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The coronavirus has wreaked havoc on Detroit’s hospitality and entertainment — and a federal bailout isn’t helping 

click to enlarge The coronavirus crisis came to Michigan just as Detroit's Kuzzo's Chicken & Waffles returned from a hiatus. The restaurant was forced to quickly adapt, installing plexiglass panes and pivoting to takeout service. - DAVID RUDOLPH PR
  • David Rudolph PR
  • The coronavirus crisis came to Michigan just as Detroit's Kuzzo's Chicken & Waffles returned from a hiatus. The restaurant was forced to quickly adapt, installing plexiglass panes and pivoting to takeout service.

A year ago, when the city of Detroit started a massive construction project on Livernois Avenue, former Detroit Lions cornerback Ron Bartell decided he would take the opportunity to invest in his popular Kuzzo's Chicken & Waffles restaurant. The $17 million project reduced traffic and parking spots along the historic Avenue of Fashion, so Bartell figured he'd use the opportunity to temporarily close his shop, which first opened in 2015, to "update, renovate, and recalibrate," he says. He spent nearly $350,000 on a new kitchen with plans to re-open in November, but restaurant projects like these almost always take longer than expected. When Kuzzo's finally reopened on March 14, it did so with much fanfare.

The timing couldn't have been worse, however. Just two days earlier, Michigan reported its first cases of the coronavirus. Two days later, Gov. Gretchen Whitmer ordered all dine-in restaurants and bars to temporarily close — among the first of several executive orders she signed to shut down sectors of the economy to contain the spread of the virus.

"It's been a rough year for us," Bartell says.

Undeterred, Bartell quickly recalibrated again, pivoting Kuzzo's from a dine-in restaurant to takeout, and partnering with food-delivery services. Though he was forced to lay off some employees, he was able to keep about 15, and installed removable plexiglass window panes in front of the cash register to help keep them and his customers safe.

"We're listening to the [Centers for Disease Control and Prevention], we're talking to all the other restaurants and seeing what they're doing, we're listening to the state, and listening to the city," he says. "We're just trying to gather all the information that we can while also keeping our staff included in any decisions we make because ultimately, you know, their health is paramount. Everybody's health is paramount in this."

Though Bartell says the support from the community has been overwhelming, it's still tough — even for a popular restaurant. He estimates sales are down to 30-40% of what they once were.

"I'm just battening down the hatches and just trying to make it — just like everybody else in this country," Bartell says. "You know, it's a tough task for everybody. I don't think anybody is excluded from this."

The financial toll of the coronavirus has quickly become perhaps America's most important political issue, as the nation stares down the largest economic disruption since the Great Depression. In small-town Owosso, 77-year-old barber Karl Manke has become a cultural flashpoint, insisting on continuing to cut hair, coronavirus be damned. In response, Manke has been served multiple misdemeanors for continuing to operate, and the state suspended his license. In capitals across the country, protesters, egged on by businessman President Donald Trump, have gathered to demand the economy be reopened — many defiantly flouting executive orders to wear face masks outdoors and maintain six feet of distance between other people. In Lansing, the protests have turned ugly, with armed militias, Confederate flags, and hand-drawn signs calling for violence.

Metro Times reported on private Facebook groups where people called for violence against Whitmer, a violation of the social media's company's policy. (The company has since shut the groups down.) In a statement, Michigan United for Liberty, which ran one of the Facebook pages, accused Metro Times of colluding with Facebook "to support the ongoing destruction of Michigan's economy and the devastation of its great people."

"We encourage everyone in the nightlife business to remember where the Metro Times stood on this," they wrote.

Suffice it to say, Metro Times does not wish for the destruction of Michigan. Of course, Whitmer's executive orders have been hard on us too. The prohibition of large gatherings and closures of bars, restaurants, and nightclubs have caused us to lose most of our advertisers, and we were forced to lay off eight employees and launch a fundraiser to try and stay afloat. Many establishments are trying to strike a balance between keeping people safe and staying in business. COVID-19 has already claimed the lives of more than 4,000 Michiganders — or, in a point Whitmer dramatically made at a recent press conference by projecting a photo behind her, the entire capacity of Detroit's majestic Fox Theatre.

"You look at that stage, and you know that nearly every empty chair represents a lost loved one of someone here in Michigan," Whitmer said. "Someone with a story, someone with children or parents, someone with colleagues. These are people who were a part of the fabric of our state. And it's so easy to look past this loss if it hasn't hit close to home."

"It's just such a precarious situation to be in," Bartell agrees. "You have people that want to work and, you know, you just want to provide a level of protection not only for the staff, but also the customers themselves."

Still, he says, he's grateful to still be in business at all.

"We can't complain," he says. "We're still here. We're still able to provide a service to the public, we're still able to keep people employed. That's the big thing for us, to be able to make it out of this and still be that place in the community that people could come patronize and have a good time and employ people. That's why I got into this — to be able to provide employment in the neighborhoods."

In the meantime, the federal government has taken unprecedented steps to attempt to keep the economy from completely crashing, approving more than $2 trillion in aid so far. A staggering 36 million Americans, including more than 1 million in Michigan, or a quarter of the state's workforce, have applied for unemployment. Delays in receiving unemployment benefits have pressured many into heading back to work, however, and governors, including Whitmer, have begun to reopen some sectors of the economy, like construction and manufacturing. On Monday, Whitmer announced that dine-in restaurants and bars in Northern Michigan will be able to reopen on Friday, with some asterisks. They'll have to limit their capacity to 50%, with groups of customers maintaining six feet of distance, and servers will have to wear face masks.

One of the federal measures is the Paycheck Protection Program, a loan program implemented by the Small Business Administration and the Department of Treasury. The SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.

However, Bartell and other business owners Metro Times spoke with say that the loan is especially ill-suited for the hospitality industry — one of the largest sectors of the economy.

"We're kind of trying to figure out how we're going to be able to use it because the requirement to bring staff back — it's a little funky for restaurants," Bartell says. "If we're only able to operate at [a lower] capacity, how are you able to bring back a full staff operating under those conditions?"

Those complaints are echoed by Jackie Victor, co-founder of Detroit's Avalon International Breads bakery, who penned an April 28 op-ed in The New York Times.

"It's difficult to successfully use the Paycheck Protection Program loan," Victor wrote. "The hurdles are high. Besides rent and utilities, the loan is meant to be spent on payroll within 60 days. If employers reach the same number of employees by the end of the period, then the amount spent on pay is forgiven. Any unforgiven portion turns into a loan to be paid back fully in 18 months. Even if we do manage to hire 135 employees and pay them for the next 60 days, it will be impossible for us to retain those employees while revenue is down 50 to 80 percent." Victor called for the loan's shelf-life to be extended for 120 days, for the number of retained employees to be lowered to 70 percent, for the loan to be able to be used for other purposes like unpaid bills, and to extend the term to repay the unforgiven portion of the loan to anywhere between five to 10 years.

Bartell's frustrations are compounded by the fact that it wasn't easy to get the loan in the first place. His usual bank, Comerica, "FUBAR'd" the application process during the first round of loans, he says.

"I think the information that was coming from Congress, to the SBA, to the banks — it just wasn't a coordinated effort," he says. He wound up securing a loan through his personal relationships and was able to catch a second round of loans. "But you know, there's a lot of small businesses out there who missed out on that first round of funding for whatever reason, and are closed now," he says.

Like Bartell, Sean Patrick — co-owner of Detroit's Willis Show Bar, a historic Cass Corridor spot known for jazz, burlesque, and high-end cocktails — also invested a lot of money into his dream. Patrick, along with other investors, spent at least $750,000 restoring the small club to its Art Moderne glory, and the spot opened in 2018 nearly 40 years after the city famously padlocked its doors as the Cass Corridor became a hotbed for crime.

"This was hopefully going to be the first quarter since we opened where there would have been some profits that would have gone back to paying off our investment," Patrick says. "We opened this place to be a part of Detroit, to be very much a part of the history of Detroit by reopening a place that sat [vacant] for 40 years. We came into this just because we were so excited by the renaissance of Detroit, wanting to be a part of pushing it forward."

Profit margins are already razor-thin in the hospitality industry. Patrick says due to the coronavirus, "any kind of savings we had built pretty much evaporated within the first three weeks" of the coronavirus crisis.

Like Bartell, Patrick is also confused by what the PPP means for his business. "The reality is, the majority of it would need to go to staff and hiring back the full staff as we were existing before," he says. "But staff counts for less than 20% of our expenses. So it's kind of a tricky one, and we don't know what our future really holds because, as it stands right now, there's no telling when we're going to be able to reopen."

click to enlarge Detroit- and Los Angeles-based investors sunk hundreds of thousands of dollars into restoring the Cass Corridor's storied Willis Show Bar to its Art Moderne glory. They planned to turn a profit this year — before the coronavirus crisis hit. - MICHELLE GERARD
  • Michelle Gerard
  • Detroit- and Los Angeles-based investors sunk hundreds of thousands of dollars into restoring the Cass Corridor's storied Willis Show Bar to its Art Moderne glory. They planned to turn a profit this year — before the coronavirus crisis hit.

That the federal bailout isn't helping the hospitality industry is perhaps surprising, considering it was one of the fastest-growing sectors in the country. According to the National Restaurant Association, jobs in the industry grew 84% from 2010 to 2018, and as small businesses, the industry employs nearly 8 million people — the second-largest number of any industry. Or at least it did. Now, restaurant and bar jobs represent more than half of the jobs lost since the coronavirus crisis began. A survey from the National Restaurant Association in conjunction with the Michigan Restaurant & Lodging Association painted a grim picture, estimating that one in three businesses could close permanently due to the virus.

There's also a multiplying effect that even an intimate club like Willis Show Bar, where the band performs on a small stage behind the bar, can have. A recent Chicago-based study found that for every $1 spent on tickets to a small theater, an additional $12 was spent at nearby businesses like dining, shopping, and parking. Patrick says in a given month before the coronavirus crisis, Willis Show Bar employed five full-time and seven part-time employees, about a hundred musicians and singers, 24 people involved in pop-up dining events, six dancers, and at least 10 DJs. That's a combination of 150 people. Plus, he estimates that the club has hosted more than 500 musicians and singers over the past two years.

Once the coronavirus crisis hit, Willis Show Bar quickly started an online fundraiser, "Willis at Home," a weekly show streamed on social media featuring cocktail tutorials and musical performances. The campaign helped raise money to pay for the club's staff and roster of musicians.

"They're vital to the community," Patrick says. "They're a part of the heartbeat of the city."

Patrick says he worries about what the toll of losing small venues will do to the fabric of a city. "When you look at the larger venues, they're important — obviously they're a big part of the ecosystem," he says. "But those are special events, right? You go see a big concert, you go to a sporting event. The places that you go in and out of each week — that's what makes a town, especially a town like Detroit."

Daniel McGowan, owner of the Crofoot entertainment complex in Pontiac, says that even though he was keeping his eye on the coronavirus situation, he was still blindsided by its impact. The weekend before Whitmer ordered a ban on large gatherings in March, he booked sold-out shows at the Crofoot Ballroom and smaller upstairs Pike Room. But that Friday, a national act coming from the West Coast preemptively canceled a show at the ballroom out of concerns for the coronavirus. It was a taste of things to come.

"From our standpoint, it became real serious," he says. "We didn't anticipate having entire quarters worth of business just wiped off our books."

McGowan also applied for federal aid through the PPP, but like others, he's not sure if he can use it. "One of the key challenges is that you have to spend the money in a short period in order to take full advantage of the federal program," he says. "If you're running, say, a manufacturing facility, the federal government is giving you funds to help cover staff and help weather the losses that you incurred." But there's no work for his staff to do now, because there are no acts on tour. And besides, large gatherings are still banned, and likely will be for a long time.

"We were one of the first industries to close down, and we'll be one of the last industries to come back online," he says.

McGowan imagines the live music industry might slowly return incrementally, by perhaps initially limiting crowd sizes and slowly ratcheting them up. He points to a recent baseball game in South Korea, where officials limited capacity in the stadium (and helped create the illusion of normalcy) by placing cardboard cutouts of people in seats.

In a general-admission setting, like the Crofoot and Pike Room, McGowan says he can imagine something like what industry folks are calling "fan pods," or limited sections of the floor roped off to isolate people from each other. He also imagines staff would have to be hired to continuously clean the venues.

Of course, sitting next to cardboard cutouts or being sequestered from other fans in a "pod" doesn't quite re-create the magic of experiencing live entertainment in a crowd. But beyond that, McGowan is also skeptical that an independent venue like his could even make it work financially. The added safety precautions will add expenses, while the lower crowd capacities will reduce revenue. Venues like his "survive because we can bring a thousand people into a venue, or 5,000 people into a venue, and that covers the cost of the act," he says. "If all of a sudden it's turned upside down and, you know, a 1,000-capacity room is now legally allowed to only hold, say 200, we're not going to be able to pay the acts what they need to perform."

Some health experts say that large-scale events will likely not return until at least 2021. And even as the crisis subsides, many music fans will likely still be hesitant to return to large crowds out of fear. After suffering financial hardship during the coronavirus economic shutdown, many will likely be unable or unwilling to spend money on entertainment when there bills to pay.

The industry has always had to adapt to new threats to keep people safe. In 2015, when a van crashed into a line of people at the SXSW festival in Texas, McGowan says he was forced to take a look at how the line wraps around the Crofoot. After terrorist attacks, like the shooting at an Eagles of Death Metal concert at a Paris nightclub in 2015, the Route 91 Harvest country music festival in Las Vegas in 2017, and the bombing at an Ariana Grande concert at Manchester Arena in 2017, officials have been forced to consider ramping up security.

"You have a shooting and all of a sudden we have to reevaluate everything we do from a safety standpoint, bringing in extra security, bringing in police officers, bringing in metal detectors," McGowan says. "Every time this happens, we layer on another set of expenses. It's just the nature of what we do."

In response to the economic toll of the coronavirus, the Crofoot and Willis Show Bar have joined a new organization called the National Independent Venue Association. The group has started an awareness campaign, #SaveOurStages, and is also writing letters to lawmakers to explain their predicament. They're hoping for another bailout, this one specifically tailored to their industry. Without it, they estimate 90% of independent venues could be forced to close. In all, more than 1,600 venues in all 50 states have signed on.

Everyone Metro Times spoke with believes that when it comes to the hospitality industry, Congress simply failed to consider these issues in the scramble to inject federal aid into the economy.

"I think they were rushing, and something is better than nothing," McGowan says. "I don't want [to slam] the SBA because I think ultimately the SBA has been an underfunded organization for a long time and what they're attempting to pull off is a miracle. So I don't blame the SBA by any means. I think they're doing the best they can."

Bartell says he wishes the government thought about the hospitality industry as much as they considered other sectors, however.

"I think the government would be doing a huge disservice if they didn't come up with something specifically for the hospitality industry itself," he says. "I mean, we bail out airlines, we bail out banks, we bail out all of these big corporations. There needs to be something that's geared toward hospitality. This is one of the largest business models that's affected by this."

Everyone interviewed says they don't want to rush back to the way things used to be too quickly. Safety, they say, is the most important thing; they don't want to do anything that could spread the coronavirus further. Health experts like Dr. Anthony Fauci have warned that reopening too fast will create a second, possibly deadlier wave of coronavirus infections. Bartell has considered that things might never return to the way they used to be just a few months ago. Patrick thinks things might not go back to normal until a coronavirus vaccine or treatment is developed.

McGowan says he's received harsh words from one customer on social media who criticized him for taking federal aid. Live music, the customer said, is not an essential service.

McGowan disagrees.

"We're not asking for special treatment," McGowan says. "We're not asking for free money. But what we are asking for is the conscientious and thoughtful approach, and that needs to be considered."

McGowan says he wishes people could be more empathetic — just like, for example, the protesters who refuse to wear face masks and are demanding to reopen the economy.

"I think people are not spending enough time putting themselves in other people's shoes," he says. "You know, you have these protesters going to the Capitol, and what I would say to them is you should go visit a hospital. I mean you can't — you shouldn't, from a health perspective. But I mean you need to talk to people, the nurses, the doctors, that are experiencing this firsthand. This is a serious matter, and just because it hasn't affected you doesn't mean it isn't affecting the culture at large. You're not wearing a mask to protect yourself — you're wearing a mask to protect other people. And it causes me a lot of pain and frustration where people are in their bubble and they're not looking outside and taking a second to consider the other people around them."

But ultimately, McGowan is hopeful.

"I don't think the message is one of fear. I think it's a message of overcoming fear," he says. "That's, in part, what music really is. It's about hope, and it's about positivity, and it's about exploring pure emotions. And I think our business, by and large, is not considered essential, but in a different way of looking at it, it's absolutely essential. What would life be without gatherings and without music?"

Bartell says he's also optimistic.

"My father always told me, 'Don't run from a challenge, run to it,'" he says. "So that's the mindset that I'm going to take."

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