Hold or fold: Restaurants face a terrible dilemma

Jeff’s Pirates Cove will not be too affected by the new rules because it has a lot of seating space and offers an outdoor dining option.

Restaurants are among the businesses hardest hit by the coronavirus and many may not survive the current crisis and decide to just close shop.

Although Guam is now in Pandemic Condition of Readiness 2, restaurants are still prohibited from offering dine-in services and are just limited to pick-up and delivery services.

And even if the dine-in restrictions are lifted, it’s still unsure whether restaurants will have enough dine-in customers to sustain their operations in light of customers’ lingering fears about contracting COVID-19.

Moreover, restaurants that plan to reopen face the daunting prospect of increased costs because of new COVID-19 requirements.

These include limits on the number of people allowed inside a restaurant, more distance between tables resulting in decreased capacity, and increased training for restaurant staff on COVID-19 preventative measures.

Jeff Pleadwell, a longtime restaurateur on Guam and the owner of Jeff’s Pirates Cove, says his restaurant will not be too affected by the new rules because they have a lot of seating space and they offer an outdoor dining option.

However, he said a lot of indoor restaurants will be adversely affected.

“A restaurant operating at full capacity is making money. But when you reduce their occupancy, money will never be the same. Our margins for profit are slim and volume is everything. When you have too many rules, there is more to deal with as people’s interpretation is always different,” Pleadwell said in an interview with PNC.

Currently, Jeff’s Pirates Cove is only accommodating to-go orders as mandated by GovGuam.

“To keep people busy, I have cleaned the property and worked on the roof as well as many other projects that are easier to do when we are closed. We kept 23 people working. I operate at a loss every day with 80 percent of my sales gone instantly. A month was long enough, but two months? Many restaurants may not open,” Pleadwell predicted.

So far, Pleadwell has managed to keep everyone on the payroll in his restaurant.

“I had reserve cash saved for emergencies but it is going fast. I never thought the government would keep me closed longer than a typhoon or natural disaster. I cut my hours now to 10 am – 5 pm and for to-go only. My employees are not happy sitting home all day and they have a good work ethic. I will do my best to keep them,” Pleadwell said.

Jeff’s Pirates Cove did apply for the federal Paycheck Protection Program and got what it asked for. But Pleadwell says the PPP has limitations and should be made more flexible to accommodate the unique needs of the restaurant industry.

“The PPP is good enough but having to use it in two months is going to be difficult. The clock is ticking. Reaching the loan forgiveness amounts even on the 25% utilities and rent side will be difficult because the bills without only 20% of our normal business is lower than half what it usually is. Our power before was $4,000, now it’s under $2,0000. A 3-month period would be better,” Pleadwell said.

He added: “The PPP should be more flexible allowing us to start credit for the 75% payroll ever since March 20th for those that never closed their businesses. It should also be extended at least another month from the time we are fully allowed to open by the government. Inventory losses should also be qualified as most on Guam are stuck with incoming product and if you’re closed or non-essential you suffer big time back-up and inventory losses for months.”

Pleadwell is also critical of the government, saying GovGuam “is feeding itself fine” with federal relief money but the private sector gets nothing from them.

“Although we pay for their existence in normal times, we are always second-class citizens to them. The business privilege tax should be zero or less than 2 percent until the end of the year. Then, they should create in 2021 an above or over the counter sales tax. All business license and permit fees should be suspended until next year. They have plenty of federal money. This will help all businesses when considering whether to continue operations or not,” Pleadwell said.

He added that now is the time to reduce the size of government and stop paying so much for poor government services. “Privatize the GVB, utilities, the hospital, and all other poor-performing agencies. They hurt Guam in the long run.”

As for his restaurant, Pleadwell said he will fight to keep it open at all costs.

“I will remain open till my last dime is lost. This is my life. I already made many improvements on the restaurant and I have many years left on my lease. All over the world, many people including my long time employees love this place. Our government will not defeat me,” Pleadwell vowed.

Port of Mocha

Jay Dewan, president of Port of Mocha, said coffee shops need to be allowed to open and allow dine-in services. He said the shutdown has already taken a huge toll on food, beverage and bar establishments.

“At Port of Mocha, we have already followed the guidelines stated by the government and spaced out tables. There is the health crisis as it is but now simultaneously there’s the financial crisis that businesses and employees are facing. Everyone knows the safety guidelines, the local government must let them practice it. We know what to do already. If the government is going to continue this, then the local government must assist with financial relief to all businesses. Rents are still due. Either let us open or pay our rents to the landlords,” Dewan said.

He added that gross receipt taxes should be reduced to 0 percent until December 2020.

“When businesses are already facing negative revenues, it makes no sense to pay taxes on negative revenue. If you hurt the businesses, it will hurt the government and the island in return. It’s all linked. Let the businesses open and let it take its course. Consumers know what to do. If they don’t abide by the guidelines, it will affect them as well. Government should pay our bills if you don’t allow us to do it ourselves,” Dewan said.