GR restaurants respond to increased costs during pandemic


Photo courtesy of Terra Bagels

Terra Bagels is one of several Grand Rapids businesses facing added financial burdens because of the pandemic.

Many Grand Rapids restaurant owners are grappling with the financial ramifications of the pandemic, which have already put thousands of restaurants across the state out of business. 

In a statement published on Nov. 15 responding to the Michigan Department of Health and Human Services’ decision to shut down all indoor dining at Michigan restaurants for the weeks, the Michigan Restaurant & Lodging Association emphasized the dire straits that restaurant owners find themselves in. 

“If the closure is prolonged and federal stimulus dollars are not made immediately available, upwards of 6,000 more restaurants will permanently close by spring,” the statement said. According to the statement, some 2,000 Michigan restaurants had already been permanently shuttered in 2020. 

Several Grand Rapids restaurants frequented by Calvin students are seeking to avoid that fate, but the financial hurdles that they face are considerable. 

Paul Lee co-owns four restaurants in the Grand Rapids area: Hancock, The Winchester, Donkey Taqueria and Royals. Reflecting on how the pandemic has impacted the restaurant industry financially, Lee noted how restaurants suffer from the combined effect of many pandemic-induced factors. 

One primary factor is persistent rental costs. Many Grand Rapids restaurants pay monthly rental fees to landlords — fees that don’t stop, even when pandemic restrictions shut down indoor dining. 

“I tell people that we are not necessarily in the restaurant business but rather in the real-estate business,” said Lee. 

Lee’s group owns all of its restaurants’ properties, so the restaurants were able to defer rental payments at the beginning of the pandemic in order to deal with other pressing financial concerns. Other restaurants with landlords who weren’t willing to wait for late rental payments were forced to go out of business, Lee said. 

Disrupted supply chains add to the burden of restaurant owners. The pandemic has significantly impacted eating habits of the general public, particularly as indoor dining has been severely limited for extended periods during the year. Because of this, typically reliable supply and demand patterns for produce, livestock, and other food products have been overturned, leading to large surpluses and ultimately more expensive products that restaurants have to purchase. 

At the same time, costs for PPE and other measures to make restaurants as contactless as possible have increased. Hancock utilizes online menus and contactless payment methods in order to limit the spread of the virus through touch, practices that Lee expects will continue following the pandemic.

Clark Frain, owner and chef at Terra Bagels, identified decreased business traffic as another major negative impact of the pandemic. 

“We anticipated employees and business alike bringing bagels by the dozen into the office.

This has not happened yet and will be an area we strive to grow into,” Frain said. 

Frain also noted that the poor economy and limited indoor seating options also discourage potential customers from buying. 

Still, the company has had some success since opening in September amid the pandemic. 

“The concept of a bagel shop was one where we were not concerned enough to pause the project,” said Frain. “We felt coffee and bagels were still easily accessible in takeout or carry out restricted times.”

As the pandemic continues to plague their businesses financially, Grand Rapids restaurant owners continue to affirm that college students are an important part of their business models. 

“While I was in college, you either had a meal plan through the university or you lived off ramen and any pizza deal you could find,” Lee said. “Things have changed significantly with college students having added buying power and being discerning with their dollars.” 

Frain said that college students play an integral role at Terra Bagels, both as customers and employees—a role that is ever-increasing as social media continues to expand. 

“Our hope is that college students will assist with marketing just by becoming customers and sharing their experience through the many outlets like Instagram, Facebook, Twitter and [in] some cases TikTok,” Frain said.