Every morning I like to take a long walk at Lake Pontchartrain and then drive the long way home. The dogs hang their heads out the window and I count the boarded up storefronts. This town, that grows around full plates of homemade food, is making due with restaurants turning into free food lines. We are adapting and being compassionate to those who are witnessing their livelihoods collapse. New Orleans and Southern Louisiana understands disaster and we understand what it takes to come back. It’s just part of living on the edge of the Gulf and in the swamps and on disappearing land. We know no one is coming to save us. But it still hurts like hell!
I wanted this post to lay out a vision for small shops like mine after we are able to fully reopen but it turns out I’m in the spitting mad part of this disaster. This post quickly devolved into an angry rant about the structures that bind us in an industry that can collapse overnight, leaving everyone broke and stunned during what would be our busiest months.
I’ve left a lot of my original rant and added some information about cash flows and financial lending that I hope will help you understand why we are all dependent on some sort of larger assistance from the government in order to reopen. But also show the very real weaknesses that we must overcome if we are to create a more resilient economy.
What we know best, second to delicious food, as restaurant and cafe owners is cash flow. New Orleans has a longer season than most places but we also face more unexpected emergencies than other cities. This disaster hit us at the exact worst time of year. We make most of our money between Mardi Gras (depending on the neighborhood) and the end of May. My shop is still busy in June, but not as busy around parade days and in early January.
While households are told to have enough savings to get through a few unexpected hard months, businesses rely on the shuffling of debt and strategically predicting cash flow to get through the worst of times. The banks fund this model more in larger businesses whose loan principles generate larger interest payments, but also demand smaller borrowers to behave like well funded larger companies. Also your net worth is counted only in your ability to pay back a loan, not whether you deserve to get a loan. A small percentage of personal backing is required in business loans, but if you have big investors that isn’t a burden you have to worry about personally. This is a dark secret we don’t talk about that often.
Small businesses are always cash strapped, but so are large businesses they just have more financial mobility when it comes to debt. Women and people of color owned businesses are less likely to get larger investments and have good relationships with banks who have the ability to lend in times of crisis. This is because of unconscious and institutional bias.
All of this is why we are seeing very large companies, like Ruth Chris and Shake Shack get massive small business loans, while your neighborhood bookstores and cafes have been shut out. The COVID-19 pandemic is exacerbating what we consider normal business ownership. The pandemic isn’t the cause of these scenarios.
I want to break down what cash flow throughout the year looks like for a small restaurant/cafe in New Orleans throughout the year.
January to June : pay down debt on time, pay around $4k in taxes and licenses (personally and business) between Jan 1 and Jan 30, start saving for summer, pay for more staff to meet sales demands, give myself paychecks without worrying
June & July: feeling good, I’m confident I saved well, everyone goes on vacation, payroll is smaller
August & September: Fuck. Fuck. Fuck. I don’t think I saved enough, check line of credit every hour, check notes from last year every 2 hours, stare at bills lining up on desk, watch every single cent, pay annual insurance premiums with great heartache, anxiously check Margaret Orr & Brian Norcross for hurricane updates all day long, worryingly look at the sky when it starts raining, deep breaths, mitigate flooding risks and damage
October: ok, start paying some more bills, try to maximize line of credit by paying into it everyday and reduce my interest rate on borrowing, cut shopping as much as possible even more
November & December: anxiety goes down, pay more bills, think of cute ways to get to customer checks a tiny bit higher, figure out how to give holiday gifts to staff, work all the slowest days myself
Cash flow is a part of any business and I’ve found comfort in hearing 100 year old company CEO’s discuss how they move debt and how they project cash flow challenges. BUT why have we so easily bought into a system that demands every industry and company constantly teeter on the verge of total collapse? A system that allows grocery store workers, who have proven to be essential workers, live on $7.25 an hour and no health insurance? Why are financial institutions prioritizing multi-millionaires’ quick access to “small business” loans when our neighborhood corner store, who ensures their customers have food either for free or on credit they may never be able to pay back, shut out of the process?
Watching all of my favorite restaurants and cafes close so quickly was a great reminder that everyone is in the same boat. We all manage cash flow for a living and then we serve food and keep people employed. I don’t have an answer for why we all allowed this to happen, but while we have always known this is unsustainable, we all are experiencing its destruction in very real terms at the same time. It is an extremely painful moment for all our communities.
It is not ok that 71,000 people filed for unemployment between March 15 and March 21in Louisiana. Our usual numbers are around 1,400 for that week. I can imagine, because of Louisiana’s industries, that the vast majority of those were in the hospitality industry. People who probably didn’t have access to healthcare or 401(k)s or much of a savings to pay rent for a few months.
My vision for our hospitality includes healthcare not tied to the workplace, emergency savings accounts, paid time off and retirement funds. There I finally managed to speak my vision.
I am full of anxiety that so many in our industry who create the standards through our shared financial infrastructure think this is just a pause of business as usual. The SBA ran out of money for the Payroll loan and in the days following the names of large corporations who received the bulk of the money started being known by the general public. The stipulation was less than 500 employees PER LOCATION. That is fucking ridiculous. No restaurant that has up to 500 people per location should be considered a small business. Shake Shack is saying they are within bounds of the loan because they have 45 employees in each store. So even the amount per location isn’t a reasonable parameter to consider.
What I truly believe is that there is no way small, truly small, under 100 employees, can depend on our government to get us back into business. Larger businesses, where the owners don’t work in the day to day business and have powerful investors will get more help. I know this because I am 40 years old. I’ve seen economic disaster more than once. Banks and airlines and now chain restaurants get bailed out, the stock market is lifted into stabilization, circumstances clouded in mystery, while our neighbors lose everything and our credit scores get docked for payment deferment. This isn’t the first time we are seeing these exact motions in play. We know the storyline because we have repeatedly seen how it plays out. We know what this means for businesses as small as mine. It means we are left out to fend for ourselves.
This needs to stop! It’s not just at the government and financial institution levels. Customers and business owners need to demand more sustainable funding practices so that we can create an economy that can’t collapse after a month of closed doors.
We can not go back to $2.13 an hour wages, to $7 an hour dishwashers, to firing people in the summer months, or to simply saying “stay well” when our co-workers get the flu and can’t make money for 2 weeks. We can not go back to lionizing a wealthy chef who bullies and harrasses his waitstaff. We can not go back to a system that does not prioritize workers rights and wellness and tells the people who are demanding better treatment to get realistic. We can not go back to a financial system that lends big to millionaires who already have the wealth to invest themselves in their own companies and not to small grocers and bookstores who keep our communities employed.
But change can’t stop there.
We are now seeing those in power trying to force the economy back open without a system in place to prevent the illness and deaths of those who are doing the actual work for large companies. Workers are getting fired for demanding protective gear. Landlords are trying to force evictions even in cities where evictions have been halted.
We must demand a more stable environment when we come back from this for the workers who make the economy move. Business owners need to be held accountable for how they treated their staff during this crisis and then they need to be forced to create a more equitable workplace.
We need a stronger system that we build ourselves centering around equity. We can no longer lean on banks that receive bail out after bail out for lending to businesses who expand too much too fast because they are empowered to treat their workers unfairly in order to do so. Who are always open for the most greedy but who can’t help create a more sustainable system for the vast majority of small businesses who are keeping our neighbors fed and safe right now that would ultimately leave them in better positions to avoid bail outs. But the hitch of course is that their investors make money on bail outs.
I am angry. I am at the angry part of this pandemic. I hope you are too. I hope we are all so angry that we demand real change. That we put our families and communities at the center of our financial structures. That we don’t go from economic disaster to economic disaster to economic disaster again.
