'Dead In The Water': D.C. Restaurants Still Struggling As Winter Approaches
The restaurant industry’s nightmare year is about to get even darker.
The cold weather is expected to slow demand for D.C. restaurants and make it more difficult to dine outdoors, a factor that has helped keep businesses alive during the pandemic.
Restaurateurs are adapting their outdoor spaces with heaters, tents and other measures, but they remain uncertain about how willing customers will be to sit outside during the winter. And with the industry still waiting for more relief money from the federal government, stakeholders agree that another wave of restaurant closures is coming.
Geoff Dawson has already shut down one of his restaurants during the coronavirus pandemic, and he owns multiple large beer halls in and around downtown D.C., including Penn Social and Franklin Hall. His bars have generated barely a quarter of their typical revenue in recent months, and he thinks winter is going to be worse.
"It's going to hurt a lot," Dawson said. "So many businesses are on the razor's edge right now going, 'OK, I think I can be here another two weeks, maybe three.' That's the nature of sitting dead in the water. We don't see any answer."
'There's Nothing Going On'
The winter is always one of the slowest periods for restaurants, but this year it comes after a seven-month stretch in which restaurants have fought to stay alive during a pandemic.
Restaurant owners say their business has largely remained steady through October, but sales are still far below their normal levels. The Restaurant Association of Metropolitan Washington said restaurant sales on average are 70% lower than they were last year.
The pandemic has already left dozens of casualties in the D.C. restaurant scene. A running tally from Eater DC has found more than 50 restaurants that have closed permanently since March. Retail vacancy on D.C.-area high streets has increased from 6.9% before the pandemic to 15.8%, according to new data from Dochter & Alexander Retail Advisors.
The RAMW projects 25% of the region's restaurants will close as a result of the pandemic.
Brothers Ian and Eric Hilton announced last month that seven of their bars along the U Street corridor would close indefinitely as of Oct. 31: Marvin, The Gibson, The Brixton, El Rey, American Ice Co., Players Club and Echo Park. They have since decided to keep El Rey open.
Ian Hilton told Bisnow El Rey, a Mexican-themed bar on U Street between Ninth and 10th, happened because of a flow of customer support following the September announcement. A large amount of that support came from students at nearby Howard University, Cosmic Mag reported this week. El Rey also received a grant from the District to help adapt its outdoor space for the winter.
But for the remaining six restaurants, Hilton doesn't know when, or if, they will reopen.
"Do I think there will probably be permanent casualties? Yes," Hilton said of his restaurants. "Does the optimistic side of me want to try to figure out a way to reopen all of them? Also yes. Somewhere in between is my expectation."
Hilton said mild weather has kept restaurant demand steady this month, but he said his businesses, many of which were frequently packed with lines to get in before the pandemic, have still been doing around 30% of their typical sales.
Dawson permanently shut down his Ivy City restaurant Big Chief early in the pandemic. He still has several beer hall-style venues in Downtown D.C. and the surrounding neighborhoods, including Penn Social, Astro Beer Hall, Franklin Hall, Church Hall and Tall Boy.
He said his bars across the board are doing around 20% to 25% of their typical sales, but business is particularly hard in the office-heavy downtown area. For this reason, he said he still hasn't reopened Astro Beer Hall at 13th and G streets NW.
"Downtown is dead as a fence post. There's nothing going on. Nothing," Dawson said. "Nobody's working, nobody's visiting, nobody's out being happy."
"We've made loads of adjustments to deal with that," he said of the low sales numbers. "Obviously we don't have nearly the amount of employees as when we were operating at 100%. We're still in a rent-deferred position with our landlord until we see where the end is with this."
Alexandria Restaurant Partners partner Dave Nicholas, whose group owns several Old Town Alexandria restaurants, said they are doing around 70% of last year's sales. Mark Ridley, owner of the Brass Tap in National Harbor, said his sales are around 80% of their 2019 level.
The sales numbers restaurants have maintained through October have been supported in large part by outdoor dining, an offering that becomes more precarious as the temperatures drop.
A Pricey Gamble
The restaurant industry is working to adapt outdoor spaces for the cold weather and to make people feel comfortable dining indoors to help fill their limited capacity.
But preparing restaurants for the winter can require significant investments, and some owners are hesitant to make those bets, considering their seemingly long odds of paying off.
D.C. in September launched the Streatery Winter Ready Grant Program to give $6K to restaurants to help them buy tents, heaters and other equipment to adapt their outdoor dining for the winter.
Deputy Mayor for Planning and Economic Development John Falcicchio said the applications have already exceeded the $4M it initially allotted for the program, but it is continuing to work through the waitlist.
El Rey is one of the restaurants that have received the $6K grant, and Hilton said it played a role in his decision to keep the business open.
"That was a big contributing factor because of the type of assistance that can help for that particular business, because we do have access to a pretty good streatery there," Hilton said. "It is the type of business where I think people will brave lower temperatures a little bit deeper into the winter."
But that $6K still represents a fraction of the cost some restaurant owners need to invest to prepare for the winter, Neighborhood Retail Group CEO Bethany Kazaba said. She worked with Chinatown's Bar Deco to prepare an enclosed, 100-seat outdoor tent for its rooftop.
The owner of Bar Deco, Noe Landini, invested $75K for the outdoor tent, and he has taken other measures such as installing plexiglass shields, Kazaba said.
"These outdoor spaces are super expensive, but it's going to be the only thing that allows places to stay open during the winter months," Kazaba said.
Armstrong said he has tents covering about 40 of Kaliwa's 60 outdoor seats as well as heaters. He doesn't plan on using the outdoor seating and heaters during the coldest days of winter, but he said in mild weather, he will look to take advantage of it.
"Every day, every penny, every little bit counts," Armstrong said. "If we get one Saturday that's busy, that's better than the alternative. Those are the crumbs and scraps we're all going to live on."
He said Kaliwa is also installing plexiglass barriers to try to make people feel comfortable dining inside.
"We'll take every amount of business in any possible way we can and limp through the winter," Armstrong said. "That's what everyone's going to do, and pray for a vaccine in the spring."
Jennifer Currie, director of public programming and events at The Wharf, said she organized a group contract for the development's restaurants to save money on the propane for their outdoor heaters. She thinks people will be more prepared to brave the cold weather than they are in typical years.
"This year people are ready for the patio, they know they're going to eat outdoors," Currie said. "I look around and it's not ladies shivering because they're in nice clothes expecting to go to a concert, it's people in their parka jackets and they're ready. I think that's a good sign that winter business will be steadier, but just different."
In Old Town Alexandria, ARP has about 300 total outdoor seats at restaurants: Mia's Italian Kitchen, Vola's Dockside Grill, Theismann's, The Majestic and Lena's Wood-fired Pizza. Nicholas said he is worried the cold will hurt business, but it is preparing its outdoor and indoor seating.
Nicholas said ARP is in talks with the Alexandria government to build a temporary, partially enclosed structure over its King Street patios, but it is still working through safety and cost issues.
The restaurant owner is also focusing on shoring up its indoor dining. ARP this month invested in new air filtration units for its indoor dining areas that cost around $5K per restaurant, Nicholas said.
"We spent a great deal of money on those units, and we're hoping that they will help people feel more comfortable and it will make things more safe," Nicholas said. "We're doing everything in our power to have safe restaurants in the winter."
Not every restaurant owner has the ability or willingness to make significant investments to prepare for the winter.
Ridley said he has already bought heaters for the outdoor deck at The Brass Tap, and he is looking into temporary walls that would keep the area protected from the wind. But this is creating complications with Prince George's County, which he said requires sprinklers and fire alarms for enclosed outdoor spaces.
He doesn't know if it is going to be worth spending the money.
"I can't invest a great number in this," Ridley said. "It would certainly be better just to shut down for a period of time than it would to invest more money. I've got to figure it out."
Peterson Cos. President of Retail Paul Weinschenk, whose firm owns National Harbor and several other major retail developments, said its tenants aren't enthusiastic about the feasibility of outdoor dining. He said they are instead focusing on indoor dining, takeout and delivery.
"There's a lot of conversation going on in the industry about how to extend the season, and I think that's going to prove to be very challenging," Weinschenk said. "We get cold enough that I don't care whether you've got a gas heater or not, you're not going to want to be outside."
Weinschenk said some of Peterson's restaurant tenants are looking into fully enclosed outdoor spaces, but that creates complications around the flow of fresh air, social distancing within the space and carrying food from the restaurant to the enclosures.
With outdoor dining largely disappearing, Weinschenk expects more restaurants will close.
"Realistically, we have to acknowledge to ourselves that some restaurants are potentially not going to survive because the winter just really impacts their ability to conduct the sales that keep them profitable," he said. "I think there will be fallout."
"There's no panacea," Weinschenk added. "There's no silver bullet. There's no magic fairy wand. It's going to be a tough winter."
Stay tuned for Part 2 of this story on the impact that a lack of new federal relief money could have on the restaurant industry.