Wilmington Chef Keith Rhodes on pivoting in a pandemic and multi-layered losses
Wilmington Chef Keith Rhodes has gained national recognition over the past decade for his promotion of fresh, local and seasonal food. His flagship restaurant, Catch, offers modern seafood that he describes as having an international flair. But when the Covid pandemic hit North Carolina, the bottom fell out for his business and for the local farmers and fishermen who supply his restaurant.
When the first signs of the coronavirus hit the United States early last year, Chef Keith Rhodes watched his business dwindle.
Then, on March 17th Governor Roy Cooper shut down indoor dining for restaurants. Catch had to close.
At that point, says Rhodes, he knew he had to pivot. Unlike some of his colleagues who resisted, he decided to adapt his menu to the world of takeout.
KR: At the end of the day, I'm a chef.
He adjusted his menu to be more curbside-friendly and adding an Asian twist. He cut prices by about 30%.
KR: And so we jumped right into that, which did not sustain, but it was able to keep the lights on and pay salary.
Then, Governor Cooper issued a new Executive Order allowing restaurants to open at 50% capacity. Rhodes wasn’t ready to open. He knew there was a pent-up demand to go out, and he thought it wasn’t yet safe.
He had a long list of worries: he worried about his staff who were seeing family members permanently laid off from other jobs. He worried about his own health because, as a diabetic, he has a higher risk of serious illness if he catches the virus. And that caused him to worry about what staff members were doing on their private time.
KR: We did not open back up. We continued with curbside, no one ordered curbside really, uh, because they were all going out to eat at this point. And for us the next four weeks were really, really, really hard.
Rhodes, his wife, and a skeleton staff kept the restaurant open for carry-out only. He paid his servers more than minimum wage and instead of pooling tips, allowed them to keep all of that money. And he watched his losses mount. But he refused to lay off anyone permanently.
KR: Of course the revenue is super-important to any business, but at the end of the day, most of my employees have been here with me for years, and this is my work family.
And he never thought of closing.
KR: it never crossed my mind… that thought...It was much more than just me. I had to fight not just for myself and my family, my immediate family, but for my work family as well, they've rode with me for many, many years through the good, through the slow winters.
The financial losses for Rhodes are steep. He says in the second quarter of 2020, he lost between a quarter of a million to a half-million dollars.
KR: That’s a hard pill to swallow. But it is what it is and we are continuing to move on.
Lynn Minges is the President and CEO of the North Carolina Restaurant and Lodging Association, an advocacy group for the hospitality sector. She says the losses for the industry for the 10 months from March 2020 to December 2020 were staggering.
LM: When you compare those same months to 2019, we're down $4.5 billion.
And federal money doesn’t begin to cover that loss.
LM: We've only received $1 billion in federal forgivable loans to the PPP. That still leaves a gap of $3.5 billion and no relief.
Overall, the Payroll Protection Program, or PPP, paid out about $13 billion to North Carolina businesses, but Minges says the hospitality industry got only 8% of that. Minges believes they deserved a bigger slice of the pie.
LM: So we've suffered disproportionately and the relief has been disproportionate.
Why was it difficult for so many restaurant owners to get the PPP help?
LM: Many businesses, you know, have financial or accounting departments that were well set up to apply for these federal -- this federal program. They were able to go to their banks and, and tap into those loans pretty quickly. We did not find that restaurants were able to do that.
Why? Minges says they were busy cooking. They were struggling just to keep the doors open, and many did not have the financial staff or strong banking relationships that allowed other businesses to get through quickly.
At his restaurant Catch, Keith Rhodes says more than half of his staff needed financial help to make ends meet. And as the pandemic wore on, he started seeing the stressors taking a toll on his own family.
KR: One evening I came home from work and my wife usually has the bedroom office set up on the side of the bed. So she's got iPads out and her pads and she's just getting all the scheduling and everything together... And she was looking at her papers and looking at the iPad and it wasn't nothing on the iPad and it was nothing on the papers. It was very tough.
Robin Gurwitch is a Professor of Psychiatry and Behavioral Sciences at the Duke University School of Medicine. She says the old adage that “what doesn’t kill you makes you stronger” is a myth. The effects of cumulative stress are real and will continue to show up long after the pandemic itself is over.
RG: What we know is that the more stressors, the more traumas, the more difficulties that we have puts us at greater and greater risk for both short-term and long-term challenges…
Including health problems, says Gurwitch.
Rhodes counts himself lucky that no one in his restaurant or immediate family has been impacted by Covid. But last year, he traveled to Philadelphia to pay respects to a relative that caught the virus. And the enormity of covid struck home.
KR: I've never seen anything like that before, you know, businesses and businesses and businesses were closed and boarded up and not just, we'll be back, I'm talking about For Lease signs in the windows. It was just that bad.
Lynn Minges of the Restaurant and Lodging Association says she’s pushing state lawmakers for $300 million in relief money.
And she points out that struggling restaurants also mean their suppliers are hit hard.
LM: So there are farmers and there are fishermen, and there are, uh, you know, all kinds of folks in the supply chain, distilleries and breweries and wine makers who benefit from the service that they received from the business they received from restaurants. And when we think about purveyors like Chef Keith Rhodes, you realize that he's hurting, but so are all the people that he does business with.
Chef Rhodes echoes that -- but he also worries about his customers--especially the seniors who make up a large part of his base. He credits what he calls “his community” for making his restaurant, Catch, the success that it is.
KR: I have one special couple. Every week they come and they order the same thing, lobster and crab cakes, every week, and they order carry out. Well, this last week, when they came they told one of the servers that they had gotten their last shot and that they are getting ready to come back into the restaurant.
There are other signs that the end to the crisis may be in sight. Governor Roy Cooper is expanding Covid-19 vaccine eligibility to Group 3, which includes restaurant, bar, and food service workers. There is a third vaccine provider with the approval of the Johnson & Johnson one-dose shot. Covid-19 metrics in North Carolina are on a stable decline.
Lynn Minges says she’s expecting a strong summer tourist season.
LM: There is great demand for people to, uh, you know, travel particularly within their own state... So we expect our beaches to have a strong summer season, cottage rentals, hotel rentals for leisure travel, you know, have been strong and, and are projected to be strong.
Chef Rhodes is certainly looking forward to better days.
KR: I'm glad we were able to sustain through this. And we look forward to just serving many, many more good meals here in the future.
And he’s growing his business. Rhodes says he plans to open a new restaurant in downtown Wilmington on Market Street after the worst of the pandemic has passed.
In the end, Duke University’s Professor Gurwitch says the pandemic brings a unique set of stressors -- particularly due to loss.
RG: Grief. We have tremendous grief happening in this country.
One way to manage that, she says, is to celebrate and honor milestones such as birthdays and anniversaries.
Maybe even at one of your favorite restaurants.