When COVID-19 shutdowns burnt the cash flow beyond recognition, a pair of top Kentucky restaurants faced hard choices to come up with recipes for survival. And each responded to the chaotic crisis with moves focused on their employees.
Jeff Ruby’s Steakhouse is an event dining experience with seven locations in Kentucky, Ohio and Tennessee. Carson’s Food & Drink, an elegant rustic-casual experience, has been in continuous high demand since it opened on Lexington’s Main Street in 2017. Each operation factored more than 40 years of restaurant experience into its decision making.
“I had decided from the first day we closed to the public that I was going to take care of the staff that has taken care of me,” said Mark Fichtner, owner of Carson’s. “I decided to pay them and their health insurance until we could reopen.
“We averaged out all the tips the front-of-the-house staff made—bartenders, servers, server assistants, bar backs, hosts. We averaged out what the back of the house—cooks, prep cooks, dishwashers—did and let them clock in and clock out to work each day. If we did not have enough (curbside take-out) business, I would pay them the difference in their average pay they were making before we closed to the public.
“The front-of-the-house servers would make some tips from our take-out program, but not enough to live on,” Fichtner said. “So I paid them their average tips each week to make up the difference. With any employees who had children at home, I gave them the option of working or staying home until we opened again, so that they could protect their children and reduce the chance of getting the COVID-19 virus and giving that to their children. If they chose to stay home, I paid them their average weekly pay to stay home with their children.”
That closure happened in March, but Fichtner had been alerted to the COVID-19 news in January, he said, when news reports indicated it was bringing China to its knees, with businesses closing and the population being asked to stay home and quarantine.
“I thought how devastating this is for that country and the businesses and economy. I never thought that this virus would reach the United States,” he said. Even when U.S. cases were reported in February and March, “something in me still said, ‘This is the United States; we will surely get a handle on this very quickly.’ ”
Instead, case numbers rose and occurred in more and more states. Then local government officials began urgently discussing closing businesses and quarantining.
‘Be the eternal optimist’
As owner of Carson’s, Fichtner knew he “had a huge job ahead of me, not just as a business owner but as the person responsible for 85 other lives that worked for me. My job was to deliver the news of closing and only doing curbside take-out” to managers and staff, as this was surely coming soon.
“My job in the midst of this incredible situation was to be the eternal optimist and to be the foundation my employees could stand on,” he said. “They have given me so much over the past few years at Carson’s; it was time for me to return that to them.”
Britney Ruby Miller is president/CEO of Jeff Ruby Culinary Entertainment, which includes steakhouses in Cincinnati, Louisville, Nashville, Columbus and Lexington, in addition to The Precinct and Carlo & Johnny concepts in Cincinnati. Jeff Ruby’s is rated among the top brands in the United States; high end IS its brand. It attracts locals and visitors for “event” celebrations as well as household names such as Jeff Bezos, the richest man in the world, and his Amazon board of directors.
- IT’S FREE | Sign up for The Lane Report email business newsletter. Receive breaking Kentucky business news and updates daily. Click here to sign up
Miller took COVID-19 very seriously from the moment it appeared in U.S. news reports. When she and her children traveled out of the country in January for a vacation in the Bahamas, Miller insisted they take all precautions.
“We were the only ones on the plane wearing masks,” she said. “People looked at us like we were crazy.”
Long before the restaurants had to close in March, Miller created an internal task force in the Ruby corporate office to begin contingency planning, including even how they would market carryout and delivery.
“We definitely knew a disruption was coming, along with a potential recession,” she said. Clearly what was approaching for the restaurant industry was unlike anything she or her father had ever experienced.
When the order to close came March 15, Jeff Ruby Culinary Entertainment had decided to continue paying for full health care coverage for its employees. There were 630 before the pandemic, she said, and about 500 employees now.
The Ruby operation used its payroll app tool to survey employees and keep them informed as internal discussions continued.
Tell it to the governor, media, staff
Ohio Gov. Mike DeWine named Miller, whose father launched his namesake restaurant group in 1981, one of 36 members of a task force he created in late April to advise on how to safely reopen restaurants.
As such, Miller is conversant in the science of the pandemic, such as the “R value”—the reproductive spread rate per individual case—in each of the states Ruby has restaurants. She knows the metrics that generate profit-loss points not only for restaurants but also for hospitals. She knows how many ICU beds are available.
She knows that restaurants today constitute about 51% of the retail consumer food supply, and their role became more significant as a never-before-seen pandemic hit and worried grocery customers began to wipe out supplies of some categories of foods.
Miller did more than 100 media interviews on Fox, CNN, the “Today” show, U.S. News & World Report magazine and many more information platforms. Just as importantly, she aggressively pushed information out to employees.
“We wanted to make sure our team was up to speed, that they stayed plugged in so they weren’t hearing what we were doing through the media,” Miller said.
Like everyone else, Ruby closed its restaurant operations, which did require laying off many employees, then transitioned to take-out and meal kits. Miller said Ruby’s has kept the 20-plus-member corporate task-force team on full time, including general managers and chefs.
Jeff Ruby’s Steakhouse locations kept enough staff to continue the hot-meal takeout they had always provided and to meet demand for a new product: $120 “meal kits” designed to feed four in a Ruby level of quality.
Continuing an expected level of quality was also of utmost importance for Carson’s.
“Carson’s restaurant,” Fichtner said, “is all about great food, drinks and service, but it is also about the environment that we have created with a Prohibition and rustic yet elegant feel, along with a great patio, live jazz and a wonderful brunch on the weekends. How do you deliver the Carson’s experience in a take-out box handed to you in your car for you to dine at home?”
General Manager Kyle Zimmerman reassured him with his, “We got you boss, no worries!” catchphrase, Fichtner said, but the decisions were still his.
“I thought: Do what we always do, serve excellent food and drinks with excellent service. Come up with a way so that take-out will be efficient, accurate and looked great in the box.”
Working with managers, Fichtner developed family-style meal packages, Carson’s Cuts (steaks and seafood that customers cook at home), cocktails to go, 50% off bottles of wine, and holiday meal kits for Easter, Mother’s Day and Father’s Day. They rearranged the dining room to accommodate the new take-out business.
“Curbside take-out was very successful,” he said, “and yet not even close for us to break even weekly.”
A Paycheck Protection Program loan was a boost, but the books showed a $30,000-$40,000 weekly loss.
“Many people asked me why I was paying out so much money to my staff when I could furlough them and let them get unemployment,” Fichtner said. “My employees are my family, and this was about all of us getting through this and not just saving Carson’s restaurant.”
Half of region’s restaurants could close forever
After more than two months of being restricted to only curbside pickup, Kentucky restaurants were allowed to reopen with social distancing protocols at 33% occupancy as of May 22. This was increased to 50% occupancy at the end of June. But at the end of July, when Kentucky COVID-19 case numbers rose to their highest numbers yet, the state reduced restaurants’ indoor service capacity to 25%.
According to Miller, restaurants operating at anything less than 50% occupancy “are just hemorrhaging.” Statistics and information she follows indicate half of all restaurants in the Ohio Valley area will fail and close within the next nine months.
The implications and impact would be severe. The restaurant industry employs about 10% of the total workforce, according to Miller, and when all the ancillary businesses that supply and work with restaurants are included, around 20% of the U.S. workforce could be impacted.
The Ruby CEO said she has had the chance to speak to federal policy makers such as Kentucky U.S. Sen. Mitch McConnell, the Senate majority leader, and Florida Sen. Marco Rubio, urging them to pass another round of Paycheck Protection Program loans at the least.
Still, Miller foresees it taking restaurants “a couple of years” to recover from the pandemic’s impacts after they pass.
“This has been one of the most difficult things I have ever gone through, personally and professionally,” Fichtner said. “But I am deeply grateful for the managers and staff I have to work with; they are the ones that made Carson’s what it is and will continue to do so. My job is to be grateful for them and to lead with passion and to continue to create a company they are proud to work for and make them feel that we care for them as family. It takes a lot of hard work to get this lucky.” ■