Can our service industry recover from the pandemic’s gut punch?

Frida Guerrero remembers the panic-riddled days early in the pandemic when customers disappeared faster than a juicy order of tacos de birria at her family run restaurant in West Valley City.

“At one point we only made one sale the whole day,” she recalled. “That was for seventeen dollars.”
Improbably, the family’s tasty birria tacos got posted by a prominent Tik Toker and it promptly went viral. Lines bulged leading to a La Casa Del Tamal restaurant expansion and since then, steady success for the Guerreros.

Of course, very few in the restaurant and retail worlds ever see an internet miracle. Instead, most slogged through the past 17 months — if they stayed open at all — battling receding revenue, existential layoffs, and the omnipresent anxiety spawned by a novel airborne infectious disease that has now wiped out nearly half of the global service industry.

In Utah alone, 400 eateries permanently closed their kitchens in 2020, while the Beehive State’s food and beverage industry has shed $2.3 billion in sales and 34,000 jobs, according to Melva Sine, president of the Utah Restaurant Association. “Being in this business always was a challenge,” Sine said. “It’s even more extreme now.”

The retail ravage showed signs of stabilizing this spring once the state plucked mask mandates and free vaccines popped up seemingly on every corner. But just as quickly, the more infectious Delta variant of COVID-19 swept the country, and now accounts for nearly 95 percent of all new cases. Hospital beds are filling to dangerous levels, including more than 80 percent of ICUs in Utah. Schools and businesses are once again debating mask mandates. And New York City became the first this summer to require proof of vaccination for its residents to essentially go anywhere or do anything.

“Being in this business always was a challenge. It’s even more extreme now.”

Melva Sine, president of the Utah Restaurant Association

Mark Alston, owner of the Bayou restaurant near downtown Salt Lake City, says he wishes more Utah businesses would follow New York’s lead. The Bayou is one of Utah’s only businesses to require vaccination proof, which has led to “completely unhinged” people making threats, an undeterred Alston says. “We’re basically right back to where we were.”

Retail Ravaged

As business owners recognized COVID-19 wasn’t going away in the famed “two weeks,” but rather here to stay, many teeter-tottered between staying open, temporary closures or shuttering completely.

“We were understaffed for quite a while,” said Green Pig Pub Manager Kristi Johnson, who noted the bar’s saving grace may be its rooftop patio — one of Salt Lake’s only such spaces.

Far more aren’t as fortunate. Sine notes some 1,470 Utah restaurants applied for federal relief funding during this pandemic but just 470 saw any financial assistance. That, in turn, has led to an industry wide hemorrhaging of employees with little to no public outcry.
“We’ve got to stop thinking some positions are more important than others,” Sine said. “Everyone who works, their job is essential. It’s essential to that person and to that family. There is no stability in the workforce right now.”

Pre-pandemic, Utah’s restaurant sector had surged to more than 111,000 workers. By Mother’s Day, it had deflated to 63,000 people, Sine laments. “You don’t replace that.”
A hallowed workforce haunts more than Utah’s dining scene. Signs are increasingly common from grocery delis to products and service businesses to boutiques that signal slashed hours or closures due to lack of staff.
“There’s just an issue out there of having enough bodies in the workforce,” explains Dave Davis, president of the Utah Food Industry Association and the Utah Retail Merchants Association. “It’s just hard to have somebody waiting your table remotely from home.”

There is little doubt the pandemic created a paradigm shift across the economy following months of virtual work and school. Tech companies like Google and Facebook have allowed employees to work remote indefinitely, causing a wave of migration across state lines, further stressing an unsustainable housing market. Real estate agents have taken to calling Californians buying Utah homes with cash “Silicon Sliders.” But besides the tech bros at the high end of the scale, workers across the economy have felt COVID’s silver lining of flexible schedules, no more commutes, simpler wardrobes and more time with family. Former servers, stockers, cashiers and sales people have left their industry for jobs they suddenly — and perhaps permanently — can do from home.

That can seem increasingly more attractive as the Delta variant rages, and vaccination levels stagnate. Indeed, the federal Centers for Disease Control and Prevention has recently recommended all Americans, regardless of vaccination status, mask up in indoor public settings, COVID hot spots and in all K-12 schools. The advice comes as the Utah Department of Health reported more than 1,000 new cases late last week, seven additional deaths, and a total of 5,265 so-called breakthrough cases, where those who are fully vaccinated still get infected.

For Wasatch Front restaurant and retail businesses still hanging on, many have been forced to increase salaries to help retain employees, which in turn has led to an increase in prices. Arctic Circle is now offering $15 an hour, spotted Davis, who says retail management writ large has been forced to be more aggressive with wages.

At Feldman’s Deli, front of house manager Austin Zetting said even though they enjoy lots of regulars, they too had to increase prices. And now, a lack of staff is preventing an increase in business.

“We have a really loyal customer base and had a niche so we were able to survive,” Zetting said. “Our biggest problem right now is to find enough kitchen staff to keep up. We’re hearing that from pretty much every restaurant so that scares us a little bit.”

Where Are All the Workers?

A rosier-than-expected July jobs report revealed 943,000 new jobs last month along with a slight dip in the unemployment rate to 5.4 percent. According to the Department of Labor, employment in July is up by 16.7 million jobs since April 2020 but that number is still down by 5.7 million from the economy’s pre-pandemic levels.

“It’s not the lack of people who come to dine, it’s the lack of workers to accommodate them,” Nomad East manager Rikki Capener says about the eatery on Salt Lake’s east bench. “A lot of people were furloughed and they’re still kind of riding that unemployment train. I hope that we can make it through again and get enough staff to keep the place up and running.”

Davis, from the Food Industry and Retail Merchants associations, says the shrinking unemployment numbers — Utah’s 2.7 percent figure is just half the national rate — are a blessing and a curse since the economy seems to be expanding during a pandemic era of fewer workers.
“People are making calculations,” Davis said. “’If I can make X amount for working or X amount for not working,’ they make that calculus. That hits those jobs on the lower end of the pay scale harder.”

The opportunity for the manufacturing, retail and hospitality industries, Davis insists, is to highlight the social component of the job while offering flexible scheduling to counter the work-from-home phenomenon. “It’s incumbent on these sectors to leverage up the strengths they have in these particular jobs,” he said. “Not everyone wants to sit in mom’s basement and log in for work.” If anyone doubts the mental health value of working in a social setting with others, Davis points to the impact COVID has now had on a nation full of isolated school children.

So how much longer do retailers and manufacturers have to adjust to this nebulous new normal? Some economists predict a full economic recovery for the business sector in the next one to two years. Others argue it may take three to five more years.

“We’re still not seating at full capacity and I don’t think we ever will,” says Gabriela Tamayo, manager of the popular Sweet Lake Biscuits & Limeade. The exodus across the industry, threats of future shutdowns and covered faces between customers and servers have permanently altered the food scene, Tamayo argues. “It will never be the same.”

Bankruptcies, Biden Bucks & Boosterism

COVID-19 did not create the so-called retail apocalypse but it has accelerated and exasperated it. The mass shutdowns of 2020 and the financial fallout has killed storied chains, significantly hobbled others and pigeonholed others to become online only.
Consider some of the big-name bankruptcies. From Brooks Brothers, Belk and Neiman Marcus to J.C. Penny, GNC, J. Crew and Pier 1, 2020 wrought reorganizations across the retail landscape.

Whether the wave of economic anguish has crested or is still surging likely depends on the vaccines’ effectiveness against the Delta variant — or a future variant — and when the United States can reach herd immunity. Meantime, food and beverage businesses across the country are starting in larger numbers to take the initiative by requiring proof of vaccination despite certain backlash. The strategy was summarized well by Business Insider: “Some bar and restaurant owners say requiring vaccines is the only way to end 18 months of hell — and bad Yelp reviews aren’t going to change their minds,” the financial publication writes.

From New Orleans to Oxford, Ohio to San Francisco, more restauranteurs and retailers are now arguing that showing a vaccination card (or picture of one) at the door is the best way to ensure employees, customers and the community at large remain safe. The leverage they may hold is considerable. After all, restaurants still constitute the largest employer in the country.

The rising risks and changing views on vaccine requirements nearly a year-and-a-half into a crippling pandemic have also led the Biden administration to consider withholding federal funding from some federal agencies that refuse to require the vaccination. Political insiders say no decisions have been made, but such a mandate from Washington could quickly have public policy and economic ramifications. It would most certainly render political ones.

Back in West Valley City, far from Beltway politics, Frida Guerrero from La Casa Del Tamal, says the only recipe a restauranteur should follow is the one in their heart. “When there’s a need for survival, you put passion and love into food,” Guerrero said. “Between my mom’s amazing cooking and people’s demand, we came out really successful.”

Despite the pandemic’s persistence, Sine too is convinced the restaurant industry’s resilience will prevail.

“They do it not for the money but because they love it,” Sine says. “You’re not going to kill that.”