After Harvey, a Few Places to Turn for Financially Strained Houston Restaurants

Six weeks out from Harvey and questions about the fate of Houston's restaurant industry still loom. Will we start seeing more restaurants closing in the coming months? There's no telling just how many restaurants are hanging on by a thread.

Jonathan Horowitz, Greater Houston Restaurant Association president and partner of Max's Wine Dive, says that restaurants will likely be watching numbers, such as TABC reports on alcohol sales, to see just what the impact of Harvey has been over the past month and a half. "Anecdotally, I’ve talked to a number of restaurateurs that say their traffic is slower. The biggest issue is the week or two that had no revenue at all. You just can’t get that back." 

Since Harvey, at least two high-profile restaurants have closed, Molina's Cantina on Washington and Holley's in Midtown, the latter of which revealed to Houston Culturemap via email that it couldn't recover from a three-week closure following the storm.

So, just how devastating is even a one-week closure for a restaurant in Houston? It depends.

"Some places have a lot more of a cushion than others,"  Horowitz says. "Depending on circumstances, it could push places over the edge if they’re just hanging on. Unfortunately, I think we’ll see some of that. Having those reserves is often not realistic. Margins are slim to begin with." 

While small restaurants may take in somewhere around $20,000 a week in revenue, he says, others may bank on $100,000 or more a week. "And they’re out of commission for a week? That’s a significant chunk of money that needs to be accounted for." 

Restaurants usually try to save money via food cost and labor cost, but these are pretty desperate times for servers and most operators seem to understand that. Some restaurant groups have even set up special funds to help their staff recover, including King's Bierhaus and Union Kitchen. Also, many restaurants lost power, meaning they'd have to restock entire coolers of food, so product costs could've been even higher during September. Meanwhile, rents in the Loop can run about $40 to $50 per square foot a year. "You could be paying almost $10,000 a month." 

Another devastating factor for many is that business interruption insurance policies don't cover lost revenue for restaurants that made it through the storm unscathed. "Restaurants not physically impacted could've been closed six days, but insurance policies don’t cover it. That's difficult for people to grasp. There’s nothing you can do." 

With all this in mind, there are resources that restaurants can turn to for help.

"Texas Workforce Commission has programs available and potentially assistance too," Horowitz says. "Those things can help employees a lot."

The Small Business Administration has programs set up to help get money into a business if needed at very low rates. Disaster loans are designed to bridge the gap and get people on their feet, even if an establishment wasn’t physically damaged, but still suffered loss.

Horowitz also emphasizes getting in touch with insurance providers. "I was at a TRA board meeting and a Texas Mutual guy — they write a lot of workers' comp insurance — had a $10 million fund where any policyholder can apply for up to $10,000 for a grant, even if the restaurant wasn’t damaged, but just lost revenue."

That could mean keeping the lights on for another month, until the holidays roll around and business perhaps picks back up.

More information on resources is also available via the GHRA's official website.

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