In its 25 years of business, San Francisco-based Extreme Pizza has weathered its fair share of crises— the dot-com bust, 9/11 and the financial crisis of 2008.
Todd Parent, founder and CEO of Extreme Pizza in San Francisco.
“We’ve always been able to adapt to difficult situations,” explains Extreme Pizza founder and CEO Todd Parent, “but we’re experiencing now with the coronavirus pandemic is completely unprecedented.”
Parent says his sales are down 80% over the past two weeks, since San Francisco and five other Bay Area counties issued a “shelter in place” order for all residents on March 16. The order, which affects more than 6.7 million people, includes a closure of bars, restaurants and other “non-essential” businesses until at least April 7.
Like many other small business owners who are facing plunging sales and shuttered doors, Parent is doing what he needs to do to survive. In addition to reducing hours, he’s moving to all-delivery and ramping up his “take and bake” business, where diners cook pizzas in their own ovens.
He’s also had to lay off employees, something the company hasn’t done since its inception in 1995.
“It’s crushing to have to lay people off,” admits Parent. “From the beginning, we’ve always taken pride in our ‘Extreme Team.’ We’re an extended family, and we’ve survived a lot together.”
The pain he is feeling is rippling across the country. According to recent data from dinner reservation app OpenTable shows just how bad the situation is for restaurants across the country. Sit-down dining at the 60,000 restaurants that participate in the company’s reservation system are down 100% year over year from 2019.
A recent Goldman Sachs survey shows that more than half of U.S. small businesses don’t have the resources to withstand the coronavirus crisis and could be out of business in under 90 days if circumstances don’t improve.
Parent, who sits on the board of the Golden Gate Restaurant Association, estimates that 60-70% of restaurants in San Francisco have closed their doors for the time being. He suspects that half of those will never re-open.
“The city is a ghost town,” he says. “Millions of people have already been laid off, and we’re only a week or two into this.”
Like many of his small business colleagues, the big decision Parent is facing is whether to keep his doors open or shut down temporarily in the hopes of re-opening once the pandemic subsides.
In the meantime, he and his team are scrambling to navigate the relief measures outlined in the $2.2 trillion economic rescue plan that is awaiting approval from the U.S. House of Representatives before it goes to Trump for approval. The 880-page document is the largest economic relief bill in U.S. history.
The legislation, called the Coronavirus Aid, Relief and Economic Security Act, includes a $350 billion loan program for businesses with fewer than 500 employees. According to the bill, loans can be used to meet payroll and other expenses like utilities and rent. Payments can be deferred by up to a year, and borrowers will be able to apply for forgiveness of the loan, or part of it.
According to the Goldman Sachs survey, 67% of small businesses are uncertain about how to access and apply for relief aid.
“Wading through hundreds of pages of federal legislation, not to mention local and state ordinances, takes time,” says Parent, “and time is a luxury we don’t have at this point.”
Still, navigating the fine print is imperative.
“The devil is in the details,” he explains. “We want to make sure that accepting federal assistance does not preclude us from taking advantage of relief measures offered on the state and local levels.”
Even with relief efforts, the money may not come in time for many businesses.
“Small business is all about cash flow,” says Parent. “While emergency funds may help, it’s going to depend on how quickly business owners can get money into their hands.”
According to a study by JP Morgan Chase, more than half of all small businesses hold a cash buffer of less than one month; 25% have less than 13 days of cash in reserve. Even on an expedited schedule, an SBA loan will take over a month to process, leaving many small businesses dead in the water.
Parent has had many heartfelt discussions with his vendors and landlords, asking for more flexibility and extension of payment terms. One plea he is making, along with other business owners across the country, is for the federal government to offer direct grants to small businesses, as they are doing for individuals.
“This would be a stop gap measure to buy us time while we navigate which relief measures to pursue,” Parent states.