Pandemic Perspectives: Bar Owner Forced to Permanently Close Operations
How COVID-19 Is Impacting Small Business Owners
The coronavirus pandemic has had an immense impact on the economy and workforce, as it has not only exacerbated a recession but led to nearly 53 million people in the U.S. filing for unemployment in just a 19-week span leading up to July 25, 2020.
Every unemployment filing, furlough, and closed business reflects a personal experience. As the statistics pile up, we’re committed to sharing stories of how COVID-19 continues to shape people’s lives and livelihoods—how they’ve coped, what they’ve learned during the crisis, and how they’re moving forward.
Among the industries hit hardest by the coronavirus pandemic has been hospitality and service, with studies showing that over 26,000 restaurants closed in the U.S. as of July 10, 2020. In New York City, which was once the epicenter of COVID-19 and where numerous venues have closed their doors, bar owners like Justin Noel, 39, have felt the impact firsthand. After trying to keep staff paid and operations afloat for months during the pandemic, the service industry vet and his partners were eventually forced to permanently close their Manhattan establishments, Sweetwater Social and Coco & Cru. Here, Justin shares his story about life before the pandemic, using Paycheck Protection Program (PPP) help and the Economic Injury Disaster Loan (EIDL), and eventually shuttering operations, his realistic view on reopening, and why he’s still determined to make a difference in his industry in this unprecedented time. His answers have been edited for length.
So, what was life like before the pandemic?
Due to the culmination of hard work and really having the right connections, I put myself in a position where I was quite busy with a multitude of different things. Up until recently, I was the director of trade advocacy for a non-alcoholic distilled drinks brand called The London Essence. So, I was traveling around the U.S. for two years launching that brand in new U.S. markets. My role as director of trade advocacy was coming up with programs, building educational decks, sales materials for distributor partners, then creating activations and strategizing on how to spend our advertising and promotional budgets, and building those relationships. That was one part of my life.
The other part was [as] owner of Sweetwater Social and Coco & Cru, and partner in a place called GoldBar. And then, I also own a company called Closing Time Cocktails, which is an events company, so I really had filled my calendar with work.
What actions did you take when the pandemic really started affecting New York?
My partners and I had a conference call among ourselves. I think we were much like everybody, 50/50 cautious [and] optimistic. From February into mid-March, not a lot of people were giving anybody any real direction and it was very confusing. It was like damned if you do, damned if you don't. And we obviously have employees and we were like, let’s be proactive.
We put out the sanitizing stations in our bar and a restaurant. We had everybody wear masks and gloves. We thought we were getting ahead of the curve. It was based on no real direction, but it seemed like a good idea. And then within like 24 to 36 hours of having our conference call, we got on the phone and were like, guys, this is not looking good. It looks like this is going to be a real situation that we need to decide on what to do because we didn't want to put ourselves in harm's way from a liability standpoint with our staff.
We also know that our staff wanted to work and make money. So, we had to do what was best not only for the business, but what we thought was best for our customers and our staff. That Saturday, we shut down at like 9 at night and we said, "Guys, until further notice, don't come back.” This seemed to be something that was gaining momentum. And then that Monday, which I believe was right before St. Patrick's Day, that's when [New York Governor Andrew] Cuomo put the stay-at-home mandate in effect, saying bars and restaurants and non-essential businesses had to close their doors. It all culminated within three days.
From that moment on, we started to get more information on a national level as to the severity of this disease and how it can spread. After that, we and our staff realized really quickly that this was going to become a much larger situation and we said to ourselves that if we're going to let the staff stay at home, they might as well start collecting unemployment before this thing becomes uncontrollable.
So, we basically furloughed our entire staff for all of our places and told them to get on unemployment now. File for claims because we don't know how many people are going to be doing it. You don't want to be stuck in the system. You don't want to be trying to do it a week from now.
In terms of retention at least, it seems like you guys were proactive with how you took care of your staff, which is good. Did you apply for the PPP?
We furloughed everybody, and we did take the PPP and did it for one main reason: We basically hired our staff back. We decided by the last week in May that we were going to shut our doors based on how the clause in our contract was. We had a 60-day Good Guy Guaranty that we had to put into place if we were going to leave the place or we would be on the hook and be personally liable for anything. So, the landlord could come after us.
How did you utilize the staff that you hired back?
With the stay of evictions being a 90-day period, we decided that on June 1, we're going to start the closing procedure and we're going to roll back our Good Guy Guaranty to April 1. So effectively, April 1 would be our last day of operation. That gave us until July 1 to get everything out of our establishments. And so what we did was we hired everybody back to do inventory and help clean up. We took a bunch of stuff to storage. We sold a bunch of stuff. But before that, we had to have all of it inventoried and photographed.
So, we hired back almost anybody who wanted to get paid. Some people had other things they were doing. We hired back almost everybody and for most of June, they pulled all the liquor down.
But we rehired those people back, and it really was a good way for us to use the money to help our workers who were definitely not going to be able to get federal or local unemployment help. So with the PPP, we knew that this was probably the best way to help them in the short-term.
I think we used like 65-70% of the PPP and then we gave back the rest. The idea was to use as much as we can to keep these workers with some money coming into their pockets and not really disturb their unemployment benefits. But also, we wanted to help those who weren't getting those benefits.
You said you've permanently closed these places, so where are we at now?
On July 1, we had to be out officially, so we closed everything up. We held a big liquidation sale and literally got pennies on the dollar for things that we spent good money on. Unfortunately that's the reality now, but we hope in the future, seeing that especially come fall and winter, there’s going to be a mass liquidation of real estate, that there's going to be an opportunity for us hopefully to find a space down the road and maybe find a better landlord situation.
We definitely loved the concepts of what we created and honestly we think it's got the opportunity to “rise like the phoenix” again. But, I think we're also very realistic in the sense that that's probably not happening until 2021 at best. One, a vaccine needs to happen. I think anybody in this industry right now who is not realistic about the fact that there's not a vaccine and that this thing is not going to be a headache between now and January 1.
Unfortunately, I think the reality that we're going to see come the end of summer is that a lot of places will have shuttered their doors.
Besides the PPP, did you receive any other financial support?
Yes, so Closing Time Cocktails is my own business, so I was able to qualify for an SBA loan. A lot of people were able to qualify with that, but that only maxes out at $150,000. If you're a small business, having $150,000 in a major metropolitan area, that's only maybe two months’, three months’ max worth of operating expenses, depending on how much your rent is and what you're doing. If you're sitting on a lot of inventory, or if you're in retail, that's going to hurt you. You're going to exhaust that money and it's a 30-year loan at 3.75%.
And if you're not getting money back in to offset that interest, you just shackle yourself with debt that is going to take you so long to pay back, that your business is probably going to not be around after that. So, you don't want to take on more debt just to sustain yourself if the reality is that there's no end in sight.
What have you learned from this overall? How has it changed your career perspective?
Well, it's made me be more involved. In the past, because I had so much stuff I was doing, I was able to—I don't want to say be a passenger—but to use my platform for my businesses and to promote my career. And as a result, I probably was not a vocal member of the industry in the sense of trying to push progressive agendas.
And so, I started to do some self-evaluation. I also saw how many people in my industry were really hurting. So I said, how can I help? This is an industry that's given me so much. So, one of the things I started to do was hosting these cocktail classes online. I’m working with ChefsFeed, which is similar to Masterclass, but it's really more like YouTube content with regards to chefs and bartenders.
I am doing classes on these platforms and using them to raise money for Another Round Another Rally and [Relief Opportunities for All Restaurants] ROAR. Using those platforms, I know that I'm talking to consumers—not my trade brethren. I'm talking to people who are everyday people who probably don't really know the plight of what our industry is going through. I've been able to create grants for Another Round Another Rally and been able to raise money for ROAR grants. It’s a drop in the bucket, but it's my way of trying to help.
Since you said 2020 might not be a go to start up your business(es) again, what is your plan for the immediate future?
I'm not saying no to opportunities; I'm constantly talking to different people. I will say I've adapted more to this [remote] format now and embraced it. I've also learned that during this time that content is king. That's why I'm getting my digital marketing degree to learn about how to be more social media-savvy, understanding the metrics, and using insights to evaluate what I’m doing.
I'm one of those people who is a realist. I can accept if things change, and if they don’t change for the better, I'm not going to be [regretful]. I'm going to be very happy and very optimistic about things. But, I definitely think what most people need to be doing right now is evaluating what reality is so you can sustain your business.
There's nothing bad about going out of business if it wasn't on your own terms. That's the one thing that's really helped me mentally was realizing that all these things that have happened to me are not of my own accord. It's not like I was bad at my job. I wasn't a bad business owner. I wasn't a bad event executioner. It was literally like the government and this [pandemic] came together and they said, for everybody's health, this is all going to stop.
The good thing about what we did was we still have money in the bank. We used a part of our PPP to pay our staff. We're going to pay some of our investors out and then we're going to keep some of it in an account so when we do decide to reopen, we've got some capital that we can come to the table with.
That's the only thing I can hope for as we navigate the waters and see what happens. You can stick your head in the sand for the next couple of months and just hope for this thing to pass by or you can—I hate to use the word pivot—but you can try to see what else is out there and explore new opportunities.
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