Colorado restaurants have been fighting for survival throughout the COVID-19 pandemic and with winter weather fast approaching — vastly reducing outdoor dining — things will likely get worse before they get better.
Colorado’s stay-at-home order forced restaurants to shut down in the early days of the state’s response to the pandemic and many eateries permanently closed in the immediate aftermath — at least 400, but likely significantly more, according to Sonia Riggs, CEO of the Colorado Restaurant Association.
“It’s not hyperbolic to say the pandemic is the most formidable challenge restaurants have faced in a generation [and maybe ever],” Riggs said in an email.
“The shutdown was catastrophic for a lot of businesses.”
According to association estimates, Colorado restaurants — a $14.5 billion industry in 2019 — lost $975 million in April alone. How much the industry has lost since then is unknown, but Riggs said it’s “safe to say” revenue losses for 2020 are “in the billions.”
Even in Colorado’s safer-at-home phase — when restaurants could resume dine-in services at 50 percent capacity or 50 people, per room, so long as tables were spaced 6 feet apart — restaurants have found it extremely difficult to generate sufficient revenue.
“Reopening wasn’t exactly a reprieve, either,” Riggs said. “Restaurants run on razor thin margins in the best of times, so limiting them to 50 percent capacity doesn’t support the business model.”
With cold, snowy weather having already made an appearance in many cities throughout the Centennial State, including Colorado Springs, and more winter conditions on the way, restaurant capacities will likely be even more limited as fewer people are inclined to sit outdoors.
OUTDOOR DINING EXPANSION
Temporary modifications are one action taken by the state that has helped restaurants mitigate losses, including changes to state liquor license laws via a June executive order by Gov. Jared Polis.
Polis’ order suspended certain legal barriers to serving alcohol in temporary outdoor dining spaces and has allowed restaurants to apply for permits that expand their licensed premises to private parking lots, sidewalks, café patio extensions and balcony seating.
The order was originally set to expire in September, but the state recently announced it intends to extend the order through October 2021, according to Laurel Prud’homme, vice president of communications for the Downtown Partnership of Colorado Springs.
In the spring, Prud’homme said the partnership identified expanded outdoor dining as a pivotal resource for downtown restaurants during the pandemic.
The partnership spearheaded an effort called Dine Out Downtown, which blocks off Tejon Street between Pikes Peak and Colorado avenues on Friday and Saturday evenings to allow restaurant customers to spill out into the street to accommodate more people.
Through Dine Out Downtown, Prud’homme said, the partnership also helped restaurants outside of the Tejon area to expand their patio spaces and overall capacities.
“It really has proven to be quite valuable,” Prud’homme said. “Anecdotally we have heard from a handful of the restaurants that if they were not able to utilize the expanded outdoor dining, they would not have been able to make it through this.”
Because the outdoor expansion has been so beneficial, Prud’homme said the Downtown Partnership advocated for Polis’ order to be extended and recently got its wish.
With the extension, she said Dine Out Downtown on Tejon Street will continue through most of October, provided participating restaurants continue to see enough customers.
“Once the weather starts getting cooler, if [restaurants] are not seeing enough volume for it to make sense for them … we won’t continue doing it,” Prud’homme said.
Jay Gust, owner of Ascent Restaurant Group that operates TAPAteria and Pizzeria Rustica on West Colorado Avenue, said when his restaurants reopened, capacity restrictions limited TAPAteria to just five indoor tables at one time.
But after being approved for variances from the city to expand his outdoor dining, TAPAteria tripled the number of tables it could serve.
Gust said the expansion has been a big benefit, but Ascent restaurants have still suffered significant revenue declines — 2020 revenue is down 15 percent from 2019 in the months since they’ve reopened, Gust said, and overall, Ascent restaurants have seen at least a 40 percent decline in revenue through this point in 2020 compared to last year.
With winter on the horizon, further limiting capacity, Gust said he thinks monthly revenue deficits could grow to 25 percent.
But the extension of Polis’ executive order is “huge” for restaurants, Gust said, especially in Colorado where there’s sporadic days of sunshine even during the winter months.
“Historically we’re not like the Midwest where I grew up, where winter is winter and that’s it,” Gust said. “So we’ll be hoping for some type of good weather on certain days where we can really access that outdoor area.”
Riggs said summer patio extensions have helped, but mostly just in staving off the worst possible outcomes.
“It’s given restaurants a way to expand capacity without being able to fill their dining rooms. But most restaurants say they’re still serving far less than 75 percent of their normal capacity, which was the bar they told us they needed to reach to have a chance of surviving medium-term,” Riggs said.
“So despite being open all summer, the industry is still in a dire situation —restaurants say they need more capacity and additional financial support if they’re going to survive longer than six months.”
SUPPORT NEEDED THROUGH THE HOLIDAYS
In the summer months, many restaurants see their highest volume of the year as more people are out and about, generating more walk-in traffic.
And though things tend to slow down in the winter, many still generate significant revenue around the holidays from family gatherings, office parties and holiday dinners.
“The holidays tend to be a very busy season for restaurants across the industry,” Riggs said. “This year, restaurants are very concerned about what their holiday season will look like, however.”
Riggs said if capacity restrictions don’t change before the holidays, restaurants will not be able to host large private events or holiday parties, which will mean a substantial drop in revenue.
Joe Campana, owner of several local restaurants, including The Rabbit Hole and Supernova Bar and Arcade downtown, said he expects holiday traffic will be “really slow” for his restaurants this year.
In anticipation of the challenges to come, many restaurants and organizations are trying to come up with creative solutions that will help them survive the winter.
The Downtown Partnership is working on purchasing outdoor heaters it would then make available to local restaurants to either rent or purchase at cost to heat their patios and outdoor dining spaces.
For Ascent, Gust said the group has erected a large tent behind its restaurants that will be equipped with propane heaters to help keep people warm.
Riggs said that because Colorado gets several sunny, warm days in winter, the CRA is working with architects and engineers on solutions “to make outdoor space usable year-round, even in the cold.”
She said that because of the pandemic, she also believes the public may be more willing to eat outdoors in cold weather than they would have in past years.
A combination of creative approaches, Riggs said, will help, “especially if the epidemiology allows for more relaxed capacity restrictions.”
But she said what most restaurants really need is cash relief.
“The business model for this industry yields profit margins of about 3 to 5 percent,” Riggs said. “That’s with full capacity and being able to take advantage of busier periods, like the holidays.”
Campana said a successful winter will likely come down to everyone’s adherence to the rules, which, if done properly, would ease capacity restrictions as well as consumer fears about dining out.
“We want the virus to go away,” Campana said. “I think people are scared and … anybody who’s over 50 — not a lot of them are going out. So what’s it going to take? I’m just hoping we have a mild winter and people can have some outside patio seating and we’re not getting a lot of snow, even though [Colorado] needs it for the moisture.”
Riggs said it will likely take additional support from the community for many restaurants to stay afloat.
“Restaurants are the backbone of our communities,” Riggs said, “They’re a really essential part of what makes our communities feel unique. That’s hard to quantify in an economic sense. Restaurants need support right now if they’re going to survive — we’ve got to continue to dine out and take out, or expect to see many more closures.”