The windows of Fair Oaks Diner stand dark, the door is locked and the interior’s checkerboard flooring and red pleather bar stools haven’t felt the weight of customers in two weeks.
But outside, the tiny neighborhood diner’s red neon “EAT” sign remains illuminated. It’s a symbol of resilience as the novel coronavirus pandemic and ensuing fallout continues to disrupt businesses and upend lives.
Located on the avenue that shares its name, the restaurant has operated on Madison’s east side for 15 years under the ownership of Kris Austin, though it changed hands a few times before she took over.
At some point along the way, people began calling it “The Eat,” and sometimes they still do, she said. To Austin, the “EAT” sign means “diner,” and keeping it illuminated even as the restaurant is closed signals that she’s “going to hang in there.”
“I just wanted people to feel like I’m coming back,” she said. “It’s not the end.”
Restaurants are among the businesses most visibly affected by evolving government directives issued in response to the spread of the novel coronavirus, but the entire hospitality industry is suffering. Destination Madison president and CEO Deb Archer said hotels are likely “the first ones that were hit really badly” after people stopped traveling.
Some 14 million people visit Dane County annually and spend more than $1.3 billion here, she said. Those expenditures support more than 22,000 jobs and contribute to municipal programs through sales and room taxes. It’s all part of what the sector calls “the invisible industry,” Archer added, because “people don’t recognize the behemoth of an engine that is.”
COVID-19, the disease caused by the virus, has claimed more than a dozen lives in Wisconsin and a couple thousand in the U.S. Efforts to contain its spread have fundamentally changed daily life for millions and operations for nearly every category of business.
“So anyone, either (traveling for) business, leisure, conventions, conferences, that spigot just got turned off really, really dramatically,” she said. “And then the other industries sort of cascaded.
Restaurants adapt to new reality
Austin’s decision to close Fair Oaks Diner came after multiple efforts to mold the establishment into one that could weather the changes the coronavirus would bring.
Workers stepped up their sanitizing efforts: wiping down menus after customers used them, cleaning door knobs and every other surface people touched. Austin bought more takeout containers and bags, offered curbside pickup and cut the tiny restaurant’s seating in half. She also made Apple Pay and Venmo options available in the cash-only diner.
But on March 17, she announced the diner would close the following day, laying off two full-time employees and two recently hired part-time employees.
She affixed a sign to the door that reads: “Stay safe, see you soon. The EAT sign will burn ‘til we meet again.”
“My first thought was, ‘If I’m not really making the money on to-go stuff to be able to pay (my workers), then at least they’ll get unemployment,’” Austin said. “That was one of the deciding factors. And my safety, and their safety. And so I talked to them. They were all on board. They were scared, too.”
Other establishments have remained open, including most in the Food Fight Restaurant Group, which includes nearly two dozen locations.
They’re a key part of Madison’s $472 million dining industry, which includes 442 restaurants that employ over 9,000 people, according to 2018 Business Dynamics Research Consortium data.
Food Fight officials announced two weeks ago they were furloughing some 750 employees, but further cuts have been made to the company’s small office staff and across some restaurants, hospitality director Elizabeth Garcia Hall said.
Pinpointing the exact number of staff currently working is “a bit of a moving target,” Garcia Hall said, as managers seek to ensure employees work the minimum hours they need to cover health insurance premiums.
Still, the group has temporarily closed a number of its restaurants: Johnny Delmonico's Steakhouse in downtown Madison; Eldorado Grill on Williamson Street; and Fresco at the Madison Museum of Contemporary Art. UW-Madison locations Steenbock's on Orchard and Aldo’s Cafe closed as a result of the university closing campus to students
Any unused food at the restaurants has been moved around internally, Garcia Hall said, preventing big losses tied to produce and other goods spoiling.
“I think the restaurants that are staying open now are not staying open to make money,” she said, noting Food Fight’s restaurants’ revenues, on average, are down between 80% and 85%. “It’s far more about their family of staff.”
Even restaurants with drive-through and takeout infrastructure firmly in place are having to make adjustments.
Susan Bulgrin, who owns or co-owns three Culver’s locations in the greater Madison area, said she’s seen a 50% loss in business across the sites after the corporate office decided in mid-March to shut down the chain’s dining rooms, though she stressed she’s grateful for the customers who still frequent the business.
The loss means staff hours were cut by about half, as managers have sought to divide hours among full-time workers and others, all while working with high school-aged part-time employees to see how they fit in, Bulgrin said. Staff is also seeking to cut costs by slowing the frequency of food deliveries into the stores, reducing waste pickups, putting on hold subscriptions to news outlets and more.
While Bulgrin said she has the support of corporate leadership, she noted each Culver’s restaurant is individually owned and operated — not a corporate store — and “we have to run this as our own business.”
Her three locations — Todd Drive, Cottage Grove Road and McFarland — haven’t had to change their menus, she said. But she said community donations, a trademark of many Culver’s stores, might be affected. She added that she and other owners “will continue to try and provide that financial support” going forward.
“We will continue to be good community partners and we are going to help as much as we can,” she said, adding that she still plans to donate to scholarships, organizations and more. “It’s just uncertain now as to the amount and the degree that we’ll be able to do.”
Widespread effect on businesses
In an attempt to measure the fallout from COVID-19 and its response, the Wisconsin Economic Development Corporation surveyed state businesses in early March.
Some 20 businesses — representing restaurants and bars, small retailers, hotels, caterers, manufacturers, event spaces and more — logged the initial ramifications of the pandemic on their operations.
Those economic disaster injury worksheets were first referenced in Gov. Tony Evers’ March 18 letter to the federal Small Business Administration requesting loan assistance for small Wisconsin businesses, which SBA approved last week. The Cap Times obtained the surveys through an open records request.
While WEDC redacted most financial information from the worksheets, arguing that disclosing the details “could hamper WEDC’s efforts to assist businesses,” the forms showed more than half had cut employees as of two weeks ago. It’s likely more layoffs have followed as the pandemic has continued.
Fox Valley Pro Basketball Inc. operates the Menominee Nation Arena in Oshkosh, home of the Wisconsin Herd, an NBA G-League team. Company officials noted cancellations and rescheduling of events that were supposed to take place over March and April led to temporarily letting 200 workers go, leaving just two employed.
Manitowoc-based Strand Adventures, a family recreation center with climbing walls, laser tag, an obstacle course and birthday party event space, operates on reservations and ticket admissions. It had just four employees as of mid-March, down from 22.
“This disaster has taken our revenue to zero,” the owner wrote on his form.
Others didn’t report steep staff cuts, including Kaukauna-based Kobussen Buses Ltd., which listed 1,175 employees before the pandemic struck Wisconsin. The owner in his form noted management was “doing our best” to maintain staff so operations could begin again as needed.
The company runs school buses across the state and contracts with a few Dane County districts, including Deforest and Sun Prairie. It also offers commercial services in Madison, the Fox Cities and Chippewa Valley.
“All travel by motorcoach has been reduced to nothing,” the owner wrote.
Other employers began feeling the effects of COVID-19 earlier this winter, as worldwide supply chains were disrupted by the virus that originated in Wuhan, China.
Green Bay-based American Tent — deemed an “essential” business because of an increased need for tents and other protective supplies, according to its website — grappled with an inability to import parts and raw materials in, its form said.
Some businesses are using this time to creatively generate revenue and increase production of medical supplies.
In Blue Mounds, Midwest Prototyping is now making face shields. Attwill Medical Solutions in Lodi is shifting production to hand sanitizer. Fitchburg’s Promega and Madison’s Aldevron are creating pharmacological materials for testing and treating COVID-19. A few liquor distilleries are making hand sanitizer, a recent Wisconsin State Journal roundup showed.
But in industries that rely on large group events for revenue, there’s less room for innovation.
Madison wedding planner Rachel Tatge, who has owned Top Shelf Weddings & Events for a decade, noted that for those who are holding conferences and informational sessions, doing them virtually is possible. But it’s different for elaborate wedding celebrations that include vendors, photographers, DJs, event venues and hotels.
“I don’t know how we would get innovative having a 250-person party where people were going to sit at a table and eat together and dance on a dance floor,” she said. “Obviously you can do some things virtually (but) it’s not going to replace that in-person, large festive reception and celebration and it’s not necessarily going to help your vendors.”
Local economic impact unknown
It’s unclear what the economic toll of the crisis will be in Madison, as many employers are seeking to adjust to the new and regularly changing reality, figure out how to pay their bills and keep their doors open — if they haven’t already closed.
While they’re focused on the day-to-day challenges, Greater Madison Chamber of Commerce president Zach Brandon said the problem-solvers in the business community are reaching “a point where it’s starting to stabilize.”
“We can transition from fire-fighting … and we can start to be more proactive about how to assess the situation, how we record it and how we relay that to the government,” the former state Department of Commerce deputy secretary and Madison City Council member said.
Already, he said, there’s work in progress on surveys and platforms to assess what the economic impact is for the metropolitan area, though he noted such mechanisms are a few weeks away.
At the state level, WEDC spokesman David Callender said while the agency doesn’t have any financial figures available, officials are working with its statewide partners “to develop a complete picture of the economic impact COVID-19 has had on businesses, especially small businesses.”
The data, he added, would help guide the recovery response for businesses in both the short and long-term.
Emerging from crisis
Some business leaders and employers initially likened the pandemic’s impact to the terrorist attacks on Sept. 11, 2001, or the onset of the Great Recession in late 2007. Those comparisons have largely been tossed aside as the crisis continues.
Archer, of Destination Madison, predicted the COVID-19 fallout would “linger much longer” than those other events. Economists and other experts expect consumers’ habits could change and a slow recovery could emerge while governments may keep in place restrictions on crowd sizes.
She stressed that no one yet knows what a recovery may look like, noting that it’s possible government officials could suddenly decide “the veil is lifted” and allow individuals to gather in large groups again.
“In the lifetime of most of us here, there really has never been anything like it,” she said.
Those in Madison’s retail and service industries are expecting to see different spending habits linger well beyond the end of the pandemic.
Among local retailers, Carol “Orange” Schroeder, owner of Orange Tree Imports on Monroe Street, said there are concerns about consumers turning to Amazon, Walmart, Target and others during the crisis while many local shops are closed.
She was optimistic that those who frequent the Monroe Street shops would return. They came back after a road construction project in 2018, when much of the street was closed. That, she said, proved “our customers are dedicated.”
In the meantime, some are selling online, Schroeder said. Those businesses are largely relying on shipping or delivering orders. The ability to do that profitably relies on the ease of shipping certain products.
It’s also possible, she said, that “retail learns new ways of connecting with customers through this.”
“If we can hold on and not have our expenses overwhelm us, we do have the inventory on hand to reopen,” Schroeder said. “I’m optimistic life will go on for many of us.”
Prior to the onset of the crisis, many restaurants and bars in Madison had been struggling with a lack of available staff and high rate of turnover.
Food Fight’s Garcia Hall acknowledged the “tough market” already in place ahead of the pandemic, but said the amount and diversity of locally owned, independent establishments is “part of what makes Madison Madison.”
Emerging from the crisis, she said, is “kind of like musical chairs in the labor piece,” as some workers may decide to move to a different restaurant or leave the industry to seek greater stability.
“There is a possibility that this is going to reset a lot of different aspects of our industry here in town and my hope would be that there would be greater camaraderie amongst all the independents,” she said.
Brandon of the Chamber of Commerce said the area is positioned well for recovery given its diverse economy that doesn’t depend on a single industry.
Instead, he said, Dane County has agriculture, manufacturing, health care, technology and public sector bases, among others, all of which “create diversity in our economy,” thus strengthening it.
He also noted the area’s young, educated workforce that adds additional protection to the region. All that, paired with the fact that supply chains will continue to be rebuilt around the world as the greater Madison area emerges from the crisis, leaves Brandon optimistic about the future.
“It is my firm belief that Madison and this region will be one of the bright spots coming out of this recovery,” he said.
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