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For bars and restaurants in a pandemic: Winter is coming

Both literally and figuratively, writes Daniel Lanigan of Lord Hobo in Cambridge. Lanergan says all those outdoor patios aren't going to mean much once the temperatures go down. And in his case, he doesn't have a patio and he's used up his PPP loan paying creditors, and now his workers aren't getting that $600 weekly pandemic unemployment money anymore.

And with each month that goes by our rent will add up, our debt will grow, our team of 33 will remain unemployed, and the likelihood of us ever serving a customer again will diminish. And we are not alone. This is the conundrum facing tens of thousands of other restaurants nationwide. The few that are open now are primarily relying on temporary outside seating. But what will happen to them in November when the temperature drops? The restaurant industry is in BIG trouble. ... Winter Is Coming.

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Related: Some folks are also hoping outdoor classrooms will be a way to do in-person teaching around here this fall. Newton is proposing a version of this: "Students taught in outdoor classrooms under tents would not be required to wear a mask," WHDH reported.
https://whdh.com/news/newton-school-district-considering-tents-outdoor-l...

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Ok. But just understand this can only be a small help. Obviously weather will take away some of the usable times for tents. But also note that all Newton schools are completely different in terms of their layout. They don't all have the same amount of free outdoor space for tents

Also, it's not like every class can share a tent at the same time. If your school has one or two tents, that means only one or two classes at a time. Out of like 12-24ish classes in elementary.

So I'm sure the outdoor break will be enjoyed when it's possible but it will be available what, like 5% of the time for any individual student?

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His PPP Loan was indented to be used to pay his employees, not creditors.

Second, his employees are still receiving UI from the state.

Lastly, according to the WSJ, approximately 68% of people receiving the additional $600 are being compensated more now than while employed. No one should be benefiting from COVID. The original intention was to help close the gap.

$600 extra a week is the equivalent of $15/hr. The Feds should help, but $600 EXTRA is ridiculous.

https://www.wsj.com/articles/is-600-a-week-in-extra-unemployment-aid-det...

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approximately 68% of people receiving the additional $600 are being compensated more now than while employed

I'm guessing most of those aren't in Boston/Cambridge. I am quite certain the take home pay after tips for his servers and bartenders averages out to more than $15/hour. Pretty sure last time I was there I personally tipped around $15 for only a couple of hours sitting there (and more than a couple of drinks). Waiting and bar-tending is a profession and people doing it are* and should be paid well.

It's certainly possible he's exaggerating, but it seems pretty reasonable to me that this is going to really really hurt the restaurant/bar industry. I'm not even sure that looking at the numbers is necessary to understand that.

*By are paid well I only mean that most people in and around Boston tip well and I think that MA has a rule that their wages have to average to something reasonable... but anecdotally I've also heard that's hard to enforce.

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Which they're required to, they would still receive the MA max UI benefit of $750 per week or $18.75/hr. Not to mention the PPP loan which the owner should have used for its intended purpose.

I agree that the 68% figure is on the high side if were only talking about MA, however it still shows there are large groups of people on UI benefiting financially.

Still the blanket $600 is an over remuneration which will only hurt the economy rebounding in the long run.

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Except the extra $600/week ended on 7/31. As of right now, we're doing normal UE rates as there's been no further guidance from congress.

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Tell that to the banks, stock market, and pharma companies.

To whatever degree it is ‘ridiculous’ that American workers weren’t being paid a living wage before COVID and are now more secure post COVID, it is pennies on the dollars compared to the outrageous amounts extracted from our treasury by already wealthy shareholders, banks, and big business owners via half-assed Trumpian unregulated Covid corporate welfare.

Big corporations take in billions in “small business loans” that are not “trickled” into the economy while people are still mad at folks getting hundreds in assistance that they turn back around to pay in rent and mortgages (that go right back into the banks), buy food (that goes back to local groceries stores and conglomerates like Cargil and Smithfield), or buy stuff at Amazon/Walmart/Apple (whose shares are the cornerstone of many of our 401ks)?

F*ck this “we shouldn’t pay people to stay home” bullshit false narrative. 32% of America missed their July mortgage/rent payments. COBRA payments don’t magically disappear in a pandemic (great idea - let’s make people choose between groceries and insurance payments! Who has BCBS in their retirement portfolios?) Aggregate demand doesn’t grow when income plummets.

We pay airlines and its shareholders not to fly and to lay off their workers, but we’re mad at people getting hundreds per week in unemployment benefits? How does that even make sense? Let the airlines leverage their assets.

If paying people the extra $600 per week has already allowed financial disaster, how is it going to improve things by taking it away?

It’s like we’re mad at the mom who steals a loaf of bread while paying $20M to the arsonists who burned down the grain field!

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Seriously?

Of course the *believe* that "all the poors won't want to work unless WE STARVE THEM INTO IT".

Assshole.

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1. PPP loans didn't have to be 100% for payroll.
2. UI without the $600 added means people out of work will be earning about 40% of what they made. The money being sent to these people was being spent on things which was helping prop up the economy.
3. Speaking of propping up...the Fed has dumped trillions into the financial markets. Was the WSJ opposed to that? no no they were not.

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There's no documented evidence that the $600 was keeping people from working if they were otherwise offered a job. But more importantly, it's economic stimulus. Unlike tax cuts for the wealthy, the $600 is going to be spent, most of it locally.

Tax cuts are a horrible way to stimulate the economy. Direct payment to those with the lowest incomes is the best way. If you want to see the US crawl out of this hole, keeping these payments intact is one of the few ways which will work.

Tax the richest now and raise taxes for middle & upper classes when the good times return.

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The last couple winters had plenty of pleasant days to eat and drink outside. I spent hours outside in February and March at places like Charlie’s Kitchen, Bow Market and Trillium Fenway. If you are too wimpy to spend an hour in 42 degree weather then why do you live in Boston?

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The last four winters have not been too heavy with respect to storms and snowfall (at least, compared to winter of 2014-2015). I wonder if we're due for a pounding this winter.

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although maybe over 100 inches of snow in one season will keep people inside...

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We then have these things called gloves and hats for November.

Agree 100% here. If you can go to a Pats game in November, you can fire back two or three beers outside the Burren.

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I stood in line outside the Sports Depot more than once (a combination of superstition, being a regular, and also being one of the few places I could go at age 20). I wondered aloud more than once why, on mere October evenings, their patio seating wasn't open. I'm not cold. Why aren't I seated, and why aren't you selling me things?

The industry gets what it deserves sometimes with its lack of imagination. Also it doesn't help when you're run by Trump (expletives) full of cocaine and/or on their third marriage.

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I give you:

If you are too wimpy to spend an hour in 42 degree weather then why do you live in Boston?
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If you are too wimpy to spend an hour in 42 degree weather then why do you live in Boston?

If you are too stupid to realize that the sun sets at 4:30 PM in November -- or earlier -- then why do you live in Boston?

Huddling outside in the dark in 42 degree weather might be your idea of a nice alfresco experience, but you're a weak reed for the restaurant industry to lean on.

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Sure, some of us will dine alfresco in November with blankets and heaters - once and a while.

But to think the demand of people that want to bundle up on a Tuesday to to eat hot food that will be cold within 10 minutes can sustain an already limping industry? That’s quite a leap even for the most optimistic among us.

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Most patios in Boston are only permitted for use during the warm months (hence restaurants not opening their patios even on unseasonably warm days in the cool seasons).

Perhaps if that rule was relaxed (perhaps it already has been, given the leniency on patios now) more places could have open patios in the winter.

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" We need another significant round of PPP. We need the $600/week to continue. We need Health Insurance to be covered. We need rent covered. We need Payroll taxes lowered. We need stimulus. We need investments from our cities for 4 season patios."

Does he want the government to own and operate his establishment?

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Owner of the restaurant who wrote the article has no outdoor space, so he can't urge people to suck it up and sit outside in the winter. Most restaurants do not have access to outdoor space, so it is not a solution. We were in London over Christmas and there were lots of busy outdoor spaces in late December - but it was also in the high 40s and low 50s, and they had tents and heaters. Do I think Americans will get used to being outside and drinking until late in the Fall, early winter? Yes I do, but our winter weather is a lot different than in London, and lasts a lot longer.

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I was in a restaurant in Roslindale this past week that normally has a smallish patio. The phone was ringing off the hook with people asking to sit outside, but they were fully booked. Maybe 3 parties were seated inside. People want to go to a restaurant and want to eat outside, but when that option gets frozen out, it's gonna get rough for a lot of restaurants.

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... Adam, I think it's Lanigan: https://lordhobobrewing.com/about/

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I don’t care how cold it gets I will still drink and sit outside.

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But there also isn't a good solution. When it was "15 days to stop the spread" or patch through a small period, there were solutions for saving the restaurant industry.

With the pandemic now a likely multi-year problem and a fair bit of evidence that, at least in the US, things like indoor dining are going to be unsustainable before an effective vaccine is distributed, these businesses are just out of luck.

Government needs to step up its safety net to keep people fed, clothed, sheltered. But we are a long way from even doing that today, we probably need taxation levels to increase materially to even keep the insufficient safety nets we have today in place, and the extended recession is going to really put budgets in a vice.

Saving existing restaurants and keeping people COVID impacted in their existing standard of living is not going to be something that's really in the cards.

The Phase 3/Phase 4 industries like restaurants, gyms,bars, airlines/travel etc as we knew them in 2019 are goners at this point.

It seems very likely on the other side of this pandemic that people will still want to share good food and company outside of home. The restaurant industry will eventually come back in some form or another, probably with a business model less reliant on packed indoor dining with whoever is willing to put up fresh capital as the new owners (and we will have challenges making sure the whole industry doesnt become chains). But for current COVID businesses and owners, the near-term future is grim.

Whether 50% of current places close or 95% of current places close, I think it is too early to say. Hard to see how the next 6-12 months arent just an increasing drumbeat of closures (and then think of what happens to the landlords and ultimately the banks.....)

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Have the government cover their base costs. Rent, insurance mostly. Employees get unemployment separately. No one gets rich, no one starves.

In the long run (1-2 years) it will do more good to keep these places around. Having all these places close is not going to help anyone. Letting them press pause untill there is a vaccine will help the economy and society. It will also help public health if restaurants don't feel obligated to skirt the rules just to have enough business to exist.

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We have to pay businesses to stay closed or opened at reduced sales. Pay workers to stay home.

OK, the MAGA/Mnuchin crowd doesn’t want to pay people to not work. We will need to maintain some levels of unemployment for a myriad of reasons, but let’s figure out a way to incentivize people that can work? Maybe waive federal taxes, FICA etc on working-class earned income, but keep taxing unemployment benefits?

Maybe that’s a terrible idea? The point is that positive incentives work wayyyyyy better than punitive economic attacks like “starve the poor back to work”.

The same for businesses. Pay them to stay closed, or let’s go New Deal and pay some restaurants to provide free/low cost meals to the community. Or something like that.

(Of course it would be vastly cheaper if our Federal leadership emulated the path and success of other modern governments, but alas the MAGA/QAnon/Muh freedums caucus is over-represented in our democracy.)

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What sort of control do you put on this to have it not be a massive "get rich" (or at least turning a profit) scheme for landlords?

Can think of a possible simple-ish ideas; maybe something like calculate a per-sq-ft median commercial property value for a neighborhood & give a partial rent payment based off that, with the tenant having to attest to not being displaced for payments to continue? Likely capped at a certain amount (if the high-end real estate markets need to become more middle-brow for a while, so be it - I don't particularly care for subsidizing $90+ sq ft rents or super-sized spaces).

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Probably the simplest way to prevent it from becoming a widespread get-rich scheme is to make it temporary, so it goes away before too many people are able to exploit it. The pandemic will (probably) be past us within a year; if the government supports are wound down by then, abuse would probably remain very manageable. Truly biblical-scale abuse of government programs tends to happen over time, as people learn the rules and how to game them most effectively.

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If this was going to be we cover base costs for a few months, yes. I originally advocated for this solution in March.

Unfortunately it is becoming clear that this virus isn’t a 2020 problem and we aren’t just taking a pause and going back to our regularly scheduled programming.

If we get lucky as hell with a vaccine, this is a 2020-2022 problem and then we can start rebuilding the new normal.

If the vaccines fail, are marginally effective, or education campaigns don’t get enough of a vaccine compliance rate, COVID will be at the front and center of life through the middle of the decade and beyond.

But I wouldn’t expect indoor dining like we knew it for, at minimum, another 18 months. So this isn’t a short term expense covering, and it has costs (rents will come way way way down in the new norma. Paying rents for these businesses is a subsidy to landlords and interferes with that process and landlords willingness to make concessions)

We need massive investment in public health to start to get the epidemic under control. Lines are hundreds deep at food banks. We need investment in reimagining education as it will be mostly remote learning for the forseeable future. We will need to subsidize former two parent households now responsible for educating their own kids and where one worker can no longer provide food, shelter, medicine. Something like 1/3 of people cant pay rent. Unemployment coffers are going to start running down at the state level. The ACA is heading to court which might result in more state resources needed to fund medical care for all residents. We have centuries of systemic inequality that is going to take investment to address. Infrastructure was crumbling pre COVID. All this while the state budget is now dire. Feds are unwilling, and perhaps eventually unable, to fill any gaps.

Tax the hell out of the top 50 percentile in a progressive manner for sure (I know i should live in reality) but the safety net is very stretched and will remain stretched even with new revenue raises. I don’t think restaurant owners, theatre owners, museums, and other such niceties make the cut for scarce resources right now.

We are better off with these businesses existing, but once the pandemic passes new businesses will spring up with new owners. From a public health perspective, we are better off with fewer restaurants right now as restaurants give people a reason to leave home and forces people off unemployment and into the workforce to perform a non essential service.

We can eventually help new businesses sprout by keeping some of the recent innovations (reclaiming streets for outdoor dining space, looser alcohol regs, etc) and reforming other rules (liquor licensing regs). Rents should also be materially lower on the other side of this, which should help new restaurants open. We rebuilt Boston from the 60s through 2019 and we can do it again over time.

The real losers are the existing business owners. It sucks and is unfair, but government can’t correct all inequities in this world and that’s capitalism as an owner, you bear the risks.

We should make sure those business owners and their employees have adequate food, shelter, and medical care should the business fail, but keeping their business afloat is on the shoulders of individual owners rather than the public.

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https://lordhobobrewing.com/about/

Daniel Lanigan, not Lanergan.

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Let them fail. If you knew what went on in restaurants, you wouldn't want to eat out.
And let's face it, most of these places suck. Cook at home. It's healthier and cheaper.

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Don’t be vague. Why would we not want to eat out?

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Maybe Dan should stop cruising around town in his Lamborghini and sell it in order to pay his bills and employees...

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Then you get a giant "RIGHT?" from me.

Nowhere to hide if you're a sole proprietorship. But, then again, if you're rich and white, you probably just straight up don't know how to abide consequences. To quote a former colleague of mine about a bar owner: "I didn't tell him to build a house in Wellesley during a recession."

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