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Uneasy Under Coronavirus Lockdown, Pubs in England Count Days Till Christmas

LONDON — At the Crooked Well, a neighborhood pub in south London that prides itself on its food, the Christmas menu is already decided. There will be venison and beef stews. But whether the stews will actually be served is another question.

Under a new lockdown planned to last a month, pubs in England have closed again. From Nov. 5 to Dec. 2, restaurants, gyms and nonessential shops are being shuttered by the government’s efforts to suppress a second wave of the coronavirus pandemic.

Britain’s first lockdown lasted more than three months, followed by an ever-changing array of restrictions since. No one knows how long this lockdown will really last.

The two nights before it took hold, “we were crazy busy, it was like the whole of London was out,” said Hector Skinner, one of the owners and the manager of the Crooked Well. “Now, I don’t know. I really don’t know. I feel like it’s going to go on for longer.”

Prime Minister Boris Johnson tried to sell the new lockdown to pandemic-weary Britons by saying it would, hopefully, allow families to be together over the holidays. But, he conceded, “Christmas is going to be different this year, very different.”

And that’s the problem for the hospitality industry, which fears losing out on a crucial month. Some 20 to 30 percent of a year’s revenue is made around Christmas and the holidays, according to the British Beer and Pub Association. At the Crooked Well, a good week in December would bring in double the best week in the summer.

If pubs can’t reopen in December, “then these businesses won’t survive January and February, which are like graveyard months for us,” said Emma McClarkin, the chief executive of the industry trade group, which represents about 20,000 pubs.

Image
Credit…Ben Quinton for The New York Times

Britain’s pubs have been whipped around by the government’s attempts to, on the one hand, curtail the pandemic and, on the other, bolster an economic recovery.

When the virus swept through Britain in March and April, filling hospital beds and killing thousands, a lockdown shutting schools, offices and nonessential shops was accepted with stoicism. But the pub closings caused the most gloom. It was the first outright closing in their history. Describing the move as “extraordinary,” Mr. Johnson said it took away “the ancient inalienable right of freeborn people of the United Kingdom to go to the pub.”

In those early days of the pandemic, there was a point when Mr. Skinner and his co-owner, Matt Green-Armytage, figured their business was only a month away from folding. They asked family members for financial support, laid off some staff and eventually opened a BBQ takeaway service at the Crooked Well. That kept some money coming in until they were allowed to reopen.

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Credit…Ben Quinton for The New York Times
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Credit…Ben Quinton for The New York Times

Then came a boom. In August, the government encouraged people to leave their houses and go out to eat, offering to pay up to half-off their meals in pubs and restaurants. By 8 on the first night of the “Eat Out to Help Out” discount, the Crooked Well had run out of food.

Two months later, virus rates had begun to soar again. Facing new restrictions including a 10 p.m. curfew, the pub industry was again fighting for survival, Ms. McClarkin said. Last month, Young & Co.’s Brewery and Fuller’s, two large pub chains, each announced plans to lay off 500 employees. Greene King, a chain based in Scotland, planned to cut 800 jobs, and Marston’s said 2,150 of its furloughed employees would lose their jobs.

While revenues have yo-yoed, some pubs came up with a new pitch to get customers through the door: They became work spaces. For a set price, officeless office workers sick of working from home could rent a table.

Image

Credit…Ben Quinton for The New York Times

At the Crooked Well, during the day when the pub used to be closed, there was unlimited tea and coffee, a breakfast and lunch service, three different Wi-Fi networks to ensure the best connection, and a pint of beer or a glass of wine to mark the end of the workday, all for just 15 pounds a day.

The new service was a success. Some customers chose to set up their laptops basking in the natural light of the Victorian building’s large windows, or in corners under warm lamp lights. There was soft music, a quiet hush and strong coffee.

Last month, Young’s added a booking option for working from 11 of its locations in London, offering charging points, internet, sustenance and the odd printer for between £10 and £20 a day. Fuller’s, which owns more than 200 pubs in Britain, just began to roll out its “work from pub” offering.

At the Euston Flyer, a Fuller’s pub near its namesake train station, Jerry Magloire, the manager, was working out the pricing in late October for his “work from pub” plan. He was ready to try anything to increase the number of customers, he said. A week later, Mr. Magloire was back on furlough.

The second lockdown isn’t expected to be as economically painful as the first one. For one, it’s less strict. Pubs and restaurants can stay open this time for takeout, and after a government U-turn, that includes alcohol.

Image

Credit…Ben Quinton for The New York Times

That doesn’t mean they will. Fuller’s has decided to shut all their pubs throughout this lockdown. “The experience that you get in that pub doesn’t necessarily lend itself to takeaway,” said Jane Jones, the company’s marketing director. Instead they are focused on reopening in time for the holidays: Turkeys have been ordered, and pubs have been asked to buy Christmas trees from local sellers.

Mr. Johnson has said that when the lockdown ends, England will return to the three-tiered system of local restrictions, with the third tier the strictest. “Tier 3 is a nightmare for us,” Mr. Skinner said, because different households can’t socialize.

Fuller’s shared that sentiment. Leaving lockdown for Tier 3 wouldn’t be good, especially because pubs that don’t serve “substantial meals” have to close. “It’s such an important part of our trading year, we have to be open for Christmas,” Ms. Jones added.

The Crooked Well has been shoring up its finances with a small-business grant, a government-backed loan and a cut in business taxes. It also began a crowdfunding campaign in September, raising £21,000 in 28 days. Some of the money will go toward awnings and outdoor heaters to fend off the rainy and windswept British winter. More important, it will pay for a lawyer to help the pub’s owners prepare for a review of their rent with their landlord in January.

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Credit…Ben Quinton for The New York Times

“We have a very aggressive landlord,” Mr. Skinner said. The landlord, he said, has warned the pub against seeking protection under a moratorium that bars eviction from commercial properties for unpaid rent, a government benefit to help renters during the pandemic that has been extended twice to the end of the year.

During lockdown, the pub will open only on Sundays to sell boxes with large shareable meals, ranging from £38 for a whole roasted chicken with all the trimmings to £120 for a leg of lamb that will serve a whole table and have plenty of leftovers for the week.

And there’s a financial cushion thanks to the extra revenue brought in over summer and fall from the work-space initiative and a refurbishment of the upstairs event space into a second dining room with eight tables. The staff has been furloughed after the government extended the wage-subsidy program. But Mr. Skinner is still worried about the rent.

“We put ourselves in quite a good financial position, but the rent isn’t going to go away,” he said. If the lockdown lasts only a month, “we can handle it,” he added. “But if it continues for longer and longer, then things really do start to get scary and bleak again.”

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While the Pandemic Wrecked Some Businesses, Others Did Fine. Even Great.

The pandemic has turbocharged profits at some big businesses, like Amazon, which reported a 70 percent increase in earnings in the first nine months of the year. But it has devastated others, like Delta Air Lines, which lost $5.4 billion in just the third quarter.

Perhaps most surprising: Some companies that had feared for their lives in the spring, among them some rental car businesses, restaurant chains and financial firms, are now doing fine — or even excelling.

Wall Street analysts expect earnings to rebound to a record high next year. And, over all, 80 percent of companies in the S&P 500 stock index that have reported third-quarter earnings so far have exceeded analysts’ expectations, said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.

Typically, just shy of two-thirds of companies beat analysts’ quarterly forecasts. “It’s amazing,” Mr. Silverblatt said.

As the pandemic forced people to stay home and do more things online, some successful companies were perfectly positioned to take advantage of the change. Now, these businesses are becoming even more dominant.

Consider Amazon. Its profits in the first nine months were up $5.8 billion from a year earlier. They allowed the company to spend 120 percent more during the period on things like warehouses, technology and other capital investments. That spending — $25.3 billion — could make it harder for all but Amazon’s biggest competitors to keep up with its growth.

Often in the past, companies that appeared strong during an expansion struggled in the next recession, delaying a full recovery. For example, banks grew with abandon before the 2008 financial crisis but later became a drag on the economy as they repaired their balance sheets.

Tech companies were strong before the pandemic downturn — and have powered through the rout, which could help the economy recover faster this time, said Jonathan Golub, chief U.S. equity strategist at Credit Suisse Securities. “It’s really quite breathtaking,” he said.

When the pandemic hit, many executives understandably feared that their companies were facing an existential crisis or, at least, a very difficult recession. But a surprising number of such companies have excelled.

Mr. Cooper, a mortgage company, believed that it might face a financial squeeze in the spring when some homeowners were unable to make monthly payments. But a federal regulator provided relief to mortgage lenders, and then business was helped by a surge in refinancing. Mr. Cooper’s revenue in the first nine months of the year was up 40 percent, and its stock has climbed 341 percent from its low in April.

During recessions, consumers often decide to pull back and avoid large outlays. But this year, something different happened. Many Americans who did not lose jobs but were also not spending on travel and entertainment found themselves with more disposable income. The $1,200 stimulus payments from the government also helped.

This has been a boon for companies that initially feared a deep recession. General Motors and Ford Motor, for example, rushed to borrow billions of dollars early in the year, expecting that car sales would tumble and stay low for a while. The auto business did struggle and automakers had to close their factories for about two months, but sales started picking up this summer. For the third quarter, G.M., Ford and other automakers reported big profits.

Some large restaurant chains, after pressing for a federal bailout, have done much better than expected as drive-through customers, delivery and takeout orders bolstered sales. On Thursday, Papa John’s, whose stock is up 32 percent this year, reported surging sales, profits and cash flow and announced a new stock buyback program. Its chief executive, Rob Lynch, said the company had added “over eight million” customers this year.

Asked on a call with financial analysts Thursday if the company can hold on to such gains, Mr. Lynch said that many of the new customers were dining more frequently and that the average spending per order was larger than before the pandemic.

“So that gives us a lot of confidence that they have come in, they are enjoying their experience and they’re coming back,” Mr. Lynch said.

But there are winners and losers even within industries. Darden Restaurants, which owns Olive Garden and other brands that are more reliant on in-restaurant dining, reported a 28 percent decline in sales in the three months through the end of August. Its stock price is down 6 percent this year.

Darden is in a painful waiting game. For its results to recover, it needs big states to relax indoor dining restrictions.

“We need to get California back,” Gene Lee, Darden’s chief executive, said on a call with analysts. Olive Garden has 100 restaurants in the state, he said.

Even as much of the travel industry struggles, some companies have found a way to survive.

Hertz sought bankruptcy protection in May. And its biggest competitor, the Avis Budget Group, ran up large losses — $639 million in the first six months of the year. But Avis turned a modest $45 million profit in the third quarter.

The company’s comeback was made possible by cost cutting and a decision to sell 75,000 vehicles in the United States to take advantage of strong demand for used cars. (Nationally, spending on used light trucks, including sport utility vehicles, was up nearly 19 percent in the third quarter from a year earlier.)

Of course, that strategy might not keep working. Demand for rental cars is still low, and many Avis Budget locations are at airports, which are seeing precious little traffic. Other companies that have more urban and suburban locations, like Enterprise, are better positioned because they don’t depend as much on air travelers.

Image
Credit…Kyle Grillot for The New York Times

Passenger airlines are among the biggest losers of the pandemic, and they have few options to improve their prospects. Delta, United Airlines and American Airlines worked quickly to cut costs and got $50 billion in the March federal stimulus package.

After suffering from a dizzying collapse in business in the spring, airlines pinned their hopes on the typically busy summer season, which brought some relief despite a surge in virus cases in July. But that did little to ease the pain. In the third quarter, American lost $2.4 billion and United lost $1.8 billion. For all three, revenue fell more than 70 percent from the same three months last year.

With coronavirus cases at record highs and domestic air travel still down 60 percent from last year, there’s little hope that the typically slower winter season will bring a meaningful rebound. The industry is hoping Congress will authorize another round of aid to help it pay thousands of workers.

Investors, who are more likely to buy stocks if they believe companies will make more money, are signaling that they expect a broad profits recovery among the largest U.S. companies. The S&P 500 has soared nearly 57 percent from its March low and is up 8.6 percent for the year.

Those gains might seem odd given that the combined profits of the companies in that index are on track to decline 25 percent this year from a record showing in 2019. But a big chunk of that rally can be attributed to a handful of large technology stocks. Investors are also counting on the Federal Reserve to keep its benchmark interest rate low for years to come and to keep pumping money into the financial system.

Of course, many struggling businesses, including lots of restaurants, stores and services companies are not traded on the stock market. That means a surge in stock prices can give a misleadingly optimistic view of where the economy is headed.

“The economy is not as good as the market is,” said Mr. Golub of Credit Suisse.

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Jobs Report Shows Gains but Vulnerability to New Coronavirus Surge

The American economy continues to heal from the devastating effects of the first wave of the coronavirus pandemic last spring, but a new wave of cases threatens prospects for sustained growth.

The Labor Department reported Friday that employers added 638,000 jobs in October, a figure that would have been larger without a drop in temporary census workers.

But the engines behind much of the gain — bars and restaurants, which added 192,000 jobs, and retailing, which picked up 104,000 — represent some of the jobs most at risk from a resurgence in coronavirus cases.

Public health experts have linked a return to indoor dining and drinking establishments with increased cases of Covid-19, and those businesses face renewed restrictions as the outbreak worsens. Cooler temperatures are already curtailing outdoor dining, a lifeline for restaurants in many parts of the country.

Similarly, if apprehensive consumers stay away from shopping centers, retail hiring could be curtailed as the year-end shopping season approaches.

Job openings have been weaker than expected as retailers gear up for the holidays, according to Daniel Zhao, senior economist at the jobs site Glassdoor. “This could point to more muted spending and hiring,” he said. And despite the recent gains, employment in the leisure and hospitality sector and among retailers is well below levels that prevailed before the pandemic.

Still, there was a notable bright spot in the October report: the unemployment rate fell to 6.9 percent from 7.9 percent.

“It’s better than expected, but we’re starting to see headwinds,” Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago, said of the report. “The drop in the unemployment rate is welcome news, but there are still over 11 million unemployed workers.”


Unemployment rate



By Ella Koeze·Unemployment rates are seasonally adjusted.·Source: Bureau of Labor Statistics

After strong gains in the third quarter, the pace of economic growth has eased as federal relief measures enacted at the pandemic’s onset have begun to expire. Prospects of another round of aid have faded with Democrats and Republicans at odds over the size of the package.

The Labor Department report also underscored the uneven nature of the pandemic-induced recession and subsequent recovery, in which low-wage employees have fared far worse than more highly skilled workers.

In October, the unemployment rate for high school graduates stood at 8.1 percent, while joblessness among college graduates was 4.2 percent.

“Low wage-workers have just been decimated,” Ms. Swonk said. “They are most at risk of falling into the ranks of the impoverished.”

Indeed, even as the unemployment rate has come down, joblessness for many has become more prolonged. The Labor Department said the number of long-term unemployed — those without work for 27 weeks or more — grew to 3.6 million in October, an increase of 1.2 million.


Share of unemployed who have been out of work 27 weeks or longer



By Ella Koeze·Data is seasonally adjusted.·Source: Bureau of Labor Statistics

One-third of all unemployed workers now fall into the long-term category, the highest share since 2014. That could also spell trouble ahead, because the long-term unemployed often find it more difficult to find work again even as jobs become available.

What’s more, the government reported the number of people accepting part-time jobs because full-time work was unavailable grew by 383,000, to 6.7 million, an indication of increasing desperation.

Millions of unemployed workers have had a harder time paying bills since an emergency federal program providing $600 a week in additional benefits expired at the end of July. Another set of federal jobless benefits will last only through the end of the year.

The Economic Policy Institute, a left-leaning research group, estimates that more than 30 million workers have lost jobs or had their hours or pay reduced in the coronavirus-related downturn.

With the Senate remaining in Republican hands, as election returns suggest, any further relief will probably be more modest than the multitrillion-dollar package that seemed likely if a “blue wave” had given Democrats control of Congress and the White House. As a result, Carl Tannenbaum, chief economist at Northern Trust in Chicago, has cut his estimate of growth next year by a full percentage point.

“The good news is that the U.S. job market is healing,” Mr. Tannenbaum said. “But full recuperation may take awhile.”

Unemployed Americans are gradually returning to the job market, with the labor force growing by 724,000 in October. The employment-population ratio, the share of adults who are working, rose to 57.4 percent from 56.6 percent in September — though it was still far short of the 61.2 percent recorded a year earlier.

Nicole Zappone of Naugatuck, Conn., is one of the lucky ones, after having returned to work in August following a harrowing six months of unemployment.

Image
Credit…Christopher Capozziello for The New York Times

“It was the worst part of my life,” said Ms. Zappone, 30, who took to reading novels by James Patterson and Michael Connelly to get through each day’s lonely hours. “I’ve been working since I was 14, and this was the first time I was laid off. And it was hard to comprehend.”

In years past, she had worked in a consignment shop and done babysitting and dog walking. Finding work had never been hard — until now.

Indeed, when she was let go as a substitute teacher in Waterbury, Conn., in March, she had no idea how severe the impact of the virus and the ensuing lockdown would be. By summer, she was applying for job after job on Indeed.com with no response.

“I felt like a failure, even though I knew it was beyond my control,” she said. “I can’t tell you how many jobs I applied for.”

When she got a nibble from a local information technology company for a public relations job, she couldn’t believe her luck. One week after a phone interview, she was hired for a 20-hour-a-week position that she hopes will become full time. She is working from home and has been in the office only once — to sign her contract.

“I love it,” she said. “I get to use my passion for writing and talk to people from all over the country.”

For others, regaining a job has been a bigger challenge.

Jodi Jackson, 57, worked as a buyer for J.C. Penney at the company’s headquarters in Plano, Texas, until she was laid off in April 2019. She has looked for a job as a buyer at other chains, with no success. And she has considered moving into another field.

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Credit…Zerb Mellish for The New York Times

“I could do sales, and I’ve tried to switch, but unless you know somebody, it’s hard to get an interview,” Ms. Jackson said.

“I was born to be a buyer,” she added. “I would buy screws and nails for Home Depot at this point.”

Ms. Jackson worked for the Census Bureau for three months, but that job ended last month. “I don’t live above my means,” she said. She sold her condominium in Ann Arbor, Mich., before moving to Plano in 2019, she said, and has mostly been living off the proceeds of that sale. (She collected unemployment benefits after her J.C. Penney layoff, and may do so again based on the loss of the census job.)

She took a temporary job as a cashier at Macy’s during the holiday rush last year. “It was only $9.45 an hour, which was a fraction of what I earned at J.C. Penney,” she said. “But I wanted to work and to be around people. And retail is something I know.”

Ms. Jackson has ruled out another holiday season at Macy’s because the pay is too low. And despite the industry’s worsening problems, she hasn’t given up hope. On Wednesday, a retailer based in Plano asked her to come in for a third interview next week.

“I feel really positive,” she added. “I’m going to get a job.”

Jeanna Smialek contributed reporting.

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If Restaurants Go, What Happens to Cities?

When the Church Brew Works opened in 1999, it amounted to a rare bit of good news for the Lawrenceville neighborhood of Pittsburgh. Its population had shrunk by half since 1960. A quarter of its residents were over 65, mostly old-timers who once worked at the steel mills that hugged the Allegheny River.

The community had “its guts ripped out,” said Sean Casey, who opened the brewery in a Catholic church that had been deconsecrated six years before. Its immediate neighbor was a building where drug dealers made crack cocaine.

It’s hard to recognize that Lawrenceville today. Carnegie Robotics has a facility in the neighborhood, as does the National Robotics Engineering Center and Caterpillar’s automation center. The population is much younger.

The Church Brew Works had a hand in this transformation. “As the technology sector started to be more successful, it attracted young professionals with disposable income wanting to eat better,” said Michael Madison, a law professor at the University of Pittsburgh who has blogged about the city.

The brewery not only provided food and beer. People “come in and discover the lost art of conversation,” Mr. Casey said.

The coronavirus pandemic has shut down many of these conversations. Business has declined 75 percent. By next summer, when Mr. Casey hopes things will get back to normal, “we are going to have had 17 months of not turning a profit.”

And the story is the same across thousands of restaurants. It raises a question that will reverberate in Lawrenceville and beyond: What will happen to America’s urban centers when the restaurants are gone?

By Aug. 31, over 32,000 restaurants and 6,400 bars and nightspots that had been open on March 1 were marked closed on Yelp. In New York City — perhaps the nation’s dining-out capital — a survey by the Hospitality Alliance found that 87 percent of restaurants were not able to pay all of their August rent.

In September, the New York state comptroller estimated that one-third to one-half of the 24,000 restaurants in the city could close permanently over the next six months. Forty-three percent of bars were closed on Oct. 5, and spending at those still open was down 80 percent from the same day in 2019, according to Womply, a company that provides technological platforms to small businesses.

In a desperate call for help, the Independent Restaurant Coalition, newly formed to lobby for the survival of restaurants not affiliated with large chains, argued in a letter to Congress in June that “this country risks permanently losing as many as 85 percent of independent restaurants by the end of the year.”

Downtown restaurants in big cities are suffering the most. And it is urban America — the big cities and their downtowns that rely on restaurants as a fundamental social glue — that will feel the shock of their demise most intensely.

Image
Credit…Ruth Fremson/The New York Times
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Credit…Ruth Fremson/The New York Times

In 2019, restaurants, bars, food trucks and other dining outlets took at least 47 percent of the food budget of consumers in cities with populations above 2.5 million, according to government data. That compares with 38 percent for people outside urban areas. In the early 1970s, by contrast, urban consumers devoted 28 percent of their food budget to dining out.

Restaurants have been a key element of America’s urban transformation, helping draw the young and highly educated to city centers. This has often turned industrial and warehouse districts into residential areas. It has also overhauled many low-income neighborhoods, sometimes forcing longtime residents out of town.

While high-tech industries and their well-paid jobs have undergirded these changes, social and cultural establishments have also proved pivotal. Already in the last two decades of the 20th century, cities with more restaurants and theaters per person were growing faster than their peers, notes a study by the economists Edward Glaeser, Jed Kolko and Albert Saiz, even as rents grew faster than wages.

In one recent study, Jessie Handbury of the Wharton School at the University of Pennsylvania and Victor Couture of the University of British Columbia document how after decades of suburbanization, the young and educated started moving back into the downtowns of large U.S. cities.

Moving to the City

Younger and college-educated people have moved to cities more than those who are older and did not go to college.




+50

%

Change in the urban

share of the population

from 1990 to 2014

+25

More

urban

0

College-

educated

Less

urban

–25

Not

college-

educated

–50

20

30

40

AGE

50

60

70

Younger

+50

%

Change in the urban share of the

population from 1990 to 2014

+25

More

urban

0

College-

educated

Less

urban

–25

Not college-

educated

–50

20

30

40

AGE

50

60

70

Younger


Source: Jessie Handbury (Wharton School at the University of Pennsylvania) and Victor Couture (University of British Columbia)

By Karl Russell

They were driven by rising disposable income, mostly, as the high-tech economy increased the payoff of a college education. Declining rates of marriage and childbearing not only freed up time and money, but also increased the demand for social spaces — largely provided by restaurants, bars and cafes.

“A distinct and persistent feature in downtowns is their high density of restaurants,” Ms. Handbury said. “It’s the feature that attracts people to downtowns — especially the young and college educated.”

There are other attractions. Nightclubs, museums — the opera, even. Public safety is paramount. Good public transportation also helps. But as Erik Hurst of the University of Chicago puts it, “Restaurants are huge.” They are hangout places and dating places. “When you think of other urban amenities, there is nothing that is as democratized.”

Honey Butter Fried Chicken opened in the formerly industrial enclave of Avondale on the North Side of Chicago in 2013. Parachute, a Korean-fusion restaurant, opened up the street a year later. Then came a Montessori school down the block two years after that. A couple of years ago, Matthew Hoffman, the artist of “You Are Beautiful” fame, opened a studio and retail shop across the street.

“One thing we noticed is that not a single person came in to our retail shop on Mondays, when Honey Butter was closed,” Mr. Hoffman said. “But it’s been a great relationship. They’ve sent chicken over. We’ve sent art and stickers back.”

That ecosystem is now in danger. Honey Butter Fried Chicken is hanging in there. “The fried chicken sandwich is kind of built for takeaway,” said Josh Kulp, who runs the enterprise with a partner, Christine Cikowski. But Parachute, which has a Michelin star, is straining to make it selling food to go. “$15,000 a week is break-even,” said Beverly Kim, who owns the restaurant with her co-chef and husband, Johnny Clark. “But last week we did $8,000; this week $6,000. We are bleeding money like crazy.”

Service is also limited to takeout orders at Lula Cafe in Logan Square, about a mile and a half to the south, and business is down about 80 percent. “No one is not losing money,” said Jason Hammel, a Brown graduate who moved to Illinois in the 1990s to learn writing from David Foster Wallace but ended up a restaurateur. “I can make it for two or three more months,” he said, “but without federal aid I don’t know if I can survive the winter.”

Versions of this story are being repeated in restaurant after restaurant across urban America. In Atlanta, Michael Lennox opened the Golden Eagle, an evening cocktail joint, and the daytime taco shop Muchacho in a former train depot in 2017, expecting an AMC theater in a new development across the road to drive business their way. But the theater opened two weeks before the pandemic arrived, and it has been closed since.

As restaurants fail, cities will lose economic output and jobs, of course — over two million restaurant jobs and 173,000 bar jobs were lost between February and August. But they also stand to lose their glue.

In a recent research paper, Sitian Liu of Queen’s University in Canada and Yichen Su of the Federal Reserve Bank of Dallas conclude that the declining value of urban restaurants is contributing to a residential reorganization in which suburban housing is in great demand while the market in the densest urban areas is dormant. In a nutshell, if you can’t go out to eat, why even live in the city?

Struggling for Customers

Restaurant visits fell pretty evenly across metropolitan areas this spring, but they have recovered more strongly at greater distances from city centers.




1.0

0.8

Miles from

downtown:

0.6

More than 20

Five to 20

0.4

Up to Five

0.2

0

J

F

M

A

M

J

J

A

S

1.0

0.8

Miles from

downtown:

0.6

More than 20

Five to 20

0.4

Up to five

0.2

0

Jan.

Feb.

March

April

May

June

July

Aug.

Sept.


Note: Data is the number of visits to restaurants, per month, relative to one visit in January.

Source: “The Impact of the COVID-19 Pandemic on the Demand for Density: Evidence from the U.S. Housing Market,” by Sitian Liu (Queen’s University of Canada) and Yichen Su (Federal Reserve Bank of Dallas)

By Karl Russell

The demise of restaurants weakens the central economic pillar of superstar cities: the gain in productivity that comes from having many smart young creative people sharing ideas in the same place.

Michael Andrews, an economist at the University of Maryland, Baltimore County, studied the value of this social interaction by looking at what happened when it was shut down.

In the 1910s, before Prohibition, several states passed laws banning alcohol consumption. At a stroke, this closed the saloons that had operated in counties where alcohol consumption had been legal. Mr. Andrews detected that in these formerly “wet” counties, patenting activity dropped.

The reason, Mr. Andrews determined, had little to do with drinking. Rather, the saloons had provided a critical social space for the exchange of ideas.

Mr. Andrews and Chelsea Lensing at Coe College are working on another study, about the importance of coffee shops to innovation. Looking at the expansion of Starbucks from its base in Seattle starting in the 1980s, their preliminary results suggest that patenting activity increased when Starbucks came to town. The same happened when Dunkin’ Donuts, Peet’s Coffee and other chains arrived.

Image

Credit…David Kasnic for The New York Times
Image

Credit…David Kasnic for The New York Times

“The overall lesson,” Mr. Andrews argued, “is that having these sorts of informal gathering places where people can get together and share ideas, bouncing from conversation to conversation, are extremely valuable for creativity.”

All this could bounce back, of course, once a vaccine or a treatment removes the threat of Covid-19 from the dining experience. Restaurants are already a high-churn business. Few survive for more than a year. Even if a large share fail, entrepreneurial cooks with a line of credit could take their place.

The question is how quickly. Mr. Glaeser, for instance, is confident that restaurants and amenities will return, but he argues that “it could take as long as a decade to work through this thing,” even if a vaccine is developed quickly.

The longer the shock, the more likely it is to produce permanent scars.

Mr. Couture’s baseline assumes that as the pandemic subsides, maybe next spring, bars and restaurants reopen quickly and cities are back to pre-pandemic normal. But he admits that there are other possibilities.

The hit to restaurants and other local businesses could combine with the rise of remote work to push more people to the suburbs, eroding the urban tax base and reducing city services, and “tip us into some kind of new equilibrium in which some cities are declining,” he said.

The economic equilibrium sustaining Mr. Hammel’s restaurant in Logan Square is already giving way. “If Lula reopened tomorrow, I would struggle,” he said. Most of his staff members were people in their 20s — musicians, actors, a photographer, somebody doing social work — who couldn’t afford to stay in Chicago without a job and have left. Winter is coming. At this point, he said, “the city is not a viable place anymore.”

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Do Dunkin’ and Arby’s Go Together? Private Equity Group Bets $11 Billion They Do

In one of the largest restaurant deals in more than a decade, Dunkin’ will join some of America’s best-known restaurant chains, including Arby’s and Buffalo Wild Wings, under a single privately held owner.

Dunkin’ Brands, the parent of Dunkin’ and Baskin-Robbins, agreed on Friday to sell itself for $11.3 billion, including debt, to Inspire Brands, the holding company that owns Sonic Drive-In and Jimmy John’s as well as Arby’s, Buffalo Wild Wings and others. Backed by the private equity firm Roark Capital, Inspire had already grown into one of the country’s largest restaurant operators since it formed less than three years ago. It employs more than 325,000 people, directly and via franchises, across more than 11,000 restaurants.

Buying Dunkin’ will more than double Inspire’s footprint, adding 12,700 Dunkin’ and 7,900 Baskin-Robbins outlets, which are all franchised. Inspire is paying a steep price: a 20 percent premium to Dunkin’s share price in the days before The New York Times first reported the talks. The shares were already trading near a record high, more than doubling since the pandemic hit in March.

“Dunkin’ and Baskin-Robbins are category leaders with more than 70 years of rich heritage, and together they are two of the most iconic restaurant brands in the world,” Paul Brown, the chief executive of Inspire Brands, said in a statement on Friday.

The deal is a bet that Dunkin’ will survive — and even thrive — as much of the industry has been ravaged, with about one in six restaurants having closed this year, some permanently. Fast-food outlets have held up better than full-service restaurants, as takeout and drive-through options have proved to be more appealing than long meals in a room full of strangers.

Dunkin’ has drive-through windows in about 70 percent of its restaurants and was already investing in digital-ordering tools to promote “high-frequency, low-touch” service. A $100 million plan to “accelerate its beverage-led strategy,” as the company described it in 2018, has also paid off as the pandemic has scrambled people’s routines. Customers are coming in later than the traditional before-work rush and ordering more expensive drinks.

“This team’s grit and determination has enabled us to deliver outsized performance and made our brands among the most elite in the quick service industry,” Dunkin’s chief executive, Dave Hoffmann, said in a statement on Friday. “I am particularly proud of our actions since March of this year. During the global pandemic, we have stood tall. We’ve had each other’s backs and are now stronger than ever.”

The chain dropped the word “Donuts” from its name last year, and now generates more than half of its sales from drinks. It serves more than two billion cups of coffee a year, with higher-margin, espresso-based coffees growing in popularity over cheaper options.

“They’re not getting people on their way to work, but they are getting people that are sick of making coffee at home,” said Adam Werner, who works in the restaurants, leisure and hospitality practice at AlixPartners, a consulting firm. Happy to be out of the house, those people might also be enticed to “pick up a couple of doughnuts for kids that are home-schooling,” he added.

Dunkin’ Brands generated $74 million in profits in the third quarter, up about 2 percent from a year earlier. Still, it has been affected by the recession, announcing a plan in the summer to close 800 “low-volume, underperforming locations” this year.

Bill Rosenberg opened the first Dunkin’ Donuts in Quincy, Mass., in 1950. He turned it into a franchise business and passed it on to his son Robert in the 1960s. Since then, the chain has spent time as a publicly listed company as well as a part of larger corporations until, in 2005, a consortium of private equity firms — Bain Capital Partners, the Carlyle Group and Thomas H. Lee Partners — bought it for $2.4 billion from its parent at the time, France’s Pernod Ricard. The consortium owned it for six years before returning it to public investors.

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Credit…Angela Rowlings/Associated Press

The takeover by Inspire is the second time that Dunkin’ will be owned by private equity. While Dunkin’ Brands is in a different industry, the private equity owners of retail brands like Neiman Marcus, Payless ShoeSource and Toys “R” Us have been criticized in recent years for those leveraged buyouts, which left behind debt that limited the brands’ ability to respond to new needs before they succumbed to bankruptcy.

Inspire’s primary backer, Roark Capital, isn’t the stereotypical private equity firm. Roark, which is named for the protagonist in “The Fountainhead,” by Ayn Rand, is known for investing in its companies’ digital abilities, managing them at arm’s length and holding investments for longer than the typical three to five years for private equity firms. In some cases, it has held on to companies for more than a decade.

Roark was founded in 2001 with a focus on franchised businesses. It bought Arby’s in 2011, turned the ailing business around and merged it with Buffalo Wild Wings in 2018 to form Inspire Brands, which is controlled by Roark but also raises its own funds from other investors. It acquired Sonic in 2018 and Jimmy John’s in 2019.

What it was missing, until now, was coffee.

With Dunkin’, Inspire is squaring off more directly against Starbucks and JAB Capital, the European private equity firm that owns Panera, Peet’s, Krispy Kreme and others. The digital investments that bolstered Inspire’s other portfolio companies could help Dunkin’ compete where it is already strong in the Northeast. But to grow to more than 17,000 locations, as Dunkin’ has cited as a long-term goal, it may need to go where it has not gone before, at least in earnest — west of the Mississippi, into Starbucks territory.

“The ability to expand on the West Coast is essential,” said Peter Saleh, an analyst at BTIG, a brokerage firm. He warned in a research note in October that Dunkin’ was “approaching saturation in its core Northeast markets.” Dunkin’ opened its first outlets in California in 2015.

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Marriott International announces partnership with Grab in six Southeast Asian countries

The COVID-19 pandemic has hit the hospitality industry especially hard, and hotels around the world are looking for ways to regain revenue. Today, Marriott International and Grab announced a partnership that will cover the hospitality giant’s dining businesses in six Southeast Asian countries: Singapore, Indonesia, Malaysia, the Philippines, Vietnam and Thailand.

Instead of room bookings, Marriott International deal with Grab focuses on about 600 restaurants and bars at its properties in the six Southeast Asian countries, which will start being added to GrabFood’s on-demand delivery platform in November. A joint announcement from the companies said the deal represents Marriott International’s “first extensive integration with a super app platform in Southeast Asia and Grab’s most comprehensive agreement with a hospitality group to date.”

Marriott International is the world’s largest hotel company. During the second quarter, as the pandemic curtailed travel and in-person events, it reported a loss of $234 million, compared to the profit of $232 million it had recorded a year earlier. Chief executive Arne Sorenson called it “the worst quarter we have ever seen,” even though business is gradually recovering in China.

The Marriott-Grab integration means the two companies will link their loyalty programs, so GrabRewards points can be converted to Marriott Bonvoy points, or vice versa. Marriott International’s restaurants and bars that accept GrabPay will also have access to Grab’s Merchant Discovery platform, which will allow them to ping users about local deals and includes a marketing campaign platform called GrabAds.

Other hospitality businesses that Grab already partners with include Booking.com and Klook. Klook is among several travel-related companies that have recalibrated to focus on “staycations,” or services for people who can’t travel during the pandemic, but still want a break from their regular routines.

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Mask Mandate? In a Montana Town, It ‘Puts Us at Odds With Customers’

HAMILTON, Mont. — Outside River Rising Bakery sits an older gentleman, his face uncovered. He’s here every morning, greeting customers as he drinks his coffee and reads. Inside, people mill about, waiting to order. A group of moms chat at a corner table.

The employees wear masks, but patrons are not required to. Most don’t. It feels almost normal. As if the pandemic had never happened.

Half a block away in Hamilton, at Big Creek Coffee Roasters, most customers don’t go inside; instead they wait to order at a makeshift to-go window. There are a lot of strollers and Lululemon tights, and most people in the line are wearing a mask. If anyone did go inside, wearing one would be mandatory.

One Montana block, two small businesses — and two different decisions about asking customers to wear masks.

This summer, the governor, Steve Bullock, mandated face coverings in public spaces to combat a spike in Covid-19 cases. But the sheriff in Hamilton, backed up by the Ravalli County commissioners, elected not to enforce the order, saying individual rights took priority. That decision left small businesses stuck in the middle of a months-long national conflict over mask wearing as they try to keep staff safe and their doors open without alienating customers.

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Credit…Lido Vizzutti for The New York Times

For the owner of River Rising, Nicki Ransier, the commissioners’ decision made her life easier: “It kind of took some pressure off of us, because we’re not having that confrontation with our customers when they walk in.”

Before the governor’s order, Ms. Ransier asked her staff to wear masks, but a few customers berated her employees — some of whom are in high school — over the decision. One customer told the staff that they were “bending the knee to tyranny” by following Mr. Bullock’s order.

Other patrons wanted Ms. Ransier to flatly require masks for all and install costly plexiglass barriers. She felt she couldn’t please anyone, so she decided her policy would focus on what she could control: employees. She would let customers choose, but ask her 14 workers to wear masks even though it can be hot and miserable.

“We have a lot of older customers,” Ms. Ransier said. “And in my heart, I was just like, ‘What if I were to get Bob — the man who sits out front every day — or someone sick?’ I would just feel horrible.”

But the commissioners’ move frustrated Randy Lint, the owner of Big Creek Coffee Roasters. He thought the governor’s order would put an end to mask conflicts. Instead, he said, the commissioners’ decision “puts us at odds with customers.”

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Credit…Lido Vizzutti for The New York Times

“Dealing with fallout from stressed customers has been one of the hardest parts of the pandemic,” Mr. Lint said.

He’s thankful for the to-go window and the reprieve it offers — at least while the weather is nice. He added a propane heater to extend the outdoor season, but once winter hits and customers come indoors, he knows his policy will be an issue again. Still, he said, he can’t risk having any of his seven staff members contract Covid-19. If one did, he would have to shut down for two weeks so everyone could quarantine. Mr. Lint said he wasn’t sure he could survive that experience emotionally.

“The danger is that it will all crush my spirit,” he said.

It’s a fear based in reality: Down the block, Naps Grill, one of the town’s busiest restaurants, recently chose to close temporarily after several workers tested positive for the coronavirus.

Complicating the choice for business owners and customers alike is that the pandemic has been slow to affect Ravalli County, which is part of the Bitterroot Valley, an approximately 100-mile strip of isolated southwestern Montana. The county is 2,400 square miles — nearly as large as Delaware — but it has had just over 300 cases of the coronavirus and four deaths from Covid-19 since March. More than one-quarter of those cases have cropped up in the past week and caused several local schools to shut down for multiple days. And with the area’s reliance on tourists for hunting season and an influx of pandemic refugees from more populous states, anything could happen this fall.

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Credit…Lido Vizzutti for The New York Times

The town, with just under 5,000 residents, is home to Rocky Mountain Laboratories, where researchers are trying to develop a vaccine for Covid-19. It is also the county seat, luring many to shop and do business, and is a gateway to serious trout streams and other outdoor recreation. That means everyone is mixing on Main Street: white collar, blue collar, wealthy ranchers, scientists, lifelong bartenders, multigeneration residents, tourists, hunters, kayakers, conservatives and liberals.

There is an uneasy truce between newcomers with high-paying jobs who are looking for the Montana lifestyle and longtime Bitterrooters, whose wages have been slow to rise even as the median home price in the county has risen 60 percent since January 2017. The longtimers feel pushed out.

“We are scrupulously apolitical,” Mr. Lint said, who has lived in Hamilton for 25 years. “It’s a survival mechanism. We have a lot of old Bitterrooters who wouldn’t come in here otherwise. We just try to give a good drink and kindness.”

That’s the refrain up and down the block. Most owners, whatever their politics, keep their business’ social media and public statements staunchly neutral. But masks have become a very public symbol onto which people imprint their own assumptions.

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Credit…Lido Vizzutti for The New York Times

“It’s quite exhausting,” said Shawn Wathen, a co-owner of Chapter One Book Store, which is cater-corner from Big Creek. “If we could go one day and not have to talk about masks — that would be just quite astonishing.”

“The governor’s order was supposed to handle that for us so that we could focus on staying open as a business, right?” added the other owner, Mara Lynn Luther. “And that’s so frustrating.”

Chapter One has been a staple in Hamilton since 1974, and both Ms. Luther and Mr. Wathen were employees before becoming the owners. They jokingly call themselves bartenders — because customers bring them their biggest problems. It’s a real exercise in trust, for example, when someone asks them to order a title on mental health or how to save their marriage. They love the hours they spend talking about books and big ideas with shoppers.

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Credit…Lido Vizzutti for The New York Times
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Credit…Lido Vizzutti for The New York Times

Recently, an elderly woman came in and lashed out when she was told that the store required masks. Instead of kicking out her longtime customer or using harsh words, Ms. Luther asked if the woman was OK. The two chatted, and Ms. Luther learned that the woman, unable to see facial expressions, was genuinely frightened to see people in masks. Now when the woman comes in, Ms. Luther said, she masks without complaint.

“Do we always share the same views and values as our whole community? No,” Ms. Luther said. “But for years we’ve just kept these lines of communication open and really made an effort to never make someone feel like we shut the door on them.”

Across the street at Big Sky Candy, the owners, Michele DeGroot and her daughter, Marlena Fehr, made a different decision: They are not asking patrons to mask while browsing the chocolates, truffles, toffees, fudge and caramels. The pair have been making the goodies from scratch for 19 years, and they love having people who came in as kids bring their own children now.

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Credit…Lido Vizzutti for The New York Times
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Credit…Lido Vizzutti for The New York Times

That community connection is partly why they decided not to enforce the governor’s mask mandate: They didn’t want anyone to feel bad in a place that is supposed to bring joy. So instead of the “masks required” sign, a note on their front door says they won’t be enforcing the order and adds, in part: “BASICALLY, it’s up to you. You do what you feel is right for you. We will not judge you. The rest of the world does enough judging. We don’t need that here. We love each and every one of you.”

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Credit…Lido Vizzutti for The New York Times

That’s how Ms. Ransier of River Rising feels about her customers: She loves them all. She cries when talking about how much they mean to her, and how Covid helped show her how much the cafe meant to them. When the pandemic hit, she said, her “old curmudgeon regulars” were the first to step up and offer cash donations to help keep her afloat.

“I didn’t even think they really cared, as long as we have their pastry,” she said. “But those ranchers, you know, they aren’t going to be wearing their heart on their sleeve. There’s always something good that comes out of everything.”

It’s bittersweet because she recently sold the business to her landlord, Fenn Nelson. The two had been in discussions since before the pandemic, and the timing finally worked out.

So far, Mr. Nelson is not planning any significant changes to the menu, the staff or the mask policy. At his other business, the microbrewery Higherground Brewing Company, he strongly encourages customers to wear masks inside but doesn’t make staff insist.

“At one level, I feel like I should push for more for masks,” Mr. Nelson said. “But on the other side, I feel like, at what cost? For us to survive, we need everyone as customers.”

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Impossible Foods nabs some Canadian fast food franchises as it expands in North America

After rolling out in some of Canada’s most high-falutin burger bistros, Impossible Foods is hitting Canada’s fast casual market with new menu items at national chains like White Spot and Triple O’s, Cactus Club Cafe and Burger Priest.

While none of those names mean anything to yours truly, they may mean something to our friendly readers to the North. However, I have heard of Qdoba, Wahlburgers and Red Robin. And Canadian customers can also pick up Impossible Foods -based menu items at those chains too.

Since its debut at Momofuku Nishi in New York in 2016, the Impossible Burger is now served in 30,000 restaurants across the U.S. and is available in 11,000 grocery stores across America.

The Silicon Valley manufacturer of meat substitutes expects that Canada, the company’s first market outside of Asia, may become its largest market — second only to the U.S.

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Unable to Pay Rent, Small Businesses Hope for a Deal With Their Landlord

In March, when the Boston restaurateur Garrett Harker and his partners shut down their seven restaurants after Massachusetts issued lockdown orders, Mr. Harker assumed the closures would be painful but temporary.

Six months later, three of Mr. Harker’s restaurants, including the flagship Eastern Standard — once described as the “perfect restaurant” by The Boston Globe’s food critic — remain shuttered. Mr. Harker and his landlord for those three restaurants are in a standoff: He can’t afford to pay the six-figure arrears he has accrued while his restaurants remain shut, and the landlord, he said, has refused to grant a deferral or discount.

“We’re probably going to lose money for another year to a year and a half,” Mr. Harker said. “It doesn’t work financially to reopen without a new lease.”

Similar sagas are playing out nationwide, as Main Street businesses — especially music clubs, gyms, restaurants, bars and others that were forced to close by the coronavirus pandemic — try to figure out how, or if, they can dig out of debt.

Nearly 98,000 businesses have closed permanently since the pandemic took hold, according to an analysis by Yelp. And the fate of many that remain open increasingly hinges on their ability to renegotiate their leases. A recent survey by Alignable, a social network for small-business owners, found that a quarter of those polled had fallen behind on their rent since the shutdowns began. For those in the fitness and beauty industries, the number rose to nearly 40 percent.

The problem may worsen now that an initial flood of federal aid has dried up and a sharply divided Congress has been unable to agree on further relief measures. The government’s $525 billion Paycheck Protection Program gave more than 5 million businesses a one-time cash injection to pay workers and other expenses, including rent, but most recipients have now spent the money.

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Credit…Cody O’Loughlin for The New York Times
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Credit…Cody O’Loughlin for The New York Times

“For 10 weeks, our revenue went to zero and stayed at zero,” said Rhonda Stark, the owner of three Orangetheory Fitness gyms in Ohio that were shut down from mid-March until late May. Ms. Stark’s collective rent bill, her largest fixed expense, tops $32,000 a month. She hasn’t paid it in full since March. Although she got P.P.P. loans ranging from $45,000 to $75,000 for each of her gyms, most of it went toward payroll, as the loan rules required. Ms. Stark’s gyms have reopened at a reduced capacity, cutting her sales by about 30 percent. To stay open, she needs to strike new deals with her landlords.

Retail rent collections plunged in April to just 54 percent of the total owed, according to Datex Property Solutions, a software company that tracks data on thousands of its clients’ retail properties nationwide. By August, collections had rebounded to nearly 80 percent, but some tenants, like movie theaters, clothing retailers, hair salons and gyms, were much further behind.

“When tenants can’t pay the rent, it imperils landlords’ ability to pay their own overhead and their loans, and the whole thing cascades,” Mark Sigal, chief executive of Datex, said.

For both sides, it’s a complicated dance. Property owners have their own expenses to pay, including taxes, insurance, mortgage or debt payments, and maintenance bills. Buildings owned by real estate investment trusts or Wall Street bondholders have complex management structures and governing covenants that can limit the property manager’s ability to make a deal.

Lance Osborne, the president of Osborne Capital Group, owns a retail plaza in Copley, Ohio, that houses four businesses, including one of Ms. Stark’s gyms. His company has around 150 retail tenants, and he estimates that half have sought rent relief or other concessions.

“Every one has to be handled on a case-by-case basis — no two tenant cases are the same,” Mr. Osborne said. “We’ve always dealt in good faith to try to keep the tenants open and operating. It’s always worth keeping someone, but it has to be an equitable deal.”

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Credit…Cody O’Loughlin for The New York Times

Eight of his tenants have declared bankruptcy or are on the brink, Mr. Osborne said. He has sued one business — which he described as open and thriving — for nonpayment. For others, he’s gradually negotiating new deals.

Many of those arrangements are informal and fragile. Ms. Stark said she hasn’t signed anything establishing new terms for any of her gyms, which means her landlords could at any time declare her in default and crack down. But so far, each has been willing to take it month by month, collecting some rent and verbally assuring her that they’ll keep working with her.

“It’s very tentative,” Ms. Stark said. “You call them up, you talk to them about what’s going on — I’ve sent screenshots of my numbers so they can see where we stand.”

Ken Giddon, a co-owner of the men’s wear store Rothmans, held off on reopening his flagship store in Manhattan until he nailed down a new lease. The shop hadn’t paid its landlord, ABS Partners Real Estate, since April, and Mr. Giddon didn’t want to bring back his staff and restock inventory if he couldn’t reduce his rent.

Last week, he finalized a new arrangement that involved lowering his base rent and giving ABS a variable payment based on his sales. Such arrangements are common in some industries, especially restaurants, but it was new for Rothmans.

“This is a very handcrafted deal,” said Mr. Giddon, who now plans to reopen next month. “We’ll probably be operating at a third of our previous volume for the next six to 12 months. This arrangement gives us flexibility.”

Gregg Schenker, the president of ABS, said both sides had an incentive to figure out a deal that would keep the business alive. Rothmans, which Mr. Giddon’s grandfather started in 1926, has been an ABS tenant for decades, and Mr. Schenker, who shops there, described it as the kind of unique, multigenerational retailer that he hopes will continue to thrive in New York City.

But not all landlords are willing, or able, to take a haircut. Oren Molovinsky closed his restaurant Farmboy, in Chandler, Ariz., in mid-July for what he intended to be a short break. He hadn’t paid his full rent for months, but he had reached out to his landlord, the Falls Investors, hoping to discuss options. Instead, he got a letter in late July telling him payment in full was due in five days. When he missed that deadline, his landlord locked him out.

“We were surprised they wouldn’t respond to us at all — my attorney didn’t even get a response,” Mr. Molovinsky said.

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Credit…Courtney Pedroza for The New York Times
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Credit…Courtney Pedroza for The New York Times

The Falls Investors sued Mr. Molovinsky last month in an Arizona state court, seeking at least $110,000 for what the complaint said was unpaid rent. Mr. Molovinsky has told his staff and customers that Farmboy, which sold sandwiches and salads using locally sourced ingredients, will not reopen. (A lawyer for the Falls Investors said the landlord has done workouts with other tenants but chose not to for Mr. Molovinsky because he was already behind on his rent before the pandemic. Mr. Molovinsky, who acknowledged his arrears, said he had a verbal agreement on a repayment plan with one of the group’s principals, who died last year.)

Mr. Harker fears that Eastern Standard — his first restaurant, and the only one of his ventures that he owns outright — will soon join that list.

The brasserie opened 15 years ago and quickly gained a reputation as one of Boston’s best spots for relaxed hospitality and cocktails. It sits in a retail space within the Hotel Commonwealth that has changed hands twice since Eastern Standard opened. The current owner, UrbanMeritage, promotes Mr. Harker’s “award winning restaurants” and the foot traffic they bring to the area in a brochure it created to to advertise a nearby vacant storefront.

But Mr. Harker said he could not afford to reopen unless UrbanMeritage renegotiated his lease, which has a bit more than two years left on it. He has $1.6 million in P.P.P. loans for Eastern Standard and the two other shuttered restaurants — the Hawthorne and the Island Creek Oyster Bar — sitting untouched in a bank account. He plans to return the loans soon if he can’t make a deal.

Michael T. Jammen, a principal of UrbanMeritage, disputed Mr. Harker’s claim that his company was unwilling to negotiate, saying via email that they have “offered multiple discount opportunities both on his existing lease and on a lease renewal” in recent years. Those discussions have continued during the pandemic, Mr. Jammen said.

Mr. Harker has worked out arrangements with his four other landlords, including Young Park, the president of Berkeley Investments. Berkeley owns the building housing the Boston location of Row 34, Mr. Harker’s seafood-and-burgers spot. Mr. Park agreed to slash Row 34’s base rent in return for a higher percentage of its sales.

“We did not want them to leave,” he said. “I think most developers are weighing the benefit of sustaining a business that is showing no revenue for an extended period of time versus the challenge of attracting another operation with the credibility, track record and management skills to run a successful business. That’s not so easy to find.”

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How the U.K. Restarted Its Restaurant Industry: Paying Half the Bill

When the British government told people they no longer had to stay home, it needed a convincing pitch to get everyone back outside and, crucially, spending money.

The answer: half-price food. For the month of August, the government has been paying for a 50 percent discount on all meals eaten in restaurants, pubs or cafes, up to 10 pounds ($13) per person, on Mondays, Tuesdays and Wednesdays.

It’s a discount that Britons have taken up with relish.

“Last Wednesday, my God, was pandemonium,” said David Williams, a co-owner of Baltic Market, which houses about a dozen street food and drinks vendors inside a converted 19th-century brewery in Liverpool. “There were more people in the queue than there were inside of the building.”

In the first three weeks of the Eat Out to Help Out program, 64 million meals — enough for nearly the entire British population of about 67 million — were eaten using the discount, costing the government £336 million ($441 million).

When Rishi Sunak, Britain’s top finance official, announced the discount last month, he described it as “a first-of-its-kind” means of supporting the 1.8 million people working in the hospitality industry. Between April and June, the sector’s economic output plunged 87 percent. “They need our support, and with this measure we can all eat out to help out,” he said.

On the first day, Aug. 3, food sales rose 100 percent compared with the previous Monday, according to CGA, a consultancy that tracks data on eating and drinking out in Britain.

“People, and myself included, underestimated the effect it was going to have,” Mr. Williams said of the discount, which includes nonalcoholic drinks. “Most restaurants in Liverpool now, you can’t even get a table for the whole of August Monday to Wednesday.”

Before the national lockdown, Baltic Market was open only Thursdays to Sundays. At the start of August, it opened on Wednesday to take advantage of the discount, and after two weeks the owners decided to open seven days a week for the rest of the month.

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Credit…Alexander Ingram for The New York Times

The restaurant industry is grateful for the rush of customers, but there are concerns about whether a temporary discount can trigger a sustainable recovery.

The government’s offer, aided by some pleasant weather this August, has encouraged customers to return to restaurants, especially the outdoor seating offered by many establishments. If diners retreat back to their homes once it’s too cold to dine outdoors, however, or unemployment rises as the furlough program ends in October, what then?

“At the moment I’m trying to really enjoy everything about it,” Mr. Williams said. “But I just can’t help but feel we’re in a bit of a honeymoon period with it all and that come October, with alfresco dining ending and furlough ending, it’s going to be a very, very different landscape and story.”

Kate Nicholls, the chief executive of UKHospitality, a trade group, added: “People are making hay while the sun shines, and seeing it as an opportunity to build back a degree of resilience” in case the crowds of August thin out in the fall.

On a recent Tuesday evening, the Soho area of central London had taken on a festive atmosphere. Rain held off, and streets were closed to traffic to allow restaurants to put tables outside. Bunting made the socially distanced tables appear more cheerful, and less like a stark reminder of the health risks.

On several streets there wasn’t a single empty table — and they were as noisy as on any pre-pandemic summer evening. It almost disguised the fact that central London is nearly devoid of office workers and tourists, with most theaters and other attractions still shut.

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Credit…Alexander Ingram for The New York Times

Before the pandemic, “this was the place to be,” said Stani Visciano, the maître d’ at Lina Stores, an Italian restaurant in Soho. On a typical night, a line of customers would already be waiting when the restaurant opened at 5. The pre-theater crowd morphed into the dinner crowd, and anyone without a reservation faced a long wait, he said.

On this Tuesday evening the restaurant was fully booked — and again for Wednesday.

But the revenue isn’t the same. The pre-theater rush has gone. Before social distancing, the restaurant could seat 52 people. Now, fully booked means 40 diners at a time — nearly one-quarter fewer customers.

The British economy fared worse than any other in Europe during the second quarter of the year, because of a longer lockdown period and heavy reliance on consumer spending. To dig itself out of this hole, the country needs people to return to bars and restaurants and cafes and coffee shops in large numbers. The government set aside £500 million for the half-off discount, an amount that economists didn’t consider to be particularly substantive compared with the £190 billion the government intends to spend on the economic recovery from the pandemic.

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Credit…Alexander Ingram for The New York Times

After spending months warning of the dangers of indoor public spaces, the government now has to persuade people that it’s safe to return to their previous habits. Throughout this crisis, the government has turned to behavioral economists to help devise different parts of its response — and their principles seem to be hard at work in the Eat Out to Help Out program.

“There are two psychological forces at play,” said Ivo Vlaev, a professor of behavioral science at Warwick Business School, who has been advising the government and National Health Service on its communication in response to the pandemic. (He didn’t work on the meal discount plan.)

The first is habit creation, he said. When someone does something and receives a reward, like the half-off discount, the next time the same situation arises, the memory of the reward encourages a repetition of the action — and this continues until the situation alone, even without the reward, can trigger the action.

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Credit…Alexander Ingram for The New York Times

The government’s dining discount could be particularly effective at getting people out to eat on their lunch breaks, Mr. Vlaev said. “It’s a very powerful way to change people by habituating their behavior because they then act on autopilot,” he said.

The second force is known as “psychological commitment,” Mr. Vlaev said: In order to get people to agree to a large request, you get them to agree to something small first. People in Britain might agree to take advantage of the restaurant discount, but once they are out and enjoying themselves the government can more easily ask them to return to offices, gyms, theaters and so on.

So far, the experiment is working.

A survey by CGA found that nearly 40 percent of people using the Eat Out to Help Out discount were dining out for the first time since the national lockdown began in late March — a sign it is winning over people who had gotten used to staying at home. The discount was also encouraging families and older customers to go back out, Ms. Nicholls of UKHospitality said. There have been no reports of spikes in coronavirus cases tied to the program.

But even if the customers want to keep coming back, restaurants face a lot of uncertainty.

Half of Britain’s restaurants are still closed, Ms. Nicholls said. Across the hospitality industry, businesses that are open are making only about 70 percent of their pre-pandemic revenue. The government has reduced the VAT, a type of sales tax, on food and nonalcoholic drinks, but this will expire in January. The government also put a moratorium on forfeiture of commercial properties because of unpaid rent for six months, effectively allowing businesses to delay rent payments until the end of September, when the next three months of rent will be due.

That heavy rent debt, building up for over the last six months, is “the single biggest outstanding issue” facing restaurants and the hospitality industry generally, Ms. Nicholls said.

And while the Eat Out to Help Out program can help change consumer behavior, it doesn’t address how each establishment will make up for reduced capacity because of social distancing measures, or what will happen when it’s too cold to dine outside. A recent survey by the Office for National Statistics found that just 43 percent of people felt comfortable eating indoors.

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Credit…Adam Pester

Baltic Market now has a capacity of 150 to 200 people, at best a third of the number of people it could have fit in before. To accommodate more people through the fall and winter, the owners say, they are building heated booths so more people can keep dining outside.

“That’s what the big worry is,” Mr. Williams said. “Obviously, we don’t live in California or Dubai, we live in the U.K. So there’s a finite amount of time that you want to eat a bowl of pasta outside.”

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