But their balance sheets remain bleak. Even some of the most popular establishments haven’t made it.
Chicago’s Michelin-starred Blackbird, which served French-influenced American food for more than two decades, closed in June. So did New Orleans’s Cake Café, whose founder got his start selling desserts door-to-door. Philadelphia’s V Street, a hip bar and restaurant offering vegan street food, shuttered in July.
These closures are gut-wrenching for restaurateurs like us. It’s tough to watch friends and colleagues lose everything — especially when it’s due to circumstances outside their control. The sheer magnitude of the carnage is staggering. More than 110,000 U.S. restaurants have permanently closed since March. Many were cherished neighborhood landmarks, valued employers and were a boon to other local businesses since they drew diners from near and far.
And sadly, more closures are right around the corner. While the new coronavirus relief package includes important provisions to help businesses continue paying their workers, the bill falls short of a separate measure — the Restaurants Act — that would have set aside $120 billion to help the nation’s smallest restaurants and bars.
Fortunately, President-elect Joe Biden doesn’t need to wait on lawmakers. He could take executive action the day he takes office to bring some immediate relief — and help ensure that many of our Main Street anchors survive until we can safely gather again.
That action would be to reverse a blow that many restaurateurs suffered months before covid-19 struck: In October 2019, the Trump administration imposed a 25 percent tariff on European food imports. It affects wine from France, Spain and Germany, whiskey from Ireland and Scotland, and Spanish olives and olive oil, along with cheeses from all over the continent, pork, and much more.
At restaurants serving European foods and wines, owners had to choose between absorbing the cost of the 25 percent tariffs themselves — in an industry where margins are razor-thin even in good times — or trying to pass it on to customers and crippling their sales even further. One small restaurateur, Colorado’s Bobby Stuckey, decried this impossible choice. “We can’t just eat 25 percent in our industry. There isn’t 25 percent to eat. . . . There are so many small businesses that are getting hammered,” he told 5280, a Denver magazine.
Frustratingly, restaurants have been caught in the crossfire of a much larger trade war. The goal of the tariffs was to hit back at the European Union in a long-running feud between U.S. aircraft giant Boeing and its E.U.-based rival Airbus. Spanish wine may have nothing to do with Boeing, but the Trump administration thought it could bring Europe to its knees over aircraft subsidies by taxing food exports.
But the tariffs haven’t worked. European producers turned to other markets, especially in Asia, to sell their wares while U.S. businesses suffered. The tariffs on wine alone have caused four times as much damage here as they have in Europe.
This self-inflicted damage was sadly predictable. Economists almost universally deride tariffs as counterproductive. In 2018, more than 1,100 economists — including 14 Nobel Prize winners — urged President Trump not to start a trade war with Europe. But he didn’t listen.
Biden could rectify that mistake with the stroke of a pen.
The relief can’t come soon enough. These tariffs are destroying U.S. jobs in a year when unemployment has hit historic highs. As of October, restaurant staffing remained at 2.1 million below pre-pandemic levels. Most of the pain is hitting small, independently owned businesses, which accounted for 64 percent of restaurant and bar employment a year ago.
Working-class Americans such as line chefs, dishwashers and wait staff suffer the most. “The penalty to the restaurant industry is unrelated and unfair, and the livelihood of too many is at stake,” noted Mike Lata, co-owner of FIG and The Ordinary in Charleston, S.C.
Many of our favorite restaurants will never return. But the losses don’t have to keep mounting. As Harvard professor and former International Monetary Fund chief economist Kenneth Rogoff has argued, ending the trade-war tariffs would deliver “immediate relief” to businesses. “A global recession is a time for cooperation, not isolation,” he noted. That’s good advice. Millions of restaurant owners and workers can only hope Biden takes it and extends them a lifeline — by ending these tariffs.