Industry advocate: Half of Iowa restaurants not at full capacity, despite demand

DES MOINES — Since the moment Iowa restaurants were first shut down by emergency order in March 2020, many establishments have had a roller coaster of a ride.

After shutdowns and coronavirus pandemic restrictions built pent-up demand, many restaurants roared back to life with the initial uptake of the vaccine this spring, only to encounter trouble finding the employees they needed. A year and a half into the pandemic, with the delta variant of COVID-19 taking hold, how have restaurants fared?

Jessica Dunker, president and CEO of the Iowa Restaurant Association, talked with The Gazette recently about what’s next for Iowa’s restaurant industry.

“We jumped out of the frying pan and into the fryer. Fully half of the restaurants in the state of Iowa are still not operating at capacity — they haven’t put all their tables back out — because they can’t. They don’t have the staffs to cover them.”

Q: At the beginning of the pandemic, the prognosis for restaurants was grim. Many predicted a substantial portion, particularly small establishments, simply wouldn’t survive. A year and a half into this pandemic, how well has the industry survived overall in Iowa?

A: “In Iowa, better than expected, and better than most states. There are a couple of reasons for that. Number one is that communities rallied around us, which was wonderful. Number two, the state of Iowa — first the agencies and the governor’s office and then the Legislature — really stretched and did about as much as a state can do to support an industry.

“They also did defer things, they did things that made cash flow possible. The federal government can’t move fast enough to do that, but the state government was able to provide a couple of release valves really quickly.

“Compared to many states, we did have (operational) limits, but we weren’t shut down to quite the degree of other states.

“Business is brisk. We’re doing quite well. We’re limited now not by COVID mitigation strategies or consumer fear but by our inability to find staff. … We may be approaching a situation now too where access to products is going to be a hindrance to us being able to recover.

“We were never so happy to be wrong about our prediction that we were going to lose 1,000 restaurants in the state of Iowa. We think that number is closer to 750.”

“We jumped out of the frying pan and into the fryer. Fully half of the restaurants in the state of Iowa are still not operating at capacity — they haven’t put all their tables back out — because they can’t. They don’t have the staffs to cover them.”

Q: What factors would you credit recovery to?

A: “Part of the recovery was pent-up demand. People were ready to go out.

“When you looked at aid, it was always based on your percentage of loss. A lot of people (who) qualified were in the center of the state because border communities like along the Mississippi were drawing so many people from, say Illinois, where there was such a rigid shutdown that they were actually drawing people into Eastern Iowa to come and golf and eat and drink and go out. Our state always had a strategy of trying to keep businesses surviving.

“I credit the creativity of restaurateurs. People had never been doing any emphasis on carryout, delivery. (They) had to turn on a dime to translate their menus, offerings, and what they do to a format that made sense as carryout.

“We were never so happy to be wrong about our prediction that we were going to lose 1,000 restaurants in the state of Iowa. We think that number is closer to 750. Had the state not done the grant program and done the measured county by county approach they took, we would have seen that many or more places close permanently.”

Q: Are we at pre-pandemic business levels yet? What will it take to get there?

A: “If we found the people we need, we would be setting … pre-pandemic record sales. We’re being totally held back by the lack of workforce we need. We’re on an upward trajectory. When we compare to (previous years), we won’t be at 2019 numbers, but we’re going the right direction.

“It would be an even greater trajectory if we had the people we need to serve more people because demand is there. Demand is high.”

Q: Starting June 13, federal unemployment benefits stopped in Iowa under Gov. Reynolds’ directive. A lot of restaurant owners pointed to those supplemental benefits as a reason they could not get the help they needed. Two months later, how much have their hiring struggles improved?

A: “That was one of the reasons that people pointed to. … It’s a more complicated or nuanced problem than that.

“We were one of the first things that got shut down from the standpoint of our operations as a pandemic mitigation strategy. People who had a mortgage, rent, kids, they left. We probably will never see them back.

“We employ more women than men in our industry. With all the on-again, off-again school situations, we had women that would normally work part time or do things in our industry that were watching kids. One of the things we’re watching and super hopeful about with school starting is … as school starts back up, we’ll get those back who we temporarily lost.

“We employ a lot of students. Their impact of going back to school, or being home, that’s a big question mark right now.

“Yes, the federal unemployment relief (discontinuation) was helpful. It did bring some folks back. But that doesn’t address the people that left our industry, nor some of the unique demographics we have.”

Q: What will it take to rebuild that base and stabilize the industry?

A: “When you look at pay, the restaurant industry is paying better than a lot of industries, like child care for example. … We have to, as an industry, have to promote the things that are unique and interesting about being part of our industry. The flexible hours is something we have that other people don’t.

“At the federal level … we’d like to see some immigration reform. We consider ourselves an industry of first opportunities and second chances. We are more likely than any other industry to hire immigrants and out of the (prison) re-entry population.”

Q: With the delta variant, infections are going up and concerns seem to be very widespread again. With this new wave of cases, what are restaurants doing to prepare and get through it?

A: “Number one, we want our employees vaccinated. I cannot stress that enough.

“Each restaurant is looking at their clientele and making determinations about what makes their clientele comfortable. You are starting to see signs go up … where restaurants are opting to have staff wear masks.

“Masks have always been welcome but not always encouraged. There may be some places starting to encourage mask use.

“Most of what we do that keeps people safe, we’ve always done. That didn’t actually change during COVID, it’s things we always did.

“We continue to have … heightened hygiene measures in our restaurants because it’s always been the right thing to do and something we’ve always been committed to.

“I think you will see self-imposed mitigation on the parts of places that believe they need it. Not everybody will. As an industry, we are pushing hard to get vaccinated and we will do the same with the booster.”

Q: Where do you think things are headed in the future, especially with the delta variant in mind? Is there anything else restaurants are bracing for?

A: “I think we will be on a steady course of growth. It will take a year or two to get back to pre-pandemic revenue numbers, and a large portion of that will be based on workforce, but I do think that will stabilize. … Ultimately, we need more people in this state.

“People will continue to see more variety and creativity in what’s out there, whether it’s a ghost kitchen or cocktails to go. … The future will be bright again.

“Two things will not go backward for us as an industry.

“Consumers like third-party delivery applications. We have to figure out how to do that in a way that’s profitable to restaurants and profitable to those services. Pre-pandemic, only 37 percent of food and beverage that was created in a restaurant was consumed in a restaurant. We were already fighting for a shrinking piece of the pie.

“I also think you’ll see, especially with new locations, the footprint of a restaurant and the feeding capacity (change.) We aren’t probably going to see giant places coming. People will strike that balance between a smaller dining-in experience and always having that emphasis on carryout, delivery and to-go.”

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