• Gerber Group is a hospitality company that owns and operates 10 bars and restaurants across New York City, Washington DC, and Atlanta.
• The group has closed its venues and laid off 400 staff members as the coronavirus pandemic cripples the industry.
• CEO Scott Gerber says there are ways restaurants and bars can conserve cash while they’re closed.
• Suspending non-essential contracts like point-of-sale systems and negotiating payment schedules and credit with big vendors can give establishments a better chance of reopening after the shutdown.
• Venues should also prioritise payments to smaller vendors who need their cash to stay afloat in the short-term.
• Visit Business Insider’s homepage for more stories.

As a 30-year veteran of the hospitality industry, Scott Gerber, CEO of Gerber Group, has seen his fair share of ups and downs in the business – but nothing quite like the effects of the coronavirus pandemic.

“It’s a whole different ballgame,” Gerber told Business Insider on a recent phone call. “The recession of 2008, obviously a lot of our corporate business cancelled, but people were still going out … If you had a good paying job, you could go out and have a drink. Maybe you would have a drink or two at your home and then go have one or two drinks at a bar or restaurant … But people were still going out. We weren’t making as much money, but we were surviving. This is a complete reset. Nobody has a job.”

Gerber Group operates 10 bars and restaurants across New York City, Washington DC, and Atlanta. Among its more recognisable venues are The Sunken Lounge at JFK Airport’s TWA Hotel, which opened in 2019 and is designed as a throwback to the golden age of flying, and NYC’s Mr. Purple, a swanky rooftop bar and restaurant in the Lower East Side. The group has closed all of its venues until further notice and laid off 400 people – the majority of its staff, including the corporate office.

It’s not alone. As cities across the US have ordered restaurants to close their dine-in operations to slow the spread of the coronavirus, mass layoffs have begun. Danny Meyer’s Union Square Hospitality Group, which operates 18 restaurants in New York City, laid off 2,000 employees – nearly 80% of its staff – last week week “due to a near-complete elimination of revenue,” according to a company statement.

The National Restaurant Association estimates that the restaurant industry will sustain a $US225 billion hit over the next three months and that between 5 and 7 million restaurant workers will lose their jobs.

Gerber says the most pressing issue for restaurants and bars right now is paying rent, an area where he hopes the federal or state governments will step in.

“Obviously if we’re not open, we have no way to pay the rent.” Gerber said. “So to me that’s the most important part. And hopefully they will step in and help employees with a little bit more relief than just unemployment.”

But there are some things that restaurants and bars can do to conserve cash in the meantime, according to Gerber.

1. Suspend any non-essential contracts

Wherever possible, Gerber Group is suspending contracts that bars and restaurants don’t need when they’re closed, such as point of sale systems and public relations companies. A point of sale system is the system for processing customers’ payments for their food and drinks.

“We’re basically just asking everybody to allow us to suspend our accounts and not do payments currently,” Gerber said.

2. Negotiate with large vendors on credit and payment schedules

“For any non-essential contracts, we’ve kind of asked our big vendors to just work with us so we can get through this,” Gerber said.

Most vendors are willing to be flexible, Gerber said.

Some liquor companies, for example, are letting Gerber Group’s venues extend their payment schedule beyond the typical 30 days, he said. They’re also allowing the group a window to return some open products, such as a case of tequila that the bar can no longer sell.

“Work with your vendors,” Gerber advises restaurateurs. “Don’t be afraid to pick up the phone and call the big vendors that you know can afford to give you some breathing room. You’re not necessarily asking to be provided a product free. I’m not saying I don’t want to pay for that product. Just give me some time to pay you when I’m open again.”

3. Prioritise paying smaller vendors who need your cash to stay afloat

Gerber Group isn’t trying to negotiate contracts with smaller vendors, Gerber said.

“For instance, if we owe a breadmaker at the Greenmarket $US500, I realise that they need the $US500 to live, so we’re not going to push them out and ask them for credit,” he said. “But these huge food companies that we know can last without our couple thousand bucks for a few months, we’re having conversations with them and they are being agreeable to extend our credit.”

Even if they do their best to conserve cash during the shutdown, many smaller, independent restaurants and bars likely won’t be able to afford to reopen even after the pandemic is contained, according to Gerber.

Still, he remains optimistic about the future of the industry.

“Hopefully, people will understand that frequenting bars and restaurants – maybe even more than they used to – is really what’s going to be needed to get people back on their feet that are really suffering right now,” Gerber said.

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