Pandemic Effects on the Restaurant Industry
Dear friends, clients and colleagues,
In these unprecedented times we are all struggling to stay safe and fully informed concerning our rapidly changing reality with the COVID-19 virus. While balancing our own personal priorities and shifting to a work from home setting, we remain dedicated to serve our clients to the best of our abilities.
Our practice is focused on some of the most heavily impacted segments of the economy, namely hospitality and entertainment, and we are diligently following the ever-changing news surrounding these industries. Unfortunately, there is little new direction at this point considering legislative action remains pending. Nevertheless, while we continue to actively monitor such legislation in order to advise clients accordingly, there are actions that can be taken now. We will continue to keep you updated regarding the status of new laws and our recommendations for your business, but as of now the current status and our suggestions are listed below and please feel free to contact us with any further questions:
Dine-In Closure: All Illinois bars and restaurants must close for dine-in service as of 9 PM on March 16, 2020. Delivery, carry-out, and curbside service is allowed. Customers are allowed to enter a restaurant or bar to order food so long as they immediately leave upon receiving their order. Restaurant and bar operators are responsible to ensure that social distancing policies are in place and enforced so that customers do not congregate inside or outside of the establishment. Sidewalk cafes and patios are to remain closed. Additional operational guidelines regarding take-out and delivery services are expected from the State of Illinois in the coming days and we will update this information upon receipt.
Employees: Displaced employees should be placed on furlough and advised that they should file for unemployment benefits with the Illinois Department of Employment Security (“IDES”). Advise your employees they can immediately apply for unemployment online through the Illinois Department of Employment Security website (even for a reduction of hours if you shift to reduced hours). Although details regarding federal legislation and IDES Emergency Rules have not been finalized, employees can at least begin the process with the IDES and we can advise employees of any future actions and rights as legislation is finalized. Upon release of pending legislation, we will further address issues concerning paid sick leave and expansion of Family Medical Leave rights based on each client’s specific situation.
Encourage your employees to write, email, call, and tweet the governor, senators, and representatives requesting that they take further steps to assist the industry. Several chefs and owners (including some of you reading this) worked to come up with solutions that were shared on Twitter, which can offer further guidance. Owners and operators can also inform the IDES and SBA of the impact this is having on your business through this link. This helps estimate the economic impact - the bigger the estimate, the more likely the aid. Lastly, the Illinois Restaurant Association provides a good resource for a call to action letter template from owners/employers to their Senators.Business Maintenance: Although the concept of economic protections for hospitality industry operators has been discussed, no formal legislation has been approved. Until we receive further direction and evaluate new law, we advise clients to look at the following items:
Rent Suspension/Abatement: Review lease language to determine appropriate Force Majeure issues. Discuss the issue of suspending rent payments or negotiate appropriate abatement language with your landlord to address the shutdown period. We can also assist if missed rental payments are unavoidable or anticipated.
Insurance Coverage: Review all policies of insurance regarding business interruption coverage (note that some states are looking to expand insurer obligations in this area so it is worthwhile to document losses accordingly and evaluate filing a claim).
Establish Protocol for Pick-Up and Delivery: Take steps to establish procedures for appropriate and safe pick-up and delivery to continue revenue (additional pick-up and delivery procedures are expected from government officials and will be passed on as soon as such information is available). Having a clear policy for pick-up and delivery will serve to put consumers at ease regarding your proper safety protocol. Let consumers know you are looking for support on social media and through sites like diningatadistance.
Sales Tax Payments: In Governor Pritzker’s March 16, 2020 press conference he indicated his administration is currently in discussion with IDOR regarding the March 20, 2020 payment date for ST-1s. While he indicated there may be some tax relief there was no indication that this would occur. We are hopeful some direction will come before the March 20th payment deadline and we will continue to monitor this closely. If you are unable to pay the sales tax owed, contact us for further direction. Payment Deferral: Contact your suppliers and service providers to create payment deferral or payment plans. Contact any banks holding loans and negotiate payment suspension or restructure. We can assist in negotiating and documenting any amendments to existing agreements.
Future Financial Assistance/Re-Opening: There are discussions of payroll tax credits as well as other financial assistance to assist with the shutdown although no details have been announced. We will continue to monitor economic assistance for our clients regarding COVID-19 related losses and advise you accordingly as information becomes available. Once dine- in service is allowed, we will also assist you with any re-opening needs from corporate issues, to employment and lease issues, including the application of any new laws and regulations arising from the COVID-19 pandemic.
For those of you who read this that aren’t in the hospitality industry, please patronize your local culinary community by ordering carry-out or delivery!
We will continue to keep you updated in the coming days and weeks with any new rules, regulations, or opportunities you should be aware of. Until then, please let us know if we can help in any way and we look forward sharing a drink with all of you when the storm has passed.
This article is for informational purposes only. If you have any questions, please contact our team at Troglia•Kaplan Attorneys.