Impact | Risk

Ask the Expert: I’m a Franchise Owner. The State is Closing Dine-In During the Pandemic, but my Corporation is Forcing Me to Stay Open. What Should I do?

December 21, 2020 | 5 min read
Covid restaurant

Last month, the Michigan Department of Health and Human Services issued an epidemic order requiring that all restaurants and bars close to dine-in service. Michigan was one of several states and cities that responded to increased rates of COVID-19 infection by closing dining rooms, allowing restaurants to remain open for carry-out and drive through service only.

It’s a move calculated to stop the spread of COVID-19, yet not all dining rooms have closed.

Citing decreased business, some restaurants resisted the ban. The owner of Andiamo’s in Michigan urged other restaurateurs to join him in keeping their dining rooms open (he recanted last week.) Some corporations and franchisees have parted ways over COVID restrictions while other businesses who refuse to close dining rooms face losing their liquor licenses.

The argument against closing dine-in is economic. According to the National Restaurant Association, more than 100,000 restaurants and bars have closed permanently during the pandemic.

So what should you do? The answer is to close your dining room.

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Restrictions are meant to keep your employees and customers safe

The restaurant industry is already subject to plenty of rules and laws intended to keep diners safe. The Public Health Code and Food Service Codes exist to prevent illness and infection; servers must wash their hands, and kitchen employees must wear hairnets and other attire in order to prevent them from transmitting illness.

Patrons aren’t allowed inside dining rooms without appropriate attire — ”no shoes, no shirt, no service” is not simply aesthetic — it’s to keep customers from transmitting infections to one another.

Public officials inspect and grade restaurants based on cleanliness. Restaurant owners accept that no one would want to eat food from an establishment with a low grade; restaurants with A grades get more business than those with B or C grades, and a 2015 study found that the restaurants in New York City were markedly cleaner after the grading system was implemented.

No one wants to eat in a restaurant that might make them sick. Why would consumers feel any different about catching COVID-19 in a dining room than they would about eating a meal prepared in a cockroach-infested kitchen?

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The economic impact of not closing dine-in

If you’re only looking at how much money you’ll lose if you close your dine-in service, you’re not seeing the full picture. How much will you lose if you stay open?

At best, the state won’t notice you’re open, but you’ll lose customers. While yes, some of your patrons want to dine-in, those who don’t want to dine-in during a pandemic will lose whatever trust they had in you and your brand. If you’re violating this health regulation what else might you be violating. (You’re not likely to face the same pushback from customers about carry-out. Even the most anti-lockdown customer is still likely to order take-away if they love your food. They’ll blame the government for the dining room closure, not you.)

But what if the Department of Public Health notices that your dining room is still open? Then you’ll face financial repercussions. Some restaurants who have stayed open are dealing with fees. Others are in court. Still others have lost their liquor license.

Why not closing dine-in is potentially criminal

The consequences of not closing your dining room go well beyond losing revenue.

What if the worst happens and someone catches COVID-19 in your establishment? What if they pass it to a loved one, who didn’t choose to eat in your restaurant, and that loved one dies? If your customer takes you to court for putting them in harm’s way, you’ll have absolutely no legal recourse for defending your choice to remain open.

In this case, you have no legal recourse for defending your choice to stay open and put your customers at risk. What about your customers, who chose to eat in your restaurant? As a place of business, you are liable where they are not. A plaintiff can make this argument: “Because this restaurant was open, I assumed it was safe and they were exempt from the ban.”

You, the owner of a place of business, have no such recourse.

Rather than a fine, or losing your liquor license, you may be facing one or multiple wrongful death suits.This will ruin your business far more effectively than closing your dining room for a few weeks.

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What can you do?

The most successful businesses are the ones who have been able to adapt to the pandemic. Chain restaurants like Culvers and Chick-fil-A have adapted by marketing their safety and health precautions, as well as improving and expanding their drive-throughs so that more cars can come through at a time.

It’s not just fast food chains that have adapted, however. Small businesses have changed their business model to adapt to the pandemic as well, moving to a take-out model. Other restaurants have changed the way they handle take-out, offering expanded menus not available through DoorDash, but through their own delivery service. Bars, particularly hard hit by the pandemic, have pivoted to to-go cocktails, or teamed up with restaurants to deliver dinner and drinks.

Another thing you can do is speak up. If you’re a franchisee whose corporation wants you to stay open, flouring pandemic restrictions, push back. They may threaten to take your license, but you can fight your corporation in a way you can’t fight the state, and if someone catches COVID in your facility, it will be you in court, not your corporation.

In fact, everyone should be speaking up. Bars in areas that don’t allow alcohol to-go can lobby, for example, and local chambers of commerce should be meeting to see how local restaurants can be helped. The state should be open to helping restaurants adapt and succeed. There should be conversations about the difficulties faced by the hospitality business.

Your first step shouldn’t be flouting restrictions and keeping your dining rooms open during a pandemic. That will only put your staff and patrons at risk.

The bottom line is that we are all in this together. Local governments, associations, business, and chamber of commerce need to work together.

Do you have any suggestions that can help small businesses stay open? Contact us if you need advice on staying open.

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