How Are Local Restaurants Surviving the Winter?

It’s been a long winter for local restaurants.

BB’s on North in Wauwatosa officially opened its doors for business one year ago on Valentine’s Day.

“That was our first full day of business and we were packed,” bar manager Lucas Fugina said. “We were on a 45- to 60-minute wait almost all night.”

A little more than a month after that opening-day scramble, the pizzeria and Italian eatery suddenly found itself fighting to survive just as it had started gaining a foothold in the community.

Like other area restaurants, BB’s had to deal with the swift onset of the coronavirus pandemic and the restrictions placed upon the business in a desperate effort to stem the tide of COVID-19.

BB’s, which is short for Balistreri Brothers, took over the space formerly occupied by the popular Irie Zulu restaurant, which closed in April 2019 due to family issues. The Balistreris purchased the building from Irie Zulu owner Yollande Deacon.

Business was brisk for BB’s early on before being stalled by the pandemic.

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“We never hit a point where we were in a lull, it was just busy from moment we opened until we kind of had to shut down,” Fugina said.

Then, the pandemic forced some quick and difficult discussions.

“We thought we would pretty much run through our inventory and call it quits until everything got better,” said Pietro Balistreri, who opened the business with his brother, Mario. Pietro Balistreri has been making pizza in a style passed on by his father, Domenico, a native of Sicily, who ran the original Balistreri Brothers at 13th and Oklahoma, which opened in 1974. The business later moved to Greenfield with the Balistreri sons taking over the restaurant upon their father’s retirement. That location remains in operation.

BB’s has no family or business ties to the Balistreri’s Bluemound Inn in Milwaukee and Balistreri’s Italian-American Ristorante in Wauwatosa.

The Balistreris decided to keep BB’s up and running as the pandemic took hold after becoming increasingly comfortable with the restaurant’s stepped-up cleaning and sanitizing routines required under COVID-19 mitigation measures.

Under normal circumstances, the restaurant has a 55-person capacity. With COVID-19 restrictions in place, capacity dwindled to about 14 people, including the five or six employees on hand at any given time, leaving room for fewer than 10 customers.

“It sucks,” Fugina said. “Times are tough.”

The pandemic also forced BB’s to alter its menu.

“We lost the dining the room, but pizza carries out very well so our take-out business pretty much tripled,” Balistreri said. “But looking at the numbers, I’d rather have the full restaurant open.”

BB’s had to remove some entrees from its menu and delay certain plans as part of cost-containment measures aimed at streamlining the business, including a walk-up window where customers could purchase pizza by the slice and clearing the rear of the building to create a patio.

“We couldn’t keep a full menu,” Fuigina said. “We had some great entrees, but when you are only selling a couple of those a week then you end up throwing away a lot of high-end food.”

BB’s invested in renovations to the seating area and in creating a sharp-looking bar, but those investments haven’t paid off at this point, Balistreri said.

“We spent all that money up front and we’ve essentially become a take-out place,” he said. “We’re grateful for the business but we would have never spent the money in the front of the house and maybe would have just done the patio instead. We decided to have a nice bar. As much as it was supposed to help us, it has been kind of detrimental.”

Alcohol sales tend to provide the highest profit margin for restaurants but when the majority of business is tied to carry-out and delivery, that part of the business ends up contributing little to the operation, Fugina said.

BBs; Photo by Rich Rovito

Because it had only been open for a brief period prior to the pandemic, BB’s hasn’t qualified for any type of financial assistance, such as the Paycheck Protection Program, a key federal program aimed at assisting small businesses in navigating the pandemic.

To help make ends meet, BB’s implemented an 8% COVID tax to cover some of the increases in food costs and cleaning supplies.

“We haven’t gotten too much blowback but there are some people who are totally against it,” Balistreri said. “I’ve seen places with surcharges of up to 20 percent here in Milwaukee.”

Although its carry-out business is often brisk, BB’s has struggled to lure customers back to the eatery for in-person dining.

“People aren’t coming to sit down in this area. They aren’t coming out to eat,” Fugina said. “The dynamic is really weird because if you go down the street the bars are busy. We have a full bar, but we still aren’t getting the sit-down business.”

The tight layout of the restaurant’s dining room may be a contributing factor, he admitted.

“We do have close quarters, but we’ve tried to space things out appropriately,” Fugina said.

Balistreri is worried that some customers will continue to shy away from indoor dining even if COVID-19 is brought under control through mass vaccinations and other measures.

“That’s the scary part. We don’t know what’s going to happen,” Balistreri said.

When asked if BB’s has been a profitable venture, Fugina said it is generating enough revenue to keep it afloat and pay its bills and employees. BB’s currently has a staff of six employees, down from 20 prior to the pandemic.

A benefit for BB’s is that the Balistreris purchased the building and aren’t beholden to a landlord.

“We’re not having to pay a lease. The means the business can sustain a little bit better,” Balistreri said.

The protracted battle to control the pandemic continues to take a devastating toll on local restaurant operators, Wisconsin Restaurant Association President and Chief Executive Officer Kristine Hillmer said.

“I think we’re in a worse spot now that we were a few months ago,” Hillmer said. “Just the extended nature of the pandemic has been really difficult for our operators. Depending on where you are in the state it might be a little bit easier than in other spots but regardless of what the capacity limits and restrictions are there is still a lack of confidence over whether eating out is safe.”

Hillmer believes this will be a long-term issue.

“Restaurants have heavily invested in safety protocols and PPE (personal protective equipment) and training for their staffs and distancing their tables and lots of mitigating practices. Despite that, there are still a lot of people who don’t feel it is safe to go out and eat.”

It has been almost one year since most restaurants have had to completely close or operate at a reduced capacity due to the coronavirus pandemic, Hillmer said.

“You have to remember that restaurants operate on slim profit margins. Even in a good year, in general, the profit margin for a restaurant is 3% to 5% when it is operating at full capacity and maximizing its space. When you reduce capacity, you reduce the ability to attain that slim profit margin. It’s brutal.”

Certain types of restaurants have fared better because their food offerings lend well to take-out or curbside pick-up, she noted.

“But it’s been particularly hard with more of your sit-down restaurants or restaurants that rely on their bar sales to be part of their profit-margin mix,” Hillmer said.

Many restaurant operators are involved in frequent discussions, sometimes daily, about whether to remain in business, she added.

“They are just trying to survive,” Hillmer said. “There are some operators that just reach that breaking point that they just can no longer make it work. Many restaurateurs have gone through their savings. They’ve right-sized their businesses to save every single dime they can. Many have reduced staffs, so the impact on their employees has been immense, too.”

In a few cases, restaurant owners are taking out second mortgages on their homes in order to keep their businesses afloat.

Many restaurant operators have benefited from certain grant funds that have been made available, but the amounts received aren’t enough to ensure the survival of their businesses.

“When you are talking about how long restaurants have been at a reduced capacity and hurting, this has been merely a band-aid on a pretty big deep gash,” Hillmer said.

Hillmer credited one program in particular, the federal Paycheck Protection Program, which provides loans to help businesses keep their workers employed during the COVID-19 crisis, for helping many restaurants simply survive and keep their staffs employed.

Restaurant operators continue to look for a light at the end of the tunnel, she said.

“It’s not a pretty picture, but there are some glimmers of hope,” she said. “Vaccines are now available and starting to be rolled out to more and more people.’

Despite the recent cold snap, the more tolerable weather of spring is approaching, which will allow restaurants to once again use the outdoor spaces in which they invested to expand their capacity, Hillmer said.

“I think there is starting to be a feeling that we just might make it, but there is still a long way to go,” she said.

Hillmer noted that it can be difficult to track the number of restaurants that have closed as a result of the pandemic, but she estimates it to be roughly 5% to 10% statewide.

“There are a lot that have permanently gone out and some that have done it temporarily,” she said.

A recent survey of the association’s members revealed that as many as 37 percent of all restaurants in the state are considering closing their doors if the situation doesn’t improve in the near future.

“Who would have ever imagined back in mid-March, when the first order came down and it was supposed to be a two week pause to flatten the curve, that 10 to 11 months later that we’d be still dealing with it.”

The high-end restaurant Dream Dance Steakhouse at Potawatomi Hotel & Casino has been temporarily closed for both dine-in and take-out service since the start of the pandemic. Photo courtesy of Potawatomi Hotel & Casino

Although patrons have been flocking to the gaming floor at Potawatomi Hotel & Casino in Milwaukee’s Menomonee Valley, none of the collection of restaurants on the grounds has reopened for sit-down dining since the pandemic’s onset, although some do offer carry-out service.

That’s not likely to change any time soon, Potawatomi Chief Executive Officer Rodney Ferguson said.

“From a bigger picture standpoint, our primary business is gaming, of course. The restaurants, hotel, meeting rooms, show room and everything else are amenities to our primary revenue source, which is slots,” Ferguson said. “So, when we made the decision to reopen back in June, we wanted to do so in a safe way and to make sure that we would not have any outbreaks that would force us to perhaps have to shut the entire facility down. That’s when we decided to go with just doing take-out orders.”

A shutdown of the casino floor would mean a halt to Potawatomi’s primary revenue stream.

The casino’s two higher-end restaurants, Dream Dance Steakhouse and Bella Italiana, will remain completely closed “until we get the pandemic under control,” Ferguson said.

Ruyi, the Fire Pit Sports Bar & Grill and the Canal Street Cafe will continue to only offer carry-out service.

Fire Pit Sports Bar & Grill; Photo courtesy of Potawatomi Hotel & Casino.

“We will continue with that as long as the condition of the pandemic is what it is right now,” Ferguson said. “Restaurants have been open in Milwaukee with limited capacity but that doesn’t mean that we have to follow suit. What we will look for are signs that we have achieved herd immunity. That’s really the point where we will feel comfortable that guests can come to the property and sit down at our restaurants without having to worry about linking cases back to our operation.”

Having the restaurants remain closed or limited to carry-out service isn’t having a significant impact on Potawatomi’s revenue model, Ferguson explained.

“Many of the meals at our restaurants are complimentary because guests have earned points through their play on the casino floor,” Ferguson said. “It’s not as if we are generating a lot of cash revenue through those outlets. It’s more like an amenity.”

RuYi; Photo courtesy of Potawatomi Hotel & Casino

Reopening the restaurants for full, sit-down service would, however, allow Potawatomi to put fill a portion of the 1,600 jobs that were cut as a result of layoffs tied to the pandemic. Potawatomi currently has about 1,000 employees, according to Ferguson.

“To be honest, the biggest impact has not been having all of those loyal, dedicated team members working here,” he said. “That’s the probably the biggest hurt for me is not being in a position to have them here and being able to support their families.”

Ferguson described last year’s three-month shutdown of the 1.1 million-square-foot property due to the global COVID-19 pandemic as “devastating.”

Potawatomi will continue to do its part to ensure that its scaled-back operations continue uninterrupted until a full reopening can take place.

“We want to get back to normal as quickly as possible, but at the same time there is a risk and reward,” Ferguson said. “We are not going to take a risk that could force us to close down.”

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Rich Rovito is a freelance writer for Milwaukee Magazine.