The Coronavirus Crisis Could Permanently Close 30 Percent of California’s Restaurants

In a letter sent to California Gov. Gavin Newsom, the state’s most powerful restaurant lobbying group said that the current shelter-in-place order for all of California could cause as much as 30 percent of the state’s restaurants to permanently close “unless there are bold measures taken by the state.”

The message came from the California Restaurant Association (CRA), which “actively works to influence legislation at both the state and local level,” its website says. Prior to the coronavirus crisis, it advocated against increases to paid sick leave, laws against retaliation against employees that report workplace sexual harassment, and California’s AB5 legislation requiring re-classification of many contract workers as employees. (Their entire 2019 slate of pros and cons can be seen here.) And now, in a letter that was widely syndicated by the Associated Press, the group is saying that unless California takes decisive, pro-restaurant steps, as many as 30,000 of the state’s 90,000 restaurants might shutter for good.

In the letter, the CRA says that it needs Newsom’s “immediate help with the following proposals targeted at our industry during this time of uncertainty,” including a pause on mandated increases to the state’s minimum wage — increases that, it should be noted, the organization has opposed for years.

Also in the CRA’s list of demands: mandated changes to insurance laws to ensure payouts for shutdown-related business interruptions, postponements of property tax payments, deferrals for sales/payroll tax and “all annual State, County and City license fees,” and a freeze on “unemployment insurance rate increases due to employers being forced to unexpectedly lay off exceedingly high numbers of people.”

In addition, the CRA asks that a statewide anti-eviction policy be enacted for all restaurant leases; that utilities like gas, electric, and telecommunications shouldn’t be cut-off for non-payment; and that credit card payment processors should be called upon to waive or refund fees related to “large events that were cancelled due to state closure orders.” Finally, the CRA says, they’d like a health insurance premium deferral for restaurants that “have furloughed workers and are paying both the employee and employer portion of health insurance.”

The letter, however, doesn’t ask for cash — and that’s what restaurants need the most these days, says Laurie Thomas, the acting director of Bay Area lobbying group the Golden Gate Restaurant Association (GGRA) and owner of Cow Hollow spot Rose’s Cafe. Speaking with Eater SF, Thomas says that “what we want is money, and we want it as soon as possible — ideally grants, not loans.”

And don’t assume that a local restaurant doesn’t need the dough just because it’s busy with delivery and takeout. Stacy Jed, the president of the GGRA and the owner of Bluestem Brasserie, tells Eater SF that restaurateurs she’s spoken to who have shifted to takeout and delivery are making so little money — barely enough to cover labor and food costs — that it seems the decision to stay open is “not a business decision, but kind of a morale decision.”

One thing that might have a negative impact on morale is denying workers their anticipated pay increases, Steve Smith, a spokesperson for worker advocacy group the California Labor Federation, tells the AP. Via email, he says that “restaurant and retail workers are on the front lines of this crisis, providing basic necessities to those in need. It’s no time to be talking about stripping away hard-earned wages workers have been promised.”

Those statewide pay increases don’t necessarily have an impact on workers in San Francisco County, where the minimum wage is $15.59, with annual adjustments each July “based on the annual increase in the Consumer Price Index.” Other counties, like Los Angeles, have lower rates: as of July 1, the minimum wage in that region was $14.25 for employers with 26 or more employees, while places with fewer that 26 employees have a minimum of $13.25. That’s set to increase to $15/$14.25 in July of this year.

County minimum wage rules supersede state rules if the former is higher, so it would take moves from SF legislators to curtail those upticks. But at the state level, the CRA says, legislators “anticipated the possibility of a significant economic downturn that would make a wage increase unwise and crafted ‘offramps’ that would delay increases if certain economic tests were met.” The COVID-19 crisis will likely spur just such a downturn, the CRA says, so the pause should kick in.

On Monday, Newsom did indeed agree to an extension for small business tax returns and payments (the full order can be read here), allowing restaurants and other companies to put off many fees until July. Most of the CRA’s other requests, including the minimum wage ask, went unanswered.

This story includes additional reporting from Eater SF editor Luke Tsai.