COVID-19: Downtown Business Impacts, Part One

Sapphire, Hope Brothers Building, 428 South Gay Street, Knoxville, September 2019

I reached out to a number of downtown business owners regarding the impact thus far of the COVID-19 Pandemic. I asked some questions to frame their responses. I offered the possibility of anonymity, if they preferred. The response was so good, I will do a short series on the topic. If you are a downtown business owner and would like to be included in upcoming installments, please contact me at KnoxvilleUrbanGuy@gmail.com.

You’ll find subsequent articles in the series here: Part Two

Aaron Thompson, Sapphire

Sapphire has been closed for regular business since St Patrick’s Day, March 17th, in what would be hilarious irony if it weren’t so grim.  We are doing everything within the legal limitations to create revenue to cover costs, and income for our staff. There is, however, a hidden cost of COVID-19 on hospitality businesses that we haven’t heard mentioned yet.  While we see many discussing layoffs being covered by the Paycheck Protection Plan, there are many employees that have no intention of coming back to their jobs whether they start getting paid or not.  The restaurant and bar industry is a career to many, but for some, serving and bartending are just steps that help pay for school loans and day to day cost of living.  We’ve seen some employees opt to quit rather than be laid off so they could move on to new, safer industries, during this unprecedented closure.  While there will be new staff to take their places, the faces will be different when guests finally start coming back. We believe that this moment in history has exposed a fatal flaw in this industry to which so many have dedicated their lives.

For those who have chosen to stay, Jessica and I have rebuilt Sapphire’s business model from the ground-up to revolve around Takeout, Delivery and Gift Card Sales, of which we give 25% directly to our staff. It isn’t a viable business model for a brick and mortar business until you take away most or all our fixed costs. After that, taxes, payroll and cost of goods, are all its good for.  So that’s what we’ve been doing.

Our employees have all been affected in different ways, but several have desired to get back to work, so we allow one or two staff members at maximum to work doing curbside pick-up and delivery.  Two weeks in and it’s already clear that takeout and delivery still mimics our guests regular dinning habits, with Sunday night, Monday and Tuesday’s food sales being so light that we are just going to close those days.  Pre-COVID, our regular guests, service industry employees, and the occasional TN/Bijou Theatre shows allowed Sapphire to sustain business on those days and not lose money.

L-R, Bar Manager Patrick Joyce, Designer Diana Lowrie, Jessica King and Owner Aaron Thompson, Sapphire, Knoxville, December 2017

So far, we’ve paid out $3000 in donations to our employees from our Gift Card program and a fundraising site that one of our regulars made.  Some have applied for the United States Bartenders Guild Grants and several other GoFundme’s that exist.  Some are now receiving Unemployment Benefits.  For Sapphire’s part, we applied for the EIDL two weeks ago and PPP today.  If their claims are to be believed, those funds will help float us for a few months.  Our bank (First Bank) and our Landlords (Avi & Ilana Zenetti) have been great to work with which has helped our situation.  We lost approximately $75,000 in the month of March and that was just for HALF the month as we were open the first two weeks.  April will be worse and May has no outlook right now.

When this is finally over and things begin to return to normal, will guests come flocking back like so many say?  Or will they be frightened to be in public until a vaccine has been found?  These are some of the hard questions that won’t be answered until we are back open and fully operational. One thing is clear, the world, as we knew it, has changed.

Since the beginning of human societies, men and women have gathered together to share in each other’s joys and pains, stories and lives. Restaurants and bars have always served as necessary cultural outlets in both the best and darkest of times.  We never thought we would live to see the day when the State of Tennessee would proclaim them to be essential.  What a beautiful silver lining! We, the Sapphire family, will continue to do our part, in what ever capacity we are able, to provide some solace to our friends, neighbors and community. We wait, in hope, for the day that we will all be free to gather together again.

 

Anonymous:

One business owner asked to remain anonymous, but expressed gratitude to be able to continue to operate the business online, saying the current situation has yielded the insight how important the business was in providing “structure, routine and purpose bring to our daily lives.” Here’s more:

“We are focused on increasing our online presence and learning other virtual ways to share our products with customers. Working on new and inventive ways to provide the best customer service with curbside pickup, delivery options etc.” Of the impact on employees, the owner said, “This is the hardest part – I really miss seeing my team! I have been able to keep a third of them working remotely doing social media and adding products online. Several of my team are students who worked only 5-10 hours a week. I haven’t been able to give them any hours yet, but we have talked about the possibility of extending our hours when we reopen so we can hopefully make up for their lost revenue.”

Regarding future projections about this particular business and others, this owner remains confident and cited an experience years ago with a business that was closed for months. “You have to keep moving forward with reopening the goal you are working towards every day. I do worry about the ability of some businesses that have just gone silent to come back but have hope that they will!”

With respect to the governmental aid being offered, the owner said, “I have applied for both the EIDL loan and the PPP loan. I realistically don’t expect to see the money for several more weeks but it will definitely be a help when May bills come due.”

Speaking of the complexities of re-opening, “We hope people will feel safe shopping again. We know we will need to take extra precautions like having hand sanitizer . . . as well as constant cleaning of surfaces . . . We are concerned what will happen to First Friday Artwalk and the Old City Market but are constantly brainstorming ideas.”

Chef Matt Gallaher, Knox Mason, 507 South Gay Street, Knoxville, November 2019

Matt Gallaher, Knox Mason, Emilia

Matt Gallaher is a successful chef and business owner, having operated Knox Mason, first on the 100 block of Gay Street and, more recently, inside the Embassy Suites hotel, in addition to Emilia on Market Square.

Here’s Matt:

“On March 16 the Federal Government advised to limit gatherings to under 6 people.  We made the decision then to close temporarily and take advantage of emergency unemployment assistance.  We filed for a mass layoff of 57 employees from Emilia and Knox Mason on March 19.  As of yet no one has received any unemployment assistance.  As of tomorrow it will have been 3 weeks since we applied.

“We have also applied for SBA disaster relief loan 7(a) and the PPP loan.  We feel fortunate to work with Regions as they are an approved lender.  Their site crashed many, many times after the program went live last Friday. It took dozens of tries but we finally got everything submitted on Monday.  As of this afternoon the bank told us we have all the necessary information and that our loan in under review.

Knox Mason, 507 South Gay Street, Knoxville, November 2019

“In the meantime we are able to offer payroll advances to those who are especially in need.  But with all the deferrals in rent, insurance, utilities, etc. I think most of our staff are in decent shape.  There’s another grant program through the State of Tennessee that gives emergency funds to families with children as long as they meet some income guidelines.  I’ve submitted that for one employee in particular.

“We’ll weather the storm.  Again, as long as we get some Federal assistance and our payments are deferred we should be able to bounce back. If PPP works as its supposed to and is delivered timely we are in great shape.

(I am) 100% confident that my staff will return. I wonder if sourcing ingredients will be an issue when we get back.  Grocery stores weren’t prepared for the increase in traffic and we see a lot of bare shelves. So suppliers are shifting gears to meet the demand.  Conversely, when we get back to dining out again we’ll have to ramp back up to meet restaurant demand.

Comments

  1. Chris Eaker says

    Thank you for posting this information. It helps us to see how it is affecting businesses we personally know and love. We have been able to see from the outside, but getting an Insider’s perspective is crucially important.

  2. This is something I have been wondering and worrying about. The downtown businesses and all that they bring are what makes me happy to live here. I would hate to see them go away. I hope the aid works the way it should and that everyone is able to adapt to this temporary disruption. Thank you for keeping us informed, Alan.

  3. Margy Ragsdale says

    Thank you, Alan, for your informative updates. In addition to the downtown businesses and their employees, I worry about the downtown homeless. Who is there to give them a dollar now (much less a safe place to shelter)?

    • Giving them a dollar doesn’t help them, just FYI. However, the mayor has begun setting up shelters for them. And they’re probably better than KARM.

  4. Leah Laboy says

    As another restaurant owner (we are located in Seymour) it’s helpful to read how others are doing, we cut a drive up window out of our back door. Love the downtown restaurants. Hope and prayers we all get past this soon and safe.. Restaurant employees are done of the hardest working people I know.

  5. I love Jessica and Aaron. Just seeing them always makes me happy. I can’t get enough of this news- I eat it up- I drink it up- thanks Alan.

  6. Oslo Cole says

    I’m glad to hear that these businesses are finding ways of to adapt and survive. God willing they won’t have to for too much longer. It’s extremely disheartening to hear, however, that UI benefits haven’t been paid out to Matt’s employees. We MUST demand more from our governments in these times of need!

  7. I appreciate and love not only this article, but the site itself.

    I’ve been working downtown since before the “new” downtown. I begin my “shift” in October 2002. We survived a lot of things.

    ** Post 9/11 world
    ** NO downtown at the time
    ** Tennessee Theatre shutdown / renovation
    ** Bijou Theatre shutdown / financing
    ** I-40 / James White shutdown
    ** Housing market collapse
    ** Great Recession

    Several factors. Positive. Negative.

    March 19, 2020 will still be the most impacting for me.

    I was actually scheduled off.
    I received a call that morning.

    Many things early in the week at our facility and across town (the nation) had already been in motion.
    We had already adjusted to less seating, staggered seating, more focus on to-go and carry out. We tried to promote pick ups on Union Ave.

    Keep in mind this was roughly a week after things were really beginning to apply here. The governor had declared no large gatherings, but we weren’t at full shelter at home like we are now.

    We tried.

    We are a large space.
    I don’t own it. I just run fractions of it.

    We tried to fight the fight to benefit our team. We wanted them to make every dollar they could, while they could.

    If…if…when what we thought would happen, happened we knew the brakes would be thrown on.

    We are a large space.
    Two levels.
    A really, large space.
    Utilities alone are insane.

    The business wasn’t making money but the team was. And, they would need it. It wasn’t a lot but it was something.

    March 19, 2020.

    I got the call.
    I went to work.

    Emergency Unemployment Assistance.
    It’s what we were told.
    It’s what I read.

    If we furloughed everyone for public health, then they would be able to move to the front of the line for assistance.

    It seemed logical.
    Being open was losing money.
    Being open was only helping a few.
    If we closed, then we could help ALL.

    We made the call.

    March 19, 2020.

    I furloughed over 100 employees, including myself.

    Read that.

    Over 100 people!
    100+ people.

    100+ people with lives.
    100+ people with families.
    200 people? 300 people effected?

    How many people did I actually furlough?

    March 19, 2020.

    We furloughed to allow for Emergency Assistance.

    4 days later changes to the to-go sales applied.
    We had already furloughed.
    And, to receive the Emergency Assistance you had to furlough the majority. We furloughed all.
    We couldn’t change it now.

    March 19, 2020 – my day off. I went in around 1130am. I was there until roughly midnight. I inputted the data. I answered the questions to the team. I spoke with our regulars.

    For every syllable that I spoke I tried to place confidence and security into who I was speaking with. I attempted to extract that same level of confidence back to me.

    Uncertainty. It’s all I knew for sure was ahead.

    March 19, 2020 – Furloughed.
    April 14, 2020 – We have about 15-20% of our team that is able to receive unemployment.

    The rest are doing battle with a system that was designed to handle 10x-15x less claims than they are handling now.

    Emergency Unemployment Assistance.

    My team of over 100 should have been ahead of the curve. Instead…they trail behind like a tail of comet that may fade out.

    I try to keep them motivated and moving forward. But we’re working with a system that wasn’t prepared for where we are now.

    You want to know how downtown businesses are?

    I’m not a business owner. I’ve been part of downtown for over 17 years. I feel like I’ve contributed, in some ways to it.

    How am I doing?
    I’m pissed.

    My team is displaced.

    I know there is a Point B. I know there is a place, Point B, that will be better than today, where we all will converge.

    I believe in Point B.

    We’re at Point A. We need to get to Point B.

    And, we will.

    I tell my displaced teams it’s okay to be a duck. We can all be ducks.

    Ducks keep moving. Ducks get to Point B.
    Ducks look cool as hell on the surface getting to Point B.
    But, if you look under the water – those are some fast, crazy moving actions that get that Duck to Point B. They have pissed off legs.

    So, we’ll get there.
    Be a Duck.
    See you on the other side, at Point B.

    • Wow Daniel, this was a greatly written timeline. Hope to see some relief coming soon. Just keep swimming!

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