Real Estate

Hurricane Harvey and Irma Make Their Mark on Restaurants

For the first time in the 166 years of recorded weather, two Atlantic Category 4 hurricanes made landfall in the U.S. in the same year. Hurricane Harvey led the way—hitting the southeast coastline of Texas on August 25 with maximum sustained winds of 130 mph. Hurricane Irma approached the Florida Keys just 16 days later with the same level of winds and after having left a path of destruction through Antigua, Cuba, Puerto Rico, and the Virgin and Caribbean islands. Between the two, the estimated damage they wrought falls in the range of $200 to $290 billion. Homes, belongings, vehicles, businesses, public infrastructure and, the most tragic, an estimated 95 human lives were lost. At one point, 85 percent of Houston, the fourth biggest city in the nation, was under water. Our hearts go out to all those affected.

 

The Effect on Restaurants

These two storms have had a major impact on the restaurant industry. On the one hand, a majority of restaurants affected by the storms are already back up and running, on the other, many establishments will require months to rebuild. Some small businesses will be left to close their doors for good. Not only have they experienced property damage, but restaurants in some of the hardest hit areas are also faced with communities that are in the process of rebuilding. Dining out is not one of their top priorities as their disposable income has all but dissolved.

Restaurant chains with a large percentage of their businesses in Texas are expected to take the greatest hit in terms of profit and stock prices. McDonald’s Corp. faced its worst stock decline since July 2016. Starbucks closed more than 400 locations in Texas and 700 stores in the Southeast in order to ensure the safety of their employees. A few other chains that were required to close locations due to Hurricane Harvey and Irma included Whataburger and Long John Silver’s. Despite the damage Whataburger sustained, it has donated $1.65 million to Hurricane Harvey relief efforts.  

Privately owned restaurants that were damaged numbered in the hundreds. Many in the Florida Keys were either washed away or received massive destruction. Just a few of these include Snappers, Gilbert’s Resort and Marina, and Postcard Inn Beach Resort at Holiday Isle. Snappers’ owner, Peter Althius, is hoping to reopen in three months and, depending on insurance benefits, will either rebuild or simply demolish and start over.

In Corpus Christi, Moby Dick’s and Snoopy’s Pier experienced tremendous damage. Moby Dick’s will have to be rebuilt while Snoopy’s owner posted a YouTube video showing his loyal customers the damage they sustained and letting them know that they should be up and running in two weeks. Shorty’s Place, another popular spot, is in operation and filled with locals looking for a place to connect.  

Because of power outages, many restaurants ended up throwing away thousands of pounds of food. After the storm and flood waters subsided, health department inspectors were out in record numbers surveying the damage and checking on the restaurants that had managed to open.

 

The Resiliency and Heart of Restaurateurs and Employees

Coming as no surprise to those in the industry, restaurants are stepping up to aid in the relief efforts even as they face their own setbacks and cleanup, portraying tremendous dedication to the communities that have supported them. Restaurant Opportunities Centers United shared a story first reported by the Washington Post. Instead of lamenting their situation, workers stranded at El Bolillo Bakery in Houston went to work—using about 4,400 pounds of flour to bake bread and deliver it to shelters and others in need. Two of Justin Yu’s restaurants had flooded, leaving one—Better Luck Tomorrow—open. Instead of bemoaning his loss, he leapt at the chance to provide free meals to first responders. The DoubleTree Hotel sent out an Instagram that they were feeding the hungry until their food ran out. Others are raising money through fundraisers.

Restaurant closures have placed a tremendous financial burden on those that they employed. One restaurateur, Thomas Nguyen and owner of Peli Peli, made his employees a top priority. He is setting up grants and interest-free loans, financial and housing assistance, as well as helping those who lost their vehicles locate loaners. Others are ensuring that their employees are receiving pay even when not working, a benefit that business interruption insurance covers.

 

Nationwide Effect

Across the nation, millions of people watched the news and weather stations in concern for those people in the path of these two hurricanes. This actually led to a drop in fine dining and upscale casual and an increased patronage for casual bar and grill operations that had TVs tuned in to these channels.

Many saw the damage experienced by shrimp and oyster boats that appeared to be tossed around like toys. This part of the supply chain may experience a major disruption as well as supplies coming from farmers and other major distribution networks. Seafood provided by the Gulf of Mexico, such as shrimp, oysters and black drum, may be particularly hard to come by. Hundreds of acres of farmland was reported underwater which will lead to less produce in the months ahead.

Disruption has not just been limited to food, but to other supplies and equipment as well. In some areas, roads are still closed, leaving what supplies are available unable to get to their intended destinations.

As always, restaurants and bars are banding together to help those who have been affected. Establishments across the nation are raising funds to help both employees and owners that have been left with little after the devastation. Hurricane Harvey Hospitality Employee Relief Fund was created by the Louisiana Restaurant Association, Commander’s Palace and the Greater New Orleans Foundation in order to provide individual employees with about $2,500 in grants. Others have donated a portion of their proceeds to relief funds. Even those restaurants that have been the most severely damaged had their employees and customers first and foremost in their mind. The resiliency of the impacted areas and the response of the nation is truly inspirational.

 

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