Kosher Restaurants Amid The Storm
With the challenging reality brought about by a pandemic stretching into nearly a year with no clear end in sight, kosher restaurants amid the storm brought on by COVID are experiencing profound losses.
It is hard to think of a Jewish business sector more hard-hit than the kosher restaurant industry. The sudden nature and associated shock of COVID and the lockdowns rendered many restaurants closed for the first few months of the crisis. Even when delivery amped up and outdoor dining started to be allowed, the case positivity rate’s constant fluctuations have resulted in the intermittent and ongoing mandatory business shutdown adding the prolonged economic damage.
There Are Winners & Losers
Even for the ones quick to chart their path in the new reality by making food delivery the lifeblood of their restaurants, many had dormant dining space quickly becoming a financial liability. Establishments, especially the high-end ones, had no way to replace that in-house dining revenue even if online orders increased. For those establishments with a majority fine dining business, the pain was especially monumental. Quite simply, few will order a $70 steak to their home versus cooking the same on their own for a third of the price. After all, many go in large part to high-end kosher restaurants for the ambiance. Therefore, the hardest-hit were these higher-priced kosher restaurants who, even with pivots, still did minimal to no delivery.
In contrast, the big winners were kosher fast food that saw their already existing and robust pickup and delivery business go into overdrive. Some of the stalwarts in this category include sushi, pizza, and other related fast food themes. As a result of the pandemic, we even saw new entrants capitalizing on this new reality, including kosher ghost kitchens entering the fray.
An Already Challenging Vertical
As it is, startup restaurants have an almost unimaginable high failure rate percentage. According to studies, approximately 60% close within the first year and 80% by year five. That stat is in the context of the general market. In our view, there are strong arguments to be made that the failure rate is even higher for kosher restaurants. For instance, the days where the restaurant cannot be open such as on Shabbat and Jewish holidays and kosher certification costs, add to the factors making the endeavor even more costly and hence challenging. Dani Klein, of YeahThatsKosher, goes into a more lengthy discussion of the kosher restaurant industry’s varying dynamics, problems, and solutions that we recommend for those looking for a more in-depth analysis of the challenges. With that said, and on the bright side, there are positives to the kosher restaurant business. A concentrated and clearly delineated market segment allows for an almost instant attraction to the customer base. On average, the Jewish audience also greatly enjoys restaurant culture and displays enthusiasm for novel food options.
Kosher Restaurants Are Not Alone Though
It is human nature to feel better when we are not going through a challenge alone. In that respect, perhaps kosher restauranteurs and the many others struggling, whether financially, healthwise, or in some other fashion, can glean a silver lining that they are not the only ones suffering. After all, many industries have seen immense destruction. Take the disaster that the Passover program operators and customers experienced with the confusion and anger that resulted in the last-minute cancellation of the popular season. Even well known, seemingly stalwart, and healthy brands such as Century 21 were devastated to the point of filing for bankruptcy. All this is not to mention the close to a quarter of a million COVID deaths in the USA.
If facing a pandemic head-on and watching it devastate one’s livelihood was not enough, kosher restaurant proprietors had to also navigate what increasingly emerged as a political food fight. While on the micro-level, New York City, the mecca of the kosher restaurant industry, is a Democrat stronghold, there was a stark divide across the United States. In traditionally Republican states, for the most part, there was a relative laissez-faire approach. Whether the differentiation was due to there being less of a COVID threat in rural and generally Republican states or because of policy and ideological views is up for debate, and we’ll leave that to the pundits. Though, the fact is that, in places like Florida, with metro areas like Miami, the governor, Ron Desantis, marched to a largely pro-business and anti lockdown mantra. On the other hand, NY, through both Governor Cuomo and historically unpopular Mayor DeBlasio were more inclined to shut businesses down and do it in a sweeping manner that many in the Jewish community saw as heavy-handed and unfair.
Why would anyone want to open a business in NYC?? A cafe in our district today received a summons for having their doors open!
— Councilman Deutsch (@ChaimDeutsch) October 20, 2020
They were adhering to the law by banning indoor/outdoor dining, & they were only open for takeout.
That wasn’t enough for this misinformed inspector: pic.twitter.com/vdWIHokOU1
There was an especially illustrative incident of Jewish restaurant owners’ harsh reality and their contentious relationship with politicians during the crisis that revolved around Mixed Greens Cafe. Located in the Gravesend neighborhood of Brooklyn, restaurants in that area were ordered closed due to a spike in COVID cases during October 2020. Jacob Green, the cafe owner, claimed that he was given an erroneous fine by city inspectors even though he was following the rules and only conducting pickup and delivery operations. Other documented instances of inspectors doling out fines even when there were no violations, such as in this instance at a yeshiva in Flatbush. Green went on Tucker Carlson’s show, one of the most widely watched on cable TV, described the incident, and saw an immense outpouring of support. People from across the country placed orders, including to send food to the police department directly across the street. The store’s reviews also skyrocketed overnight to close to 150 average 5-star reviews. The violation was also subsequently rescinded by the city for a happy ending for this kosher restaurant, but many others did not have the same good fortune.
A Creative And Agile Approach Is Key To Getting To The Other Side
Like so much with the pandemic, surviving and even thriving depends on being agile and changing with the fluid dynamics. Creativity and finding new ways to generate revenue and transform business operations is also a recurring theme. This takes varying forms to include upgraded ordering and delivery systems, new digital advertising strategies, and overall achievement of best in class digital transformation in the restaurant context. We have seen great examples of restauranteurs being able to flex with the reality dealt, including becoming a hybrid eatery to supplement revenue due to loss of in-store dining.
The Future & A Post Mortem
The lack of business certainty and all else that comes with an economy ground to a halt during a pandemic has rendered an already immensely challenging business environment near impossible. Knowing the long term damage to the kosher restaurant industry will only be possible upon completing a post mortem when the pandemic is well in the rearview. With that said, we have already seen many well-known kosher restaurants shutter permanently, adding to the ever-growing heap of business casualties brought about by a once in a century health crisis. Our only hope is that the promising news of vaccines results in the nightmare ending soon and perhaps even a renaissance of the kosher restaurant landscape.
