The hospitality industry has taken one of the hardest hits
By Tyler Schneider
With a variety of grants and aid packages now in play for businesses at both the state and federal level and with coronavirus relief/stimulus checks hitting mailboxes this week, it’s undeniably a period of sheer damage control as far as how local economies look to recover.
“Most of our businesses have pivoted to something else,” said Dorna Edgar Swan on behalf of the Waldo CID. “In the office we’ve switched over to marketing. We will send out daily emails and keep our social media updated to help keep area businesses on the same page. We want our business owners to know that we are there with them through this as much as we can possibly be.”
John Lovell, a partner with Lovell-Sagebrush Insurance, does his best to help mitigate the damage for his client businesses. From his perspective, there have been clear ‘winners and losers,’ to what was already a grim reality for everyone.
“Bars and restaurants got hit the fastest because they’re cash businesses,” Lovell explained. “If you’re in the Power and Light District, the dollars that those bars and restaurants have already missed out on are enormous. A lot of them run on a margin and depend on high-margin alcohol sales to stay afloat. Their servers and bartenders depend on tips. Many can’t afford to take the blow.”
Some bars without a kitchen or grill even have to close up shop completely. Others are aiming to get by on reduced hours and curbside pickup orders as they wait for further instruction and assistance from their state governments.
As far as insurance coverage is concerned, the outlook isn’t fantastic either. No more than five percent of modern business insurance policies include business interruption coverage in the event of a pandemic—a direct response from insurance companies to the AIDs panic of the 1980s.
“Most bars and restaurants are not going to find relief from their insurance,” Lovell said. “If they do, they’re going to have to wait a long time and it will probably require litigation.”
If an unnamed client of Lovell’s gets back to business next month—a ludicrously unlikely possibility—they would still lose at least 30 percent of their monthly income.
“They’re lucky if they hit 70 percent of their avg monthly revenue, and that would be on the higher end of all businesses,” Lovell said. “By the end of the year, restaurants could climb back up close to where they were, but it would take a lot of factors going just right and we just don’t know how long this is going to last to know anything with certainty.”