When restaurant owner Vanessa Garcia applied for a loan to support her Brisbane restaurant earlier this year, she hoped she wouldn’t have to use it.
Garcia owns 7 Mile House, a historic dining spot, sports bar and live music venue. At least that’s what they were before the COVID-19 pandemic. Now they’re just providing food.
The restaurant qualified for a loan through the federal Paycheck Protection Program (PPP) and for a while, business was good.
“My goal was to pretend like it (the loan) wasn’t there, to basically not use it unless I really need to,” Garcia said. “We were doing fine until this month. Now we’re using it like water.”
The pandemic already put a strain on businesses, especially those in the hospitality industry like restaurants. Now colder weather and the end of daylight savings time makes it even more difficult to attract customers.
Business owners in San Mateo County now face another setback to staying open: tighter restrictions and a nighttime curfew as the county moved to the most-restrictive tier (purple tier) of the state’s reopening system on Saturday. That meant indoor dining had to close once more.
Garcia said that business was so slow on Monday that it only covered labor — not ingredients, electricity or anything else. Just this week, she had to cut her staff’s hours in half.
“It’s just getting worse right now,” she said. “It seems so difficult to fight because everyone’s scared. I can’t keep open outdoors if nobody wants to come out because they’re scared that they’re going to get sick, even if we have amazing protocols and an amazing space where everything’s just open but safe.”
Many businesses depend on December earnings to take them through the beginning of the new year. But COVID-19 is throwing a wrench into holiday shopping. As restaurants rely more on takeout and deliveries, some may not survive, according to Cheryl Angeles, president and CEO of the San Mateo Area Chamber of Commerce.
“They’re just barely hanging on by their fingertips,” Angeles said. “They’re not all going to survive. I think we’ll see probably a quarter to a third of businesses going out if this lasts much longer.”
Restaurants rely on delivery services to stay afloat
For the first time in its 35-year existence, Three Brothers Tacos — a Mexican restaurant in East Palo Alto — is relying on takeout and deliveries to stay afloat.
The restaurant’s office manager Marlene Connolly said that business had “slowed down tremendously” during the pandemic. Because they don’t have their own driver for deliveries, they’re relying on third-party delivery services like Uber Eats, DoorDash, GrubHub and Postmates.
“Going to those third-party companies has really helped out right now,” Connolly said. “When we were able to open the patio (business) picked up a little bit but people were still too scared to go out. It’s mostly just to-go orders.”
One challenge is that these services charge restaurants delivery and commissions fees, sometimes up to 30 percent of the cost of the customer’s order, according to a San Mateo County staff report. These fees go toward marketing and listing the restaurants, delivery services (such as drivers’ pay) and credit card processing.
As a result, some restaurants break even when they use delivery services, or struggle to make a profit.
Connolly said that Three Brothers Tacos had to increase their prices when they first started using delivery services.
“We were losing more because of the high charge on the orders,” Connolly said. “We raised the prices a little bit and explained to our clientele that because of these hard times, we’re going to have to.”
To help support restaurants, some Bay Area counties and cities instituted a temporary cap on the delivery and commission fees that companies like DoorDash can charge to restaurants.
San Mateo County followed suit on Nov. 17 when the Board of Supervisors voted to establish a 15 percent cap on fees for delivery orders, and a 10 percent cap for pick-up orders. The cap would apply until June 30, 2021 or the end of the COVID-19 local emergency.
The supervisors voted unanimously in favor of the cap, and some business owners and community leaders spoke in support of the ordinance during public comment.
But a spokesperson from GrubHub said that the cap could reduce a restaurant’s visibility and ability to attract customers.
“Fee caps are well-intentioned but counterproductive at a time when restaurants need more support, visibility and order volume than ever,” GrubHub spokesperson Grant Klinzman wrote via email.
GrubHub charges a negotiable 10 to 15 percent fee for marketing, 10 percent for the delivery fee (which goes towards the driver’s pay) and a 3 percent credit card processing fee.
While the 15 percent cap won’t directly reduce drivers’ pay (which is prohibited with San Mateo County’s ordinance), it would cut into the restaurant’s marketing ability, meaning they might reach fewer customers and get fewer orders. Fewer deliveries means there’s less work available for drivers, according to Klinzman.
People encouraged to support businesses by shopping local
Businesses have several places to seek support. This week, Gov. Gavin Newsom announced a $500 million relief fund for small businesses. San Mateo County has its own relief fund that awarded $3.5 million dollars in grants to support 350 small businesses, according to the county’s recovery initiative website.
The San Mateo Area Chamber of Commerce hosts free workshops and starting next year, it will offer free counseling to businesses.
Despite challenges, Bay Area businesses are finding ways to survive. Bank of America surveyed over 1,000 small businesses nationwide plus 300 small businesses in markets like the Bay Area. They found that more than half of Bay Area businesses had found ways to reinvent themselves, and 89 percent remained open during the pandemic, more than the 75 percent national average.
“I have pivoted so many times this year,” Garcia said about 7 Mile House. “I just want to thank everybody for their support for this whole year, because we haven’t had to close permanently.”
Along with various Bay Area city campaigns, Garcia encouraged people to support small businesses by shopping local.
“We are not only trying to struggle to survive. It’s psychological. It’s emotional,” she said. “People don’t know how they’re going to pay for their rent, or how they’re going to survive without food while worrying about possibly getting a virus.”