Once bustling downtowns are adjusting to the new work-from-home normal. Will our favorite restaurants survive?
It is 12:30 on a hot and sunny Monday afternoon in August, and the Qdoba Mexican fast-casual restaurant on Southwest Taylor and Fifth in downtown Portland looks … sad.
Instead of the usual line out the door, three masked patrons, spaced 6 feet apart, anxiously wait for their turn to build a midday burrito bowl. A delivery person runs in to grab a small order. No one sits down. No one lingers. And no one else is on the street.
The situation is bad news for owner/operator Stan Kramer. “This was one of my strongest, best-performing locations,” he laments. Along with this store, Kramer owns and operates nine other Qdobas scattered throughout the greater Portland area. “It used to do as much business between 11 and 2 as some of my suburban stores did all day long.”
Now those statistics have flipped. Six months into the COVID-19 pandemic, sales at Kramer’s suburban restaurants have climbed back to nearly 90% of normal.
But his two highest-performing eateries, the one in downtown Portland and another in the Lloyd District, still falter with revenue about 70% down from usual.
The same story is playing out all over the state. Oregon’s leisure and hospitality sector has suffered greatly from the pandemic and resulting shelter-in-place orders.
One estimate from Harvard University’s Opportunity Insights Economic Tracker put the loss for small-business revenue at 16.6% compared to January 2020.
But that statistic represents the entire state.
Downtown eateries, sited on densely populated city blocks, are taking the hit harder. Designed to serve the weekday lunch crush of hungry office workers, shoppers and tourists, these locations feel even more pain as people work from home, shop online and vacation locally, if at all.
Can these small restaurants ride out the pandemic?
Not all downtowns are equal, of course. Along with the financial losses caused by a drop in diners, downtown Portland restaurants must also contend with the property damage and public relations fallout of nightly protests that turn into riots.
It is a struggle Nicholas Peck, owner of the historic Virginia Cafe, knows well. He reports revenues at the bar/restaurant are down around 70% since March. Now he must decide whether or not to pony up $1,000 to replace his recently shattered storefront window.
Nicholas Peck behind the bar at Portland’s Virginia Cafe Photo: Jason E. Kaplan
Peck has already made plenty of concessions to keep the Virginia Cafe afloat during the pandemic. He has taken out seating and moved the video poker machines, now this location’s biggest revenue source, to the front of the very small dining room. Replacing the glass with wood siding would change the cafe’s ambiance even more.
“It would become a dark, dingy tavern, and that’s not what I think of for the Virginia Cafe,” he says. “It’s all just moving in the wrong direction.”
Despite the continuing threat of COVID-19, Oregonians desperately want to go out to eat and socialize. An Oregon Office of Economic Analysis’ graph of the week shows consumer demand for bars and restaurants snapping back to 60% of normal as of July 1.
But the type of restaurant, its location and the availability of outdoor seating play a strong role in the sector’s eventual recovery.
That lesson is presently playing out on First Street in Old Town/ downtown Beaverton.
Envisioned by city planners as an eventual restaurant row, filled with places to shop and dine, this central city location had been “coming alive and more active by the week,” according to Beaverton Downtown Association’s executive director Kevin Teater.
His data shows that between October 2019 and March 2020, the area saw eight businesses open and three close.
The numbers from mid-March to present, however, have flipped with three opening and five permanently closing down.
In a measure to stem the tide, the city created Open Air Beaverton. This program allows businesses to expand into private parking lots and/or on to the public on-street parking spaces or closed-off public streets.
The city also created 1st Street Dining Commons, a one-block-long public dining area for people to bring takeout, including closed containers of alcohol, from any of the area’s surrounding restaurants.
1st Street Dining Commons, downtown Beaverton Photo: Jason E. Kaplan
The result is a lively, by COVID-19 standards, street scene. A recent weekday lunch visit saw one family getting coffee drinks, one group and their dogs lingering around a table, and two individuals working on laptops.
But Lisa Alleyne worries about the loss of parking. She owns Ickabod’s Tavern, a downtown Beaverton mainstay, with her 84-year-old mother, Bonnie Aman.
“This is suburbia, where people are lazy,” says Aman with a laugh. “They will be deterred if they can’t park close by.”
Lisa Alleyne (left) and Bonnie Aman of Ickabod’s Tavern in Beaverton Photo: Jason E. Kaplan
Still, Alleyne reports that her sales have rebounded to near pre-pandemic levels thanks to a core group of regulars she calls “Bod’s Boosters” and cannibalizing of her own private parking lot for table service.
Striking a balance between on-street parking and outdoor dining is also a concern for businesses in Bend. Named the Work From Home Capital of America by the Oregon Office of Economic Analysis in January 2019, downtown Bend still has a fair share of office workers.
But tourism generates the real revenues. While the winter ski season is important, it is the influx of summer tourists that sustains a large portion of these establishments all year long.
“With summer approaching, we knew we had to do something,” recalls City of Bend business advocate Ben Henson. “But salons and retail shops didn’t want us to shut down streets.”
Eventually the city allowed individual restaurants to spread out onto parking spaces, but Sarah Grover Worley, owner of the Good Drop Wine Shoppe, says local officials “did not make it easy.”
She estimates spending 40 hours working with the city just to get her outdoor-seating plans approved. She then partnered with two neighboring restaurants, splitting the $3,200 cost for build-out materials.
Grover Worley says the resulting outdoor tables are saving her business. The return of tourists is also helping. Henson reports that weekend occupancies are running between 80% and 90% of normal. Weekdays are still about 20% down.
This loss may be countered by an influx of new work-from-home types. The city’s residential real estate market is heating up, with median prices rising and people buying houses sight unseen from all over the U.S. This cohort will certainly need coffee shops, cafes and happy-hour spots.
Bend and Beaverton seem to have solved the downtown-dining puzzle by capitalizing on their less-dense footprints. Both cities are also looking toward winter by preparing to extend their open-air dining plans. Businesses are busy securing heavy-duty tents and space heaters to protect their outdoor spaces.
The City of Portland is also trying to help businesses located in the hard-hit downtown core. Mayor Ted Wheeler recently proposed an emergency plan to clean up downtown, address homelessness and promote public safety.
Will it be enough to draw people back?
After all, working remotely was already gaining in popularity before the pandemic hit. A January 2020 Gallup research poll found that 54% of office workers would quit their job for one that allows remote work.
Six months in, it turns out we like it. Another Gallup poll reports that 59% of U.S. workers want to continue working from home as much as possible once health restrictions are lifted.
Those numbers are playing out in downtown Portland. When asked if companies will continue to rent expensive office space, Portland Business Alliance spokesperson Amy Lewin says, “While many businesses are reconsidering long-term remote working environments, we know others remain committed to investing in the downtown core. The fastest way to know for sure will be slowing the spread of COVID-19 so we can begin to fully reopen our economy.”
Stan Kramer’s downtown Portland Qdoba restaurant Photo: Jason E. Kaplan
But Kramer, the owner of Qdoba, is not waiting.
He temporarily shut down his store on Taylor and Fifth in downtown Portland on September 5 and is focusing on finding new space outside of Portland.
To subscribe to Oregon Business, click here.
