urge Gov. Wolf to sign this bill and allow consumers to buy and sell homes.”

The PAR is encouraging the governor to sign the bill, which they have been strongly advocating for.

Festa noted that any in-person real estate activity would follow Centers for Disease Control guidelines for safety and social distancing.

He had previously stated that the industry was not expecting to go completely back to normal anytime soon and that activities such as open houses would not be held for the foreseeable future.

Wolf tours Lancaster County redevelopment, offers new program as a solution

Gov. Tom Wolf enters a formerly blighted property undergoing renovations in Columbia, Lancaster County. – (Photo / Ioannis Pashakis)

Redevelopment efforts in Columbia are working to rid the Lancaster County borough of blighted properties – a process that Gov. Tom Wolf said could be helped along by a state severance tax.

Wolf visited several Columbia properties in the process of being restored through the county’s land bank on Wednesday. The governor said he expects his proposed infrastructure program to pass into law this year, which could raise up to $4.5 billion for similar projects around the state.

“I wanted to come around and look at the revitalization efforts and tout the Restore Pennsylvania program,” Wolf said. “One of the things it’s designed to do is address the issues of blight.”

Restore Pennsylvania, introduced in January, relies on a natural gas severance tax starting at $.091 per thousand cubic feet and rising with the price of natural gas. The governor has been persistent on enacting a severance tax since he took office in 2015, but a GOP-controlled legislature has so far resisted the levy.

Wolf’s new program would use proceeds from the tax to pay for high-speed internet access in rural areas, enhanced storm preparedness and disaster recovery, improved energy infrastructure, and revitalization and transportation projects.

Lancaster County launched its own effort to bring life to blighted properties through the Lancaster County Land Bank Authority. Created in in 2016, the land bank works with investors interested in redeveloping blighted properties for public or private uses.

“I see a lot more individuals and companies looking to invest in flipping or making an investment in Columbia, Manheim and Marietta,” said Justin Eby, director of housing and community development of the county’s redevelopment authority. “Lancaster city has a lot of momentum and I am seeing that come to the other boroughs.”

The county has sharpened its understanding of blighted properties in the region, according to Matthew Sternberg, executive director of the redevelopment authority. Sternberg said that Wolf’s program could bring more funds to the county that could help bring further interest from investors.

“Financial resources are scarce,” he said. “A reliable funding stream over four years will go a long way to bolster investment and position our communities for success.”