The coronavirus pandemic has claimed the jobs of all 400 workers at the Gerber Group across its 10 venues in three cities.
Scott Gerber, CEO of the hospitality company, said he made the decision Monday after New York Gov. Andrew Cuomo ordered restaurants and bars to close except for takeout and delivery services.
Geber said many of his venues did not have a takeout business and he didn’t believe the volume of orders or safety risks of kitchen staff working in close proximity justified trying it. He said the employees were let go to “make sure we have a business to go forward.”
“We laid them off just so they could go and get unemployment,” said Gerber. “For me personally, it’s heartbreaking.” The layoffs encompass the company’s entire workforce, including its corporate team.
Gerber Group predominantly operated bars and lounges including The Campell in Grand Central Terminal, Mr. Purple in The Indigo Hotel on the Lower East Side, and three venues in the newly-renovated TWA Hotel at John F. Kennedy Airport.
Gerber said he told his staff that they would all be rehired once the crisis was over and restaurants were allowed to reopen for dining.
He is also turning one of his shuttered locations, Irvington Bar & Restaurant near Union Square Park, into a food pantry where former employees can pick up free food for the duration of the crisis.
Initially it will be stocked with the remaining supplies from kitchens around the city, but Gerber said he will be ordering staples including milk, eggs and rice to keep the pantry stocked.
It’s the latest in a string of layoffs and furloughs affecting the service industry. Danny Meyer’s Union Square Hospitality Group laid off 2,000 workers Wednesday, Eater reported. Pebblebrook Hotel Trust, one of the largest hotel owners in the country, has plans to lay off 6,000 within the month and Marriott International is beginning to furlough thousands.
Gerber said he’s wrestling with how to conserve the company’s cash to ensure its locations can reopen once the coronavirus crisis is brought under control.
For starters, he’s only paying vendors that are either small businesses or individuals. For larger vendors, such as liquor companies, he’s reaching out to delay payments.
“We have no idea how long this will last,” he said. “We’re just trying to hold on to as much money as we can.”
He voiced support for proposals of interest-free loans for small businesses and an abatement on payroll taxes that could be in place as venues reopened. State and local officials in New York are calling for similar relief measures for both businesses and workers who have lost their jobs.
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Gerber said that many of his vendors have been understanding and have extended a grace period for payments. But some landlords are continuing to demand standard rent payments. The Metropolitan Transportation Authority, which runs Grand Central, is one of them.
The MTA sent a letter to its tenants noting that it would waive fees if they did not adhere to their operating covenants regarding opening times, but their “obligation to pay rent continues without abatement.”
“Nobody could believe that they actually sent this letter,” said Gerber.
Other MTA tenants called the letter “tone deaf,” the New York Post reported.
In a statement, MTA spokesperson Abby Collins said “we understand the challenges facing these businesses, and we urge the federal government to step up and provide assistance in its latest relief package.”
In New York, an indefinite statewide moratorium on eviction proceedings is in place.
Gerber said he had contacted his insurer to cover the rent payments but was told that pandemics were excluded from his business-interruption policy. Without coverage, potential losses could be “limitless,” he said.
He declined to name the insurer but said it was one of the top providers to the hospitality industry. Lawyers say some insurers began specifically excluding coronavirus-related losses in January in new policies.
“There are going to be a lot of tenants that are going to have to declare bankruptcy,” he said. “We won’t be one of them,” he added, though he admitted that if the crisis lasts a long time and landlords or other vendors demand that companies pay, that could change.
“I would find that unconscionable,” he said. “I can’t imagine that that’s going to happen.”
Write to Erin Hudson at ekh@therealdeal.com