Chen Yi, 35, is an owner of a hot pot restaurant “Little Pigs” in Guangyuan, a China’s central city. Chen is hardworking enough to work more than 12 hours every day, opening the restaurant at 10 a.m. and closing it at 10 p.m. Even before opening the eatery, Chen would come early to prepare food materials and deep cleaning. He has been used to this busy life for 10 years.
But two months ago, Chen made the heartbreaking decision to close the Little Pigs, which was severely affected by the impact of COVID-19.
“I think there had been an almost 60% loss per day since the government asked all shops and restaurants shut down except groceries and pharmacies,” said Chen. “It is so hard for me to continue running it without enough cash.”
Struggling under a coronavirus-related ban on restaurant dining, 75% of Chinese restaurants had suspended or shut down their business in the past two months because of the coronavirus, according to an analysis released by the China hospitality association in March.
More than 70% of survey participants said their overall revenue fell by more than 90% over the period. Moreover, 27% of caterers said they had to close their companies due to the shortage of money, while 45% said their cash flow was merely sufficient to cover operating costs for up to two months, South China Morning Post reported.
China has made many plans to help those owners of shops and restaurants to get through the dilemma, but these policies has not been implemented in effective. For example, the government suggested landlords to offer rent abatement or deferrals of the leases. However, there is no mandatory provision and many of them are reluctant to reduce the rent due to their own financial pressure.
“In the food industry, it is a tradition to prepay at least three months’ rent and it cannot be refunded,” said Chen.
Running a small-sized restaurant is actually a high-risk career because they often do not have a professional team to deal with urgent crisis like the COVID-19.
“The outbreak came so unexpected and almost all restaurants shut down at one day that we have to throw away stocked meat and vegetables, which was a huge waste,” said Chen. “And the outbreak cut cash income to almost zero before we are permitted to reopen the Little Pigs.”
Also, the tight funding chain add threat to their regular operations. “There are four main expenses on running an eatery, which are rent, food materials, staff salaries and operation costs. In normal circumstances, the rental cost and food are the biggest cost, which account for roughly 50% of the whole expense,” said Chen.
Chen also tried to borrow money from his friends and banks, however, with banks not interested in lending to small businesses, Chen said it seems like that closing down is the only thing that small eateries could do.
Although the situation is so difficult for employers, Chen still offered employees paid sick leave for work missed due to the outbreak crisis.
“Even with new cases down, the government has maintained strict limits on dining establishments and people are still scared about sharing space and food,” said Chen.
In order to get customer volume back to pre-virus levels, Chen has tried his best to manage the Sichuan restaurant to stay open, including safeguard patrons and changing the way he did the business.
Given the ventilation system can keep viruses aloft, Chen spaced tables two meters apart and installed front counter shields in restaurants. He also distributed thermometers, surgical masks, hand sanitizer and gloves to employees. In the evening, he reduced hours of operation for deep sanitation. “We’re sanitizing every five hours and washing hands a lot more. I know it won’t help win more customers, but we just want to do our best,” said Chen.
Chen also tried to offer takeout and contactless delivery through apps such as WeChat and Alipay. But one of problems is that the chili oil in hot pot can easily become sticky in cold days. “So people rarely order hot pot takeout, though I have tried to offer 60% discounts to manage to improve the business. And they won’t come in because it’s not only about the money. They are just too worried,” said Chen.
Without enough income and short-term government loan, Chen’s cash reserved could only support him for two months. After he had laid off more than 10 people, he finally decided to shut down the restaurant in March.
“I’m so anxious that could not sleep every night, but when I finally gave up and shut down the Little Pigs, I felt relieved,” said Chen.
Thinking about the future, Chen said he has not yet decided whether or not to open a smaller dim sum shop which would make him less stressful about the operation expenses.
“Even when the coronavirus completely disappears in the future, people will become more cautious about their spending,” said Chen. “I’m not very optimistic about continue doing food business.”