Can the Restaurant Industry Be Saved?
This story appears in the June 2020 print edition of Rolling Stone.
There’s a refrigerator in the kitchen of Eleven Madison Park designed specifically for ducks. They hang in rows, hooks through their heads, ready to be rubbed down with honey and lavender, and plated like pieces of modernist art. The dish is a specialty of chef Daniel Humm, who took over the Manhattan brasserie in 2006 and turned it into one of the world’s most renowned fine-dining establishments. It’s the type of place where meals last three hours and reservations must be bought, like concert tickets.
“A lot of photographers want this shot,” Humm says, standing next to the duck refrigerator one afternoon in early April. He’s speaking about a previous life, one that ended only weeks earlier, when Eleven Madison Park and every other restaurant and bar in New York suspended dine-in service indefinitely, and the glass-paneled case in front of him was still stocked with succulent fowl. Now, it’s filled with towers of cardboard to-go boxes, the kind you might fill up at one of midtown’s countless pay-by-the-pound hot bars. The meals inside of them — today it’s pasta Bolognese, roasted broccoli, and house focaccia — cost around $5 to produce, including labor. A 12-person skeleton crew, drawn mostly from the 300 employees Humm was forced to furlough, hopes to assemble up to 3,000 of them before the day ends. The effort is a collaboration with the nonprofit Rethink Food, which is delivering the meals to hospital workers and others in need as the city combats the coronavirus. When the partnership began on April 1st, Eleven Madison Park almost certainly became the most expensive commissary kitchen in the history of food service.
It is one of the more surreal examples of how the pandemic has thoroughly upended New York’s storied culinary scene, where some 26,000 restaurants and their 350,000 workers are scrambling to pay rent, feed their families, and figure out whether there will be a job for them to come back to — and to what extent the industry will resemble the one the virus swept away, like a natural disaster, in March. Even Humm, who ran one of the most successful restaurants in the world, has acknowledged that there may not be a place for Eleven Madison Park in whatever culinary scene emerges from the pandemic. This doesn’t mean he’s any less determined to play a role in shaping the future of food service. “The world has changed,” Humm says in a soft Swiss accent. “If anyone is out there and hasn’t seen that yet, I hate to break it to them, but it’s changed. This is also exciting. There was a model that we were kind of stuck in. Now we have the blankest canvas you can imagine.”
Humm, 43, began working in kitchens at 14, making a name for himself at five-star hotels in the Alps before moving to the U.S. in 2003, where he’s been collecting Michelin stars ever since. Which is to say, he would seem to belong to a rarefied set that has the privilege of describing the current crisis as “exciting.” But he was as shellshocked as anyone when the industry suddenly went dark. Like most restaurant owners, his first thought was taking care of his employees, a consideration that was quickly replaced by the realization that he couldn’t — at least not through traditional means. “One thing I learned in this whole thing is that you become very alone very quickly,” he says. “The employees don’t understand. They think you could do more, and you just can’t.”
Eleven Madison Park runs on the same paper-thin margins as the rest of the industry, particularly in New York, which have left restaurants uniquely ill-prepared to weather a prolonged shutdown. Rising rents, rising wages, rising food costs, delivery-service fees, and other factors have left independent owners with almost no cash reserves. “Over the last 10 years, restaurants have been so intensely overregulated,” says Camilla Marcus, owner of West-Bourne, a cafe in SoHo. “Our operating margin is 10 percent, at best. That’s the target for a restaurant. Most businesses can’t conceive of 90 percent going out the window. Think about that. That dynamic doesn’t exist in any other industry.”
It’s a precarious business model for a trade that, outside of government and the health care industry, is the largest employer in America, generating four percent of the country’s annual GDP, according to one trade group, and accounting for 12 million jobs (and millions more, indirectly). Though the majority of the nation’s restaurants are independently owned, single-unit establishments have never had any real lobbying power, partly because the industry is so vast and variegated, and partly because independent restaurant owners simply don’t have a ton of time to worry about much more than staying afloat financially. “As a small restaurant, it’s very difficult,” says Ignacio Mattos, a James Beard Award-winning chef who owns three restaurants in New York. “The system doesn’t support small businesses. There’s not really protection. You’re on your own. There are too many sharks in the tank, and the margins are supernarrow.”
This has to change if independent restaurants stand any chance of surviving the coronavirus and its potentially yearslong tail of adverse effects. In an op-ed published by The New York Times on March 24th, a group of high-profile New York chefs and restaurateurs estimated that 75 percent of the nation’s independent restaurants wouldn’t be able to open without a more robust relief package than what Congress was offering.
To fight for relief, Marcus, some of the authors of the Times op-ed, and others founded the Independent Restaurant Coalition (IRC), dedicating its efforts to the memory of Floyd Cardoz, an Indian American chef who died from complications stemming from COVID-19 on March 25th. Marcus also helped found Relief Opportunities for All Restaurants (ROAR) to advocate for change at the state level. “The silver lining is that we have coalesced as an industry for the first time ever, in a really distinct and clear and organized way,” Marcus says. “I think it’s critical that we have a core advocacy agent to untangle everything that has led to this.”
On March 27th, Congress passed the CARES Act, allocating $350 billion into a Paycheck Protection Program meant to assist small businesses. It was a disaster for independent restaurant owners. The fund was exhausted after barely two weeks and favored large corporate hospitality groups, like Shake Shack and Ruth’s Chris (both later returned the combined $30 million they received). It wouldn’t have helped that much anyway, as the program stipulated that loans would only be forgiven if 75 percent of the money was spent on paying employees within eight weeks. Not only does this hinder owners’ ability to pay rent and other bills, it only provides an eight-week solution for a problem that is going to last months. If restaurants are unable to open their doors and resume business as usual by the end of that compressed time frame, they’ll be forced to lay off their just-rehired staff for a second time.
The IRC penned a letter asking Congress to reconfigure the program, but when the PPP was replenished with another $320 billion on April 21st, not much had changed. “Today we learned Congress does not care if local restaurants close forever,” the IRC wrote in response, noting that former food-and-beverage industry employees accounted for 60 percent of the nation’s soaring unemployment claims, but less than nine percent of PPP loans went to the hospitality industry.
“The mass unemployment that happened overnight poses a threat of being structural and long term,” Marcus says. “It’s not like other businesses. You don’t just turn the lights on and everyone goes back. Anyone who’s opened a restaurant knows startup costs are high. I think a 50 percent sales drop is a reasonable estimate.”
Restaurants able to reopen will face unprecedented headwinds. An impending recession will mean less disposable income. Add to that a lingering hesitancy to gather in confined spaces, as well as the possibility of additional waves of the coronavirus that could lead to more stay-at-home orders. Delivery is going to only grow in popularity. So could cooking at home, an appreciation for which is increasing while Americans are in quarantine. “Our 34-seat restaurant can make sense economically if we’re busy on all 34 seats,” says Gabe Stulman, who owns several small restaurants in Manhattan. “If we’re not busy on all 34 seats, it doesn’t make sense. If we’re not busy on 17, it definitely isn’t viable. It’s just not working.”
The industry needed to revamp its business model even before the coronavirus struck. Now it’s going to have to, and independent owners will need to devise creative solutions as they stare down what could be multiple fallow years. “I think a lot of restaurants will be closed after this, and the ones that reopen may realize their model isn’t working anymore,” Humm says, now slouched in a corner booth of Eleven Madison Park’s empty dining area, sipping coffee out of a clear plastic to-go bowl. “I’m pretty convinced of that. The ones who will stay open are the ones who are going to reinvent themselves. I think we’ll see a big change. I really do. For me, everything has gotten somehow a new meaning. I’m asking myself questions.”
The type of reinvention Humm is envisioning will ultimately require several answers, but he thinks he may have at least one of them in Rethink. As Humm’s staff chops broccoli stems and ladles Bolognese, Matt Jozwiak and Winston Chiu sit in an office off the back of Eleven Madison Park’s kitchen, dialing into conference calls and taking stock of the restaurant’s supply of personal protective equipment. Jozwiak was a line cook at Eleven Madison Park before he left in 2017 to found Rethink with Chiu, the organization’s chief strategy officer. The nonprofit’s founding mission was to use food waste from restaurants and grocery stores to make meals for soup kitchens. Rethink sees the coronavirus as providing an opportunity to overhaul how the entire industry operates, which also means overhauling how the industry is perceived.
“Restaurants are the entry point to our economy,” Jozwiak says. “I was from a low-income family. I was in Kansas and I couldn’t afford college, so I started washing dishes. It’s the only job you can go to and get 15 bucks an hour. Restaurants do workforce training, they teach language skills, they provide meals. If you look at the bare bones of what a restaurant is, it’s a community. But they just fell underneath the business thing. It’s time for restaurants to get more credit. It’s not about Michelin stars. It’s about getting credit as community centers.”
In the short term, Eleven Madison Park’s collaboration with Rethink is both feeding those in need and providing a cash infusion — with the help of sponsors American Express and Resy — that has allowed Humm to rehire some of his staff. Humm doesn’t see why the model can’t be permanent. “Food and hunger are obvious things in front of me,” he says. “We’re now producing 3,000 meals a day. There are only 12 people here. In a way it’s a pretty easy lift. So why are we not feeding people all of the time? Why does it take a crisis? Why do we have hunger in this country? There is enough food. There are enough kitchens.”
Rethink wants to replicate Eleven Madison Park’s model in restaurants across the United States, and has been negotiating collaborations with owners from Florida to California. “We want to get restaurants cash,” Jozwiak says. “If we can build a baseline revenue stream so a restaurant can keep the lights on and the staff employed, then as things start to open up again they’ll have that structure in place instead of being totally cash-poor.” Ultimately, Jozwiak and Chiu want the government to subsidize such operations as part of a federal program that would continue even after the pandemic.
The idea of restaurants instituting a catering shift that provides for the food-insecure, even after they may have resumed their typical dining service, is enticing to Humm, who throughout his career has been known as an innovator ready to zig whenever the rest of the industry zags, an approach that landed Eleven Madison Park the title of the world’s best restaurant in 2017. That summer, Humm and then-partner Will Guidara literally tore the space apart and rebuilt it. Humm says he was planning another reinvention this fall, before the pandemic threw the industry on life-support. “At this point, I don’t even know if there’s going to be an Eleven Madison Park,” Humm says. “We always look for the next chapter. This is it. It’s very real. For this restaurant, and for me as a creative person to react, this is my reaction — and it’s a reaction more from my heart than anywhere else.”
Humm isn’t the only restaurateur using his resources to feed people in need. Humanitarian chef José Andres has been doing it for years through his World Central Kitchen, and on May 5th he teamed up with Rep. Jim McGovern (D-Mass.) and a handful of other legislators to introduce the FEED Act, which would tap federal resources to facilitate restaurants providing meals for vulnerable populations. Other chefs and restaurant owners, like Luca Di Pietro, who founded Feed the Frontlines NYC after he was forced to shut down four of his five restaurants in Manhattan, have taken up the effort directly in response to the coronavirus. “If I can bring someone back to work and feed people who are food-insecure, it’s a win-win,” Di Pietro says.
Restaurants’ survival might depend on such holistic, outside-the-box efforts that stem from a desire not just for financial solvency but also to foster community and, of course, feed people — which is why most restaurateurs got into the business in the first place. The pandemic has led many to ruminate on whether those core purposes will be able to continue as the industry reconfigures itself amid the largest crisis it has ever faced.
“I wanted to build places where people congregate, where memories happen, where relationships are had, where communities exist, where people’s lives can grow,” says Stulman, who is now running a free grocery store of wholesale goods for his out-of-work employees. “I could pivot and adjust my model for something that’s sustainable for a new world, whether it’s delivery or home-cooked meals. That may be what works for the industry, but is that what I want to do?”
Humm, too, has spent a lot of time thinking about his first years at Eleven Madison Park, when he’d get to work in its old kitchen at 6:30 in the morning. “In a weird way this feels very, very similar,” he says of starting over with Rethink, a process that has required him to spend time working in old kitchens without duck refrigerators for the first time in years; starting in late March, he toured soup kitchens around New York to get a better sense of how they operated.
It was a raw time for Humm. On the Wednesday before his staff started plating meals in brown cardboard boxes, he was in an Uber on his way to Rethink’s headquarters in the Brooklyn Navy Yard when his phone began to blow up with text messages.
“Hey, did you hear?” Humm recalls one of them reading. “Floyd just passed away.” Floyd Cardoz was a close friend of Humm’s. His restaurant, Tabla, stood next door to Eleven Madison Park for years. “I couldn’t feel my body,” he says of learning of Cardoz’s death.
Still in the back of the Uber, his mind began to race. He wasn’t wearing a mask. Should he be? What about gloves? Maybe the driver was infected. What about the other people who had ridden in the car before him? The Uber arrived at the Navy Yard. He got out. He’d been there before, but nothing was familiar. “I’m just standing there,” he remembers. “Honestly, I didn’t know how to move forward. It was a really, really tough moment. There were no people. It was cold and gray. I didn’t even know where I was going. I was just paralyzed and in shock. It was one of those moments I will never forget.”
He managed to call Chiu. He also managed to remember why he was there. His restaurant was closed, but he knew he could feed people, even if it meant starting over as a soup kitchen with a small fraction of the staff. “It was just what I had to do,” Humm says. “Do you want to just stand there and die, or do you want to take another step? Basically, it’s just keep it moving. I have to just keep moving.”