Restaurants Aren’t the Only Members of Chicago’s Service Industry Harmed by the Pandemic

Across the country, restaurants and bars have lost more than 2.4 million jobs since the start of the pandemic, more than any other industry. Over the holidays alone, in the greatest increase since April, 372,000 restaurant and bar workers lost their jobs, making up 73 percent of all December job losses. In Illinois, eating and drinking places lost 31,000 jobs in November.

But restaurant employees aren’t the only ones hurt when restaurants close. There are plenty of niche suppliers customers might not consider who rely on restaurants for survival. Galit, for example, sources wood for its ovens from a supplier that is down to about four customers in 2021. Cornerstone Restaurant Group, owners of Urbanbelly, Bill Kim’s Ramen Bar, and Michael Jordan’s Steak House, source pea shoots from Korean grocery store Joong Boo Market in what the group’s president Josh Zadikoff calls a “key partnership.”

Many across the industry are feeling pressure on all sides, especially as they try to account for customers’ changing behavior while striving to survive the pandemic. Chefs say they’ve noticed decreased alcohol sales as more customers choose to drink at home. Zach Engel of Galit, for example, says his restaurant’s alcohol sales currently make up just 5 percent of their normal levels.

“People are just not buying alcohol from restaurants, which is how we really survive,” he says.

At Cosmopolitan Linens, which provides aprons, tablecloths, and cloth napkins to restaurants, business is down 75 to 80 percent of what it would normally be this time of year.

“Our company has been niche, which we always thought would be recession-proof,” Cosmopolitan Linens sales manager Don Loukota says. Cosmopolitan has laid off 50 full-time workers and another 10 part-timers from its Harvard plant “directly because of steakhouses closed in Chicago.”

“The ripple effect is so huge, how much the food-service industry impacts our economy,” he says.

Bruce Finkelman, managing partner of 16 on Center hospitality, which owns the Promontory, Dusek’s, and others, typically works with around 85 vendors, including the group’s largest vendor as restaurants that double as performance spaces: musical artists.

“I think it’s really important for people to understand the places that we operate are huge ecosystems,” Finkelman says. “Closing a restaurant doesn’t only deal with vendors, employees, cleaners, but byproducts too.”

Restaurants themselves are the first and often only businesses to come to mind when customers think of the struggling industry, but many other businesses that play a part in the country’s dining experiences have been caught in the pandemic’s wake, from launderers to valets to florists.

Cosmopolitan Linens [Official Photo]

A Long Winter

Lula Cafe has been takeout-only for months now, running with a staff of 12, down from 80 before the pandemic.

“We don’t know if we can survive the winter,” owner Jason Hammel says.

So far, at least 60 Chicago restaurants have closed. Lula and Hammel take their relationships with farmers seriously.

Mick Klüg Farms works with many restaurants in the Chicago area. Abby Schilling runs the farm today, but her father started it back in 1974.

“Our business is 50 percent made up of restaurants,” Schilling says. “It’s scary for us because we really invested a lot in our restaurant business. We bought refrigerated trucks, hired delivery drivers, put a lot of time and energy and money into catering to independent restaurants.”

She notes that not only would farm employees struggle if more restaurants closed, but delivery drivers and a number of employees who sort and pack restaurants’ orders would also be laid off.

The many pivots and adaptations that restaurants have made for their own survival have also benefited their suppliers. Most Chicago-area restaurants offer takeout, including many that didn’t before the pandemic. Others, like Daisies in Logan Square, are operating more like markets than restaurants, selling their vendors’ olive oil and cheeses and fresh bags of produce. Still others sell home meal kits. This has kept Klüg afloat.

While 16 on Center has opened two restaurants during the pandemic — Pizza Friendly Pizza and El Oso — it’s cut down from 85 vendors to a handful, focusing on core needs.

“During a pandemic, you start to look at the cost of being able to put out something that you’re proud of but that can exist in this quarantine life we’re living in, where costs have to be extremely combed over. You find yourself really paring down to the essentials,” Finkelman says. “Quality pepperoni, quality flour, quality olive oil, quality burrata.”

Marty Travis of Spence Farms also runs Down at the Farms, an aggregator of 60 farms across Central Illinois that delivers to Chicago-area markets and restaurants.

“We had to dramatically pivot,” Travis says. “In March last year, we went from probably 35 restaurants one week to three after the shutdown.”

He started selling to individuals, but it wasn’t an easy switch. “We went from restaurants ordering 50 pounds of this, 50 pounds of that, to 180 individuals ordering one-pound packages of radishes or whatever. All 50 to 60 farmers became packing companies, and that was awful. It was exceedingly hard,” he says. “We had to recreate a million-dollar business in a week with a new online ordering system and distribution network. We did it, but it was painful.”

Down at the Farms eventually opened Village Farmstand in Evanston and Dos Farm Stand and Pantry at Dos Urban Cantina in Logan Square, which helped centralize distribution and give farmers an easier way to sell produce. Travis says the stores will stay in place after the pandemic.

Prairie Farms, which makes goat cheese, also created an online store and sells through Down at the Farms, but owner Leslie Cooperband says she’s “definitely counting on restaurants to reopen.”

In the meantime, she brought in cow milk from Kilgus Farmstead in Livingston to make cheese so she can have some product available through the winter: “Historically, we have not made any cheese through the months of January and February when the goats are dry.”

Across the food supply chain, everyone seems to be scrambling for survival. In 2019, Linz Meats’ sales were approximately $180 million, according to chief operating officer John Majchrowicz, and Chicago was the primary market. Sales shrunk about 38 percent in 2020, and markets like Arizona, Texas, and Florida, which had more relaxed dining restrictions, kept the company afloat.

“Cruise lines — completely dead. Hotels, nonexistent,” Majchrowicz says about the company’s other main markets. “We export to 19 countries. As they go, so do we. Some exports dropped down to zero.”

The company shifted to ecommerce and retail, something it plans to expand even once life returns to normal. Like with other food suppliers, inventory control has been challenging.

“Some of our processes take 120 days to age the product. From the time we harvest animals to the time we have a sale, that’s three months out. We could plan around restaurants, but we don’t know what customers will be doing. It’s difficult.”

The beverage world faces challenges

Before the pandemic, 60 percent of distributor Cream Wine Company’s clients were restaurants. Cream served 745 independent restaurants in 2019 and 653 in 2020, but co-owner Andy Pates says active accounts aren’t as important as sales, which were down over 50 percent in 2020 versus 2019.

“There are active accounts, but they’re buying a limited menu,” he says.

So far, retail with clients like Binny’s has been strong enough that Cream hasn’t had to lay off or furlough any employees. But Costco and Binny’s bring their own challenges, as they typically sell big-name brands or inexpensive wines.

“A lot of the fine wine or small family producers who were selling to restaurants had to pivot to independent retailers that cared about authentic wines,” Pates says. In some ways, this was a good thing and has brought new drinkers into the world of wine. “People were wanting to drink better because it was a pretty freakish time. They were exposed to wines via winemakers on Instagram lives, for example. You don’t really see that in grocery.”

Coffee, another thing people are drinking more at home these days, has also been buoyed by grocery sales. Intelligentsia is operating only nine of its 14 locations, and vice president of retail Lori Haughey says “downtown markets are struggling in so many ways.” But ecommerce and grocery are thriving, so the coffee chain has been able to continue working with all of its growers.

Still, it’s had to cut milk and linen vendors. Haughey says the company is probably using about half in milk and dishes compared to the same period last year. She can’t remember the last time she ordered a case of ceramic mugs, and supply chains bank on employees “breaking trays and trays of glassware.”

“We used to have two to three different local bakers for our pastries; now we’re down to one and trying to order enough to make it realistic for that person to deliver,” Haughey says.

Marc Much/Eater Chicago

For Some, Pivoting Is Not an Option

For all the scrappy action taken to survive across the food supply chain, there are inevitably those that can’t up and switch how they operate.

While other linen companies might partially rely on a small amount of business from medical and industrial companies, Cosmopolitan Linens’ customers are 100 percent food and beverage. Prior to the shutdown, the company served more than 600 restaurants in the Chicagoland area and had more than 150 employees. “It’s hard to know what we have today because so many places have closed that we hope will reopen,” Loukota says. “We were down to 15 staff at one point. We’re down 75 to 80 percent of what we would be for the same time frame in a normal year.”

At this point, the company is almost losing money trying to serve the few remaining clients.

“It’s extremely inefficient,” Loukota says. “We’re walking in with two bags of towels and 10 aprons, costing us 10 times more than it used to.”

The general public doesn’t understand that restaurants are “part of a food chain,” says Drew Larson, chief executive officer of Leaders Beverage, which works with taverns including Hopleaf Bar and breweries like Half Acre, Lagunitas, and Forbidden Root.

Close to 15 percent of the Leaders clients have gone out of business, and co-owners Larson and CFO Kevin Busch have furloughed all nine of their workers. A few clients are still selling growlers, so they’ve asked Leaders Beverage to come in and sterilize their vessel filling systems, while others can’t afford the maintenance.

“It’s not good for their systems and would lower revenue in any other time, but they have to survive first,” Larson says.

He’s worked with clients to help them properly shut down their systems so they can start back up with minimal issues in the future.

“We’ve done a lot of work that’s pro bono. As long as I’ve got time on my hands, if I can keep you open, someday you can pay us again,” Larson says.

No One Is Immune to the Ripple Effect

Restaurant closures affect companies from Loukota’s and Cooperband’s to big distributors like Gordon Food Services.

“It’s the big bad evil companies as well as the local farmers,” says Engel. “A lot of people work on commission.”

Local public relations firms are also hurting. Heidi Hageman, president of H2 Public Relations, was repping about 60 hospitality-related venues until large events and conventions began being canceled in March 2020. The number includes 14 individual restaurants and large restaurant groups with five to 25 restaurants.

“Our clients started losing tens of thousands of dollars overnight, and we could feel it coming,” Hageman says. “When the mandates shut down dining altogether, almost all of our clients understandably either paused, pulled, or scaled back their campaigns in a single day. It was brutal not only for our company, but to witness clients we’ve worked with for years close doors to restaurants they’ve poured their hearts and savings into.”

Her work shifted to initiating social media campaigns such as #TakeoutChicago and pro-bono services for businesses that have been notoriously underrepresented, such as Let’s Talk Womxn, a small-business initiative focusing on helping women restaurateurs join together to battle the pandemic, and nonprofit Coffee, Hip-Hop & Mental Health, which focuses on normalizing therapy and taking the stigma out of mental health.

The Next Few Months Could Make or Break Businesses

For everyone even tangentially involved in the restaurant industry, the next few months are crucial.

Loukota hopes he can get back to 80 percent of the sales he should have had this past December by next December, but says he thinks it will take two summers to return to normal levels. He’s optimistic that both new and pre-existing restaurants will open in the coming months.

“But one thing that concerns me is that an account that used to use 5,000 napkins a week may not use napkins at all,” he says. “Are they full service? Are people going to take the ghost kitchen concept and run? It’s too hard to project.”

Everyone has predictions, but of course, no one can be certain.

“The only thing I know for sure is that everyone’s been wrong since this started,” says Pates. “I’m optimistic about our food and wine community, I’m optimistic about things getting better and easier for people, but think it’s going to take some time, longer than we’ve been told, a little longer in terms of people who really need financial help.”

Chicago has partially restored indoor dining, but it’s unclear how safe it is and how long it will take for restaurants to completely pick up operations after nearly a year of hibernation or partial closure.

“The hospitality businesses we love and operate aren’t light switches,” Finkelman says. “We can’t just turn them on and off. People need to be trained, products need to be brought in, vendors need to be paid and renegotiated with. It’s going to be a very difficult time for people to wade through the noise into what actually is going to be necessary to operate safely.”

Larson is also optimistic new restaurants will open, but thinks it will get worse before it gets better.

“More businesses are going to close in January and February. But we’ll have a whole group of entrepreneurs, and that will be new business,” he says. “We think our ramp-up will start very slowly in the middle of February and we’ll see it continue to accelerate. It won’t be until June or July that we really know what kind of business we’re going to have back going into the fall.”