By Ed Avis
Editor's Note: This is el Restaurante’s sixth annual Independent Mexican Restaurant Report. It draws on a reader survey in late September that was answered by 53 readers, and follow-up interviews with five of them.
Who is the hero of 2020? In a terrible year for the world, and especially
Masked-up Taco Mama employees
for restaurants, one hero stands out: The community. In countless examples, community members stepped up and helped save our readers’ businesses when COVID threatened to shut them permanently. Loyal customers – and even many new customers – stepped up during the worst crisis in history and helped make sure that Mexican restaurants survived.
“The response was amazing from our locals,” says Shane Bratton, co-owner with his wife Diana Bratton of Taco Mama in Hot Springs, Arkansas. “When the pandemic hit and they shut us down, we freaked out. Diana and I looked at each other and said, what will we do? She said, ‘Let’s pump this up’ we started ramping up our take-out. We put it out there on Facebook and other marketing, and it was amazing how our customers responded.”
Of course, there’s more to the 2020 Independent Mexican Restaurant Report than just community goodwill. Nearly every restaurant suffered major setbacks this year, and thousands closed for good. Food prices went up, delivery and takeout took on new importance, and labor struggles continued.
Business Overall? Horribly Down
A band entertains guests outside El Golfo
For the first nine months of 2020 compared to that same period in 2019, 27 percent of respondents said that their business is down by more than half and 45 percent said business is down, but less than half. The fact that 72 percent of our readers saw a decrease in business stands in profound contrast to previous years. In 2019, for example, only 5 percent of readers saw a decrease in business; in 2018, 16 percent saw a decrease.
Like nearly all restaurants, El Golfo in Silver Spring, Maryland has lost the majority of its dining room business. Owner Ada Villatoro says she is allowed to seat customers inside at 50 percent capacity, but most customers opt for the patio.
“The restaurant has a small patio at front that seats about 20 people and we extended patio seating on the side of the restaurant that seats about 40 to 50,” Villatoro says. “I’m worried that in the cold winter months, our customers might go into hibernation and not eat out at all.”
Villatoro says she’s considering putting up temporary walls and portable heaters on the patio and hiring local musicians to draw attention to the restaurant during the winter. Nevertheless, off-premise dining will likely remain essential.
“Most of our revenue comes from food and drink carry-outs,” she says. “This is our new normal!”
At Nick’s Crispy Tacos in San Francisco, dining room business has diminished, but more painful is the business that once came from serving food to offices in the city.
“What’s significantly dropped for us is our catering services,” says Peter Billeci, owner of Nick’s. “People aren’t working in offices now – everyone’s working at home – and catering to offices was a big part of our business. That’s gone, pretty much entirely.”
There are a few fortunate restaurants. According to our reader survey, 12 percent of Mexican restaurants actually saw an increase in business this year. One of them was Taco Mama, which is up 1.3 percent over 2019 to date. How did they do it? The great community response helped, of course, but having irresistible food also played a role, Bratton asserts.
“We just keep putting out good product,” he says. “We have a lot of vegetarian options, which is another thing that’s helped. We started introducing vegetarian and began options in the last two-and-a-half years, and there’s a big need for that now.”
Off-Premise: A Survival Tool
Only 15 percent of Mexican restaurants are operating at normal indoor capacity, according to our survey. The majority – 68 percent – are partially open, and the remainder are still entirely closed or offering only delivery and take-out.
What has allowed tens of thousands of restaurants to survive since COVID started is off-premise dining. Ninety-eight percent of respondents to the survey said they offer delivery and take-out; 20 percent of them only started offering those services after COVID hit.
The survey also asked how important delivery is to the restaurant’s business. The largest number of respondents – 44 percent – said delivery accounts for 25 to 50 percent of their current business. Six percent said it’s 51 to 75 percent; 8 percent said it’s 75 to 100 percent; and the rest, 42 percent, said it’s less than 25 percent.
“We had no inside dining at first, everything was to-go,” says Danny Sandoval, owner of Sandoval’s Café & Cantina in Portland, Oregon. “But it was amazing how much support we got from the community.”
Sandoval says his restaurant always had offered take-out, but they signed on with Postmates for delivery once the lock-down started. However, that didn’t work out as well as he had hoped.
“That was a big eye-opener. Number one, they’re making all the money, 30 percent off the top,” Sandoval says. Delivery of quality product with Postmates also was tricky, he says, especially since one of the most popular items on the menu is the wet burrito, which gets soggy if it’s not handled correctly during delivery.
So Sandoval and his wife, Cathy Sandoval, took over deliveries themselves. That also presented challenges – such as a massive rush of orders for 6 p.m. on Cinco de Mayo – but eventually they worked out their online ordering system to make the process smoother.
Billeci says delivery has been “huge” to his restaurant’s survival. And in his case, the city intervened in the third-party delivery fees: They can only charge 15 percent. “Hopefully that will stay for a while,” he says.
Food Costs Up
Rising food costs have exacerbated the suffering of Mexican restaurants. Food costs have increased for 86 percent of restaurants this year, according to our survey. That compares to 71 percent seeing increases in 2019. Twelve percent of this years’ respondents said prices are about the same, and 2 percent said they’re down.
“Food costs have definitely increased, mostly meat,” reports Miguel Solano, owner of Azteca Restaurant, which has locations in Toms River and Brick, New Jersey. “It also has been difficult getting products from Mexico, like dried peppers and avocados.”
Billeci says produce prices have jumped in his area, somewhat because many California farms burned in the recent fires.
“Meat prices also have gone up since COVID because a lot of meat plants had to close or reduce capacity for a while,” he notes.
Sandoval also has faced higher food costs: “Cheese prices almost tripled, meat over doubled, chicken over doubled,” he says. “We used to buy chicken wings for $50 a case. Good luck getting them now under $100 a case.”
With a Little Help from My Friends
Our report is grim this year, and it’s impossible to know how quickly the restaurant industry will recover. But without a doubt, the crisis has revealed how important a restaurant’s relationship to its community is.
“Definitely the customers appreciated that we have been open,” Solano says. “At the end of the day they wanted something different, not just pizza and sandwiches. They say, ‘We appreciate that you are here.’”
Sandoval echoes that concept, with a twist: “I think a big part of this is karma. We’ve always been involved in the community, and I think the people who have seen that have reached out to us.”
Sidebar: What Worries Mexican Restaurant Owners?
An open-ended question in the el Restaurante survey asked respondents what they are most concerned about at the moment. Here is a sample of replies:
* Food costs are still high, but the HUGE issue is finding workstaff.
* Because of the extra steps we need to take for sanitation and to offer takeout, our labor is high even after raising our prices.
* Falta de empleados, no hay gente que quiera trabajar.
* Safety for our employees and guests.
* The biggest concern is if someone gets sick on our staff, how that will affect the business.
* La gente no tiene mucho dinero para gastar por que los trabajos están en escasez y por lo tanto no gastan en restaurantes.
* We need to get back to 100% capacity and allow our guests as free Americans make the choice on how they proceed. Government regulations on how we run our business has to stop.
* Going into the winter months without outdoor seating will cut my business in half.
* La preocupación principal es que no se podrá trabajar con la capacidad al 100% dentro del restaurante o que en el invierno no vuelvan a permitir sentar clientes dentro de los restaurantes.
* Simply, when will this pandemic end?
* Que después de todo esto no vuelva a la normalidad.