For 35 years, celebrity chef and restaurateur Rick Bayless has packed his Frontera Grill on New Year’s Eve, an annual tradition for scores of longtime customers at the acclaimed Mexican restaurant in Chicago’s River North neighborhood.
But as 2022 dawned, dashed hopes and empty tables were on the menu at Frontera and restaurants across the city and suburbs, as diners stayed away in droves amid the omicron surge. A psychological and financial blow after two years of pandemic disruption, it has left the once-vibrant Chicago restaurant industry on the verge of devastation and in desperate need of federal relief, Bayless said.
“A lot of the restaurateurs and chefs that I’m talking to are just about to give up,” Bayless said. “They’re incredibly discouraged. Nobody knows what to do at this point, because the numbers are so low.”
The restaurant industry has been hard hit by the pandemic, navigating closures, indoor dining restrictions, labor shortages, supplier price increases and declining revenue. In 2020, 90,000 restaurants permanently closed as sales fell by $240 billion across the U.S., according to the National Restaurant Association. While the industry showed signs of recovering last year, the one-two punch of the delta and omicron variants has halted the momentum.
In a January survey conducted by the association, more than three quarters of Illinois restaurateurs said revenues were lower last year than in pre-pandemic 2019. Declines have accelerated since the highly transmissible omicron COVID-19 variant hit in December, with 97% of Illinois restaurants reporting lower indoor dining demand in recent weeks, according to the survey.
One of Chicago’s most influential restaurateurs, Bayless opened Frontera in 1987, adding the adjacent Topolobampo two years later and more recently, Xoco, to his Mexican restaurant portfolio. In 1996, Bayless and Manny Valdes, a former Kraft Foods executive, launched Frontera Foods, a gourmet chips-and-salsa company, which they sold to Conagra Foods for an undisclosed price in 2016.
Like many operators, Bayless pivoted to emphasize takeout during the pandemic, offering everything from weekly suburban food deliveries to Topolo At Home, a five-course carryout from his Michelin-starred Topolobampo. Last year, as vaccinations rolled out and indoor dining restrictions eased, his business recovered to about 75% of 2019 levels, but has since fallen back to 45% amid the omicron surge.
“We never built back to where we were, but in the fall, we kind of hit an equilibrium that we thought we could maintain,” said Bayless, 68. “The saddest part of the whole thing is that December, when we were all hoping for a strong holiday season, the bottom fell out.”
Frontera will hit 40 to 50 customers on its best nights this month, Bayless said. He had hoped to fill 145 seats for New Year’s Eve, but sold only 68.
The omicron variant has left a lot of unused place settings at Chicago-area restaurants. Data from OpenTable’s “State of the Industry” website shows seated diners at Chicago restaurants this week are down by about two-thirds, compared with the same period in 2019.
“If you go to a restaurant and there’s hardly anyone there, then it feels awkward,” Bayless said. “You think either you’re doing the wrong thing by going out, or the restaurant’s not very good. We want a full room.”
Bayless has fared better than some Chicago restaurateurs, in part because he was one of a fortunate minority to receive a federal grant last year from the oversubscribed Restaurant Revitalization Fund. The Small Business Administration, which oversaw the program, received over 278,000 applications seeking more than $72 billion. It awarded the allocated $28.6 billion to about 101,000 restaurants before closing the program June 30.
In Illinois, 4,524 restaurants received federal grants totaling more than $1.4 billion. But 15,674 applied for nearly $3.5 billion, meaning more than 71% of Illinois restaurants did not receive funds, according to SBA data.
Restaurants applied for the grants based on a formula that covered the year-over-year decrease in gross receipts for 2020, minus any Paycheck Protection Program loans received by the business. In June, Frontera was awarded a $3.5 million federal restaurant grant, according to SBA data.
Frontera, which pared its staff of 176 employees down to 46 during the first year of the pandemic, is back to 140 employees on the payroll, despite the precipitous falloff in business this winter, Bayless said. It is a luxury many of his competitors cannot afford.
“We are still employing those 140 people, even though we could do with a third less, for sure,” Bayless said. “The only reason we can do that is just because we got federal aid.”
Bayless said he knows of a number of Chicago restaurateurs who didn’t get the funding that are now “laying off employees right and left” because they don’t have the business to support them. For many operators, the situation is increasingly dire.
The Independent Restaurant Coalition, a grassroots group that sprung up as the pandemic took its toll on the industry, found 42% of businesses that did not receive a restaurant grant are in or on the verge of bankruptcy, according to a nationwide survey conducted this month.
“Our members are struggling every day to stay afloat,” said Erika Polmar, executive director of the Independent Restaurant Coalition. “They’ve got mountains of debt, and they’ve just run out of resources, especially those who have not received the Restaurant Revitalization Fund grant.”
The coalition has been pushing for Congress to replenish the restaurant fund. Such a measure was not included in President Joe Biden’s $1.75 trillion Build Back Better Act, which was approved by the House in November but stalled in the Senate. Several other stand-alone proposals, however, are gaining traction.
The clear front-runner is the $48 billion Cardin-Wicker bill, Polmar said. The bipartisan proposal, introduced in the Senate in August, would provide funding to the nearly 180,000 applicants that did not receive grants during the initial Restaurant Revitalization Fund awards last year.
The coalition stepped up its lobbying efforts this month with an all-star social media campaign that included Bayless, TV host Jimmy Kimmel, NFL player Ndamukong Suh and New York Mayor Eric Adams, among others. The “day of action” generated more than 5,000 calls to members of Congress, the coalition said.
“We’re really encouraged by the momentum that we are seeing in Congress right now,” Polmar said. “But if Congress doesn’t act quickly, we’re going to lose these restaurants.”
Meanwhile, restaurateurs are cutting staff, reducing hours, selling assets and taking out personal loans to keep their doors open, Polmar said.
For the thousands of Illinois restaurateurs that missed out on the first round of federal funding, more than half said it was unlikely they would survive the pandemic without a grant, according to the National Restaurant Association survey. Using that data, the Illinois Restaurant Association projects that full replenishment of the federal restaurant fund would save 110,000 jobs in the state.
A member of the Independent Restaurant Coalition, Bayless remains hopeful that “better days are coming” for his restaurants and the industry at large as the omicron variant wanes. But he is frustrated the government has not stepped up with another round of funding to enable other struggling restaurateurs to weather the pandemic storm.
Bayless said there is far more at stake than economics if Chicago’s diverse culinary scene collapses, leaving only well-funded fast-food giants in its wake.
“I think this is almost like the death of a whole segment of our society,” Bayless said. “We add texture to a neighborhood. If it’s all fast food in your neighborhood, there isn’t much texture there.”
