CEO Roundtable: Restaurants

Last edited 8:11 a.m., Sept. 14, 2020

Springfield Business Journal Editor Eric Olson talks the restaurant business with Michael Cho, co-owner of Craft Sushi and hospitality director at Hickory Hills Country Club; Cosmo Kwon, co-owner of Bawi Korean BBQ and Hinode Japanese Steakhouse and Sushi; Colleen Smith, owner of Tea Bar & Bites Bakery and Cafe; and Jimm Swafford, owner of Jimm’s Steakhouse & Pub.

Eric Olson: What’s one word to describe the restaurant industry right now?
Colleen Smith: Uncertainty.
Michael Cho: Unsettled.
Jimm Swafford: Devastating.
Cosmo Kwon: Oddly enough, right now, it would be thankful.
Olson: There are obvious challenges. What’s been your greatest fear that you face in running a restaurant and keeping your establishment open?
Swafford: Mine was passing on the virus to the team members or to a guest, even if it wasn’t traceable. We closed on March 18 or 19, and then we did a little bit of takeout and I wasn’t 100% that I wasn’t doing something wrong that may allow that virus to be passed. And so I drew back until May 7. It was just difficult.
Cho: I would echo that, as well. We know a little bit more now than we did obviously four months ago. People have settled into a routine. I have Craft Sushi along with my wife, so I see it from a couple of different angles. I also am at Hickory Hills Country Club, so obviously that poses a whole different set of challenges than a fast casual like Craft Sushi does. That is the big fear – that we’re somehow going to be passing on this virus. Craft Sushi, it’s a wide spectrum of customers, but at the club there is a large segment of the membership that comes in regularly who are in that very high-risk category. Are we doing everything that we can to stop this thing and flatten that curve and give our professionals time to do what they do and somehow pull out of this?
Smith: You’re all saying the same thing I’m thinking, too. My biggest fear has been in keeping my staff safe and my customers safe and not bringing them back until they felt comfortable enough. It’s been a scary time.

Hard choices
Olson: Did you guys feel like you had enough information to make those decisions early on from the city and the Health Department? Where did you get advice?
Swafford: I think I read more in that one month than I’ve read in my entire life. You read an article and then you think you’re done and here comes another article. Everything was new and changing every hour and you wanted to keep ahead of the curve. I think the city did do a good job of keeping us informed as much as they could.
Kwon: The situation was kind of changing every hour. It was just our role as leaders in our businesses to constantly follow up. … That whole past hour that we worked on (for) the contingency plan, is that even relevant the next hour? We just decided that, you know what, that’s just the state we’re in and just roll with the punches.

Facing furloughs
Olson: The National Restaurant Association on surveying its members found two out of three restaurant employees lost their jobs and four out of 10 restaurants closed down. That was some collateral damage. What were those conversations like in your places of business?
Smith: Tea Bar shut down for gosh, at least five, six weeks. That was a real concern of mine. Fortunately, they were all collecting unemployment. And then when we decided to do an online menu pickup curbside one day a week just to survive. I would bring back a few employees that were willing to come back and we would social distance and stagger schedules to work in the bakery and the kitchen. That kept us going. … We were able to do the Easter menu and Mother’s Day menu, because that’s one of the restaurant’s biggest times. I did lose some [employees] for various reasons, some were moving away, and I haven’t been able to hire that number back because people were still making more money staying home. We weren’t getting the applications like we normally do. And, unfortunately, I know it was set up to help the employers hire people back, but that extra $600 a week, it did the opposite.
Cho: I’ve heard from more people in the industry, how difficult right now it is to make quality hires. To Colleen’s point, that’s $600 a (week); frankly, at Craft we’re paying a wage that can’t touch that. It was very difficult to keep spirits up and morale up because we did stay open. We were deemed essential, and we noticed that business levels were frankly quite good and people were looking for quick dining options. Once we offered curbside and kind of opened up more, business levels continued to do well. So, we stayed open. I have to say it was very difficult to look at my staff, who some of them had roommates who were also in the industry who are now at home hanging out and collecting more money than they’re making working. Literally everybody that was on our team opted to stay. That’s just a testament to our good fortune and the fact that we have a great team that wanted to work. We did supplement their income a little bit and gave them some bonuses periodically. It’s still not like what Uncle Sam was giving out, $600 a week. I couldn’t do that for all of my employees. I understood the need for it, but it is making it very difficult for a lot of businesses to get back open. Not only are you having a hard time finding people that want to work, we’re getting all these applications that are coming in and setting up interviews and such, and then people are ghosting us. And it’s because they need to prove on their weekly unemployment application that they had reached out to “x” number of potential employers, and that they’re doing their due diligence to try to get back to work. Frankly, it’s all BS there. My wife, Jenny, had 12 interviews or so lined up, she got three shows.
Swafford: From Indeed.com, we had 107 applicants. We set up over 20 interviews for hosts and bussers and 25% of them showed up.
Kwon: Immediately after what happened, we did end up furloughing the majority of our team. We did a mass furlough and we figured that would be the best way to take care of our staff. Because if they go to the unemployment office, our whole company should already have a record there and their process of collecting unemployment should have been expedited that way. We were able to go back and hiring people who were willing to work. That was difficult.

Federal funding
Olson: How many of you applied for federal funding, whether it was the Paycheck Protection Program or a Small Business Administration loan?
Smith: All of it.
Kwon: Anything we could get.
Cho: Some of it wasn’t even solicited by us. It was a huge blessing for living in a town this size where you’re able to have relationships, real relationships, with your local banks. I’m just going to shout out my banker, Brent McCoy, and the team over there at OakStar. They were well ahead of the curve in letting me know what needed to happen. The day that the applications were allowed to be submitted, I had all of my ducks in a row, all my paperwork filled out. They had a team that worked around the clock through the weekend, and I had a preapproval letter on Tuesday and then I think a few days later the money was here. The SBA came out to say they would take care of the principal and interest payments for six months on the loan. So, I have not actually had to pay my SBA loan since April and that was a huge blessing.
Smith: Did anyone have trouble with the $10,000 forgivable loan? I even had a person call me over the weekend and said, “You only have two more steps to complete, and I’ll walk you through it on the computer.” I wasn’t going to get the loan because I feel like I have so much debt already, but I wanted that $10,000 forgivable loan and I trusted him. He encouraged me and he said the money’s really cheap. I went ahead and applied for a $20,000 loan. I called and they always had trouble with the phone line. I finally got through about 10 days later and the woman said, “No, you didn’t check that box. You don’t get it.” I was devastated. I just could not believe it. And they said there’s no more money. That would have helped so much.
Cho: Your experience, unfortunately, I have heard that from many of my friends. The frustration that they’re going through.
Smith: It was terrible. I cried all night.
Swafford: A lot of folks don’t know about this, but Greene County has the $34 million for small businesses. I didn’t qualify because I have above 50 employees, but for less than 50 employees that might be something. And then if it’s this (Health, Economic Assistance, Liability Protection and Schools) Act goes through, then there’s another round of PPP.

Big pivots
Olson: Any challenges present opportunities. What have been the biggest innovations you guys have made in your restaurants?
Kwon: Hinode is an “eatertainment.” You come for dinner and a show. For us to go from takeout being only 10%, 15% of our total revenue to now 100%, it was a big pivot. Throughout that time, we were able to learn from our mistakes. We probably made 10-15 changes a day; 9 a.m. we had a plan. We open at 11 a.m. and everything is all haywire. It was just constant. … Bawi Korean BBQ is a much lesser known brand. We’re still kind of building our clientele. We said how can we make ours more of a fast casual? Bawi is something where the minimum that you typically spend is about $25 to come eat per person. The fun of it is grilling at the table. We had to change into what we created, which was the Bawi bowl. A $5.99 deal, much less of a price point than what we’re used to. However, it was one of those innovations that we had to do. Luckily, I think now, thanks to those kinds of innovations, it definitely gave us a lot more customers. Three out of four customers that are coming through the doors are all new customers. They tried Bawi bowl and liked it and now they are coming for the full experience.
Swafford: Ours was the salad bar. Jimm’s is known for the salad bar, and all the sudden the guests can’t go to the salad bar. We have a fun little chart on the back of the paper menu that you check out and we make it for you. After all this clears, I think we’re going to be making a lot of salads for folks. We may have created a monster. [Laughs]
Cho: Even after four months into this, there’s still some people that feel safer at home. That to-go portion of the business, and that being a bigger percentage of the overall business, that’s not going to change. The days of waiting for the guests to come in through the doors, those days are over. Those days ended in March. Where do you go from here? How do you keep your employees employed? How do you keep this business afloat? It was psychologically draining. We were doing really, really well. 
You want to do well. You want to make sure the people who have stayed behind can work and you want to take care of them and, if possible, more than $600 a week. To the point where my wife and I were looking at new homes one week, and then the following week we’re wondering if we can keep this business open – whether or not we’re going to have to declare bankruptcy. That was an incredibly difficult couple of weeks. Everyday just being thankful for another day. It was proactively going out and looking for business. At Craft, it was engaging partners that would have us catering regularly. The no-brainer for us was across the street at Mercy. A lot of doctors that were essential still had to work. Their staff had to be in their office. Craft is now at Mercy Hospital multiple times a week, and we’re feeding anywhere between 150 and 200 employees every day that we’re out there.

Effects of masking
Olson: How has the city masking ordinance affected your restaurants?
Smith: Thank God for it. It was well received by all of us. We were really hoping for it. Our customers are pretty mindful and aware and very respectful, but there were still some coming in without them. I was so glad when it passed and no one has come in without a mask.
Cho: It’s great. It was one of those things where there was no choice. You’re supposed to wear them. Having said that, there are a lot of people that feel very strong that they don’t want to wear it for one reason or another. And obviously we’re seeing this becoming a politicized thing, which I think is, personally, super silly. My staff has been wearing them since March. Once this passed, we put a sign up and we asked everybody to wear a mask. A gentleman came in, and this happens multiple times a day, he did not have a mask. My staff asked the gentlemen to wear a mask, and the reply was very simply, “I can’t wear a mask.” We’re not allowed to do anything beyond that. A couple that came in behind this gentleman that wasn’t wearing a mask, both of them were masked, as 95% of our guests do. They saw he wasn’t wearing a mask and they immediately turned right around and walked out and sent an angry email to my wife saying that there was a gentleman that was not masked. We’re just doing what we feel we can do, which is just ask them to wear one.

Future of dining
Olson: What does all this mean to the future of dining in Springfield?
Smith: It’s just changed so significantly. It’s not only having a really well-prepared meal to enjoy, but it’s the whole experience that people are really looking for. That camaraderie and that community feel. It’s how they feel when they leave your restaurant. If it just goes to takeout only, how long will that last? We’ve gotten to know families here. We’ve had baby showers and then we’ve seen these kids grow up and they’re now teenagers.
Swafford: I’m worried about menu pricing. Because of the price of beef, we had to take the pricing up, and I’m afraid that that’s going to scare people away. And only being able to seat 60% of the restaurant and still paying 100% of the lease and personal protection equipment for the staff, there’s a lot of additional expenses. I’m looking for every opportunity to bring some of my pricing back down because some of the beef has come back in line, which is great. I don’t think it will ever go back to the complete normal. We closed in March with it at $7.80 a pound and opened back up on May 6 with it at $15.97 a pound. But we’re back under $10 now.
Cho: This is something that we’re going to look back on 50 years from now and realize it was a seminal moment in society, globally. What all of us provide in this room right now, as restaurants and people in the hospitality business, we provide an experience for people. And people will always have that desire to want to go and be fed and be cared for. That will never go away. People are really just longing for that. Those of us who were able to figure that out quickly are the ones that are going to do well.
Kwon: People will revert back because, like Michael said, they want that experience. Whatever we can do to provide that, we will. If restaurateurs stay on top of it and we try to be as creative as we can, we’re just going to adapt and it will be OK again. When? Hopefully sooner than later. In the greater Springfield area, there are 650-plus restaurants. People love eating out. Restaurants thrive in our area. People are coming in and buying a $10 meal and at times leaving a $50 tip. I really get that sense of community here right now. Greatest fear now is actually no fear. What’s the point of fearing stuff? Just take it day by day, hour by hour. If you could adapt, then you live. If you don’t, then, you don’t. It’s just the way the game works.

Excerpts by Features Editor Christine Temple, ctemple@sbj.net