How Much COVID-19 Pivots Cost One Detroit Food Hall
Annoyingly technical, but incredibly precise, “panning” is an important term in the restaurant world today. The pandemic has called for adjustment; As of March 2020, restaurants and bars across the country have weathered the COVID-19 pandemic, transforming into online groceries, al fresco dining, meal set providers, and more. These pivots take time, resources, creativity, innovation, and of course money – and their success can mean a restaurant’s survival. In this series, Eater asks operators to open their books and use the numbers to explain how the panning worked (and what it didn’t). First: Detroit Shipping Company.
March is usually a whirlwind time for Detroit restaurants. Guests come out of the hibernation winters in the Midwest call for and enjoy an array of holidays and sporting events, including St. Patrick’s Day, Detroit Tigers Opening Day, March Madness and the Marche du Nain Rouge, an annual parade and Celebration in Cass Gang. March 2020 was a great month for the Detroit Shipping Company, a two and a half year old grocery store near the Marche du Nain Rouge parade route. “We placed a big order to get ready for St. Patrick’s Day and Nain Rouge and we had mountains and mountains of Jameson and Irish whiskey,” recalls General Manager Matthew Zacklan. When the alcohol was delivered, the state confirmed its first two COVID-19 cases. Within six days, the state’s food industry had almost completely stalled.
Trying to ensure the safety of customers and employees, as well as the viability of the restaurant booths within the walls of the Detroit Shipping Company, has been challenging to say the least. In a regular year, the food hall would thrive on a steady number of customers coming in from six independent restaurants for entertainment, drinks, art exhibitions, and international food. At full volume there could be room for 600 people.
“We’re seen as a meeting place for groceries and a common space where people get together, order, and then sit down with some people who may or may not be in their own group – they’re basically sitting with random strangers,” says Zacklan. However, all of this has been put on hold due to COVID-19, which challenged its model. In 2019, the Detroit Shipping Company served 88,210 customers. In 2020, it served less than a quarter of that volume. It closed its doors on March 16, 2020 with the expectation that it will reopen in early April. On the last day of the service, the Food Hall grossed $ 734 in total. Since then, the grocery hall has gone through several iterations, reopening on May 20 for roadside performance and June 12 for dine-in service at half capacity. With the exception of a brief shutdown in July to reassess its reopening plans, the Detroit Shipping Company has since kept the doors open in some form or another.
The Detroit Shipping Company is by nature a destination for private parties and a hangout for large groups. The 12,000-square-foot Food Hall is within walking distance of some of the city’s largest concert venues and arenas. The variety of food and the space with stages for musicians make it a good, people-friendly place for casual events. But with the pandemic, large gatherings were one of the first things to stop in Michigan. Weddings, bachelorette parties and baby showers were canceled at short notice and the districts began to impose new capacity limits. The Detroit Shipping Company tells Eater that it has canceled around 145 private events, including a wedding, as well as six public events and countless regular calendar events like open mic evenings and comedy shows.
Between 25 and 30 employees were laid off in March, including most of Detroit Shipping’s employees. The Detroit Shipping Company, like many other establishments, organized a fundraiser for employees but received only $ 1,915 for the $ 50,000 goal, while some individual restaurants in the grocery hall, such as Bangkok 96 Street Food, received nearly $ 2,000 Donations received for the benefit of the employees.
The on-site operations have been restructured to comply with the new rules enacted in the summer to restrict customer movement, as well as impose masks and social distancing requirements. Instead of customers coming to order at individual booths, the Detroit Shipping Company had to offer table service. A host at the door enforced masks and deployed guests and food runners to deliver customer orders to tables. Detroit Shipping incurred additional labor costs in hiring these employees, as well as hiring staff to maintain strict hygiene protocols. “It definitely added up,” says Zacklan.
In the spring, the team filed for the Paycheck Protection Program through CARES and secured $ 100,700 that management ultimately used to pay staff and change service, plus an additional loan for economic injury of $ 149,900 Dollar. “That helped us enormously,” says Zacklan. The grocery hall also received grants from a local company, Midtown Detroit Inc., to help with rent relief for tenants totaling $ 26,016 – enough to give two months of rent to any business within the Detroit Shipping Company. The grocery hall also participated in a state liquor buyback program that offered cash in exchange for alcohol bought before it closed on March 16. This enabled the Detroit Shipping Company, which operates all of the bars in the grocery hall, to dump the alcohol it had bought for events like St. Patrick’s Day that never happened.
While many restaurants were generating little to no revenue at the start of the pandemic, some were still forced to make costly purchases in order to improve their online presence and take-out services. The restaurants within the Detroit Shipping Company moved from independent point-of-sale systems (the programs and devices that companies use to take orders and payments) to a single online ordering system, which cost the Detroit Shipping Company well over $ 10,000. (In particular, the unified POS system didn’t last long. Jonathan Hartzell, partner of the shipping company, says they went back to individual systems due to the complicated division of sales for each company.) The company incurred new costs for cleaning agents and PPE that were included in the his management responsibility are included.
COVID-19 pivot-related construction projects were another cost. During the spring, management initially spent $ 35,000 building a deck in the property’s surrounding parking lot to complement the seating in the building’s courtyard. They added wooden fences to insulate the space, as well as a volleyball court to make the outside of the building feel funnier and more welcoming. They set up tents and designed new wooden cabins to improve the feeling of being outside. For Hartzell and his business partner James Therkalsen, the creation of the outdoor space in a very challenging situation was a positive result. “It was our dream and plan that the environment around us would be built up and the parking lot in the background removed and converted into the back yard,” he says, referring to the free space around the two-story building of the Detroit Shipping Company.
Hartzell says from the outside it looked like the Detroit Shipping Company was doing fine this summer. “During midsummer, when people were comfortable, we had to wait an hour and it looked like we were jamming,” he says. “But you will see year after year that we were still 40 percent of what we were doing [during the same period in 2019]. “The lower capacity limited the grocery hall’s ability to cater for so many people per day, and the incoming groups were also smaller as per the safety recommendations. Changes in state laws that allow take-away cocktails did little to help.
And the wintering was an enormous, largely undetected cost burden for restaurants in cold climates this fall. Detroit Shipping Company management estimates that $ 30,000 was spent on building the original outdoor seating area on top of the $ 35,000. Less than a week after the new tents were built, Michigan closed the indoor dining areas and unexpectedly restricted the outdoor seating. Under the rules: outdoor structures didn’t have to have more than one wall if they were to house multiple groups, which meant tents like Detroit Shipping’s couldn’t be enclosed or insulated with any type of wall. They also had to be clear of standing walls, which meant that the Detroit Shipping Company had to move one of their tents from the seating area of the building’s courtyard further from the building to meet the requirements, and it did so at a cost of $ 3,800. “This is a misstep on our part that we could not have foreseen,” says Hartzell.
I’m looking forward to
Right now, Michigan restaurants are facing an extremely difficult winter. Indoor dining is currently closed through Sunday, January 31st, with the possibility of the state allowing some forms of indoor service to resume on Monday, February 1st, if hospital capacity, total case rate, and percent positivity rate are up improve further. Companies like the Detroit Shipping Company, which has received numerous grants and loans during this process, may be able to do this. But others don’t like it.
Despite that relief, winter has its own challenges, and the promise of March – its events, improved weather, potential for advances in vaccinations – is still a long way off. “Unfortunately we had to lay off some people and make some changes in-house to get to work for the winter. We’re doing pretty much everything to make it this winter, ”says Zacklan. “Hopefully we’ll see some better days in the spring.”
Brittany Holloway-Brown infographics, Made by Made icons.
Sign up for the newsletter
The latest news from the food world every day