The wait for a table is 3 weeks: Industry erupts at LA’s outdoor dining ban

LA landlords, restaurant owners say they have been unfairly targeted; brokers say tenants will struggle to pay rent

Los Angeles City Councilwoman Monica Rodriguez (Wikipedia Commons, iStock) 
Los Angeles City Councilwoman Monica Rodriguez (Wikipedia Commons, iStock)

Landlords and restaurateurs say Los Angeles County’s decision to suspend outdoor dining for three weeks because of spiking Covid cases will have dire economic consequences.

“Restaurant operators that thought they could pay 30 to 35 percent of rent are now saying they can only pay 15 to 20 percent of rent,” said Lorena Tomb, CEO of Urban Lime brokerage. Those numbers could keep dropping the longer the ban lasts, she said.

Throughout the coronavirus pandemic, L.A.’s restaurant industry has grumbled about various pandemic-related restrictions, but it has mostly complied.

That has begun to shift, and the outdoor dining ban is a flashpoint. The move has already led to a lawsuit, resistance by city governments — Pasadena is not complying — and outrage among commercial brokers and landlords.

“Outdoor dining was enabling many tenants to pay their rent, barely,” said Jay Luchs, vice chairman at Newmark. “This ban is a blow that sets them off track.”

But L.A. County maintains the ban, which took effect Wednesday, is a matter of life and death.

“Covid-19 hospitalizations continue to accelerate at an alarming speed,” the county said in a release on Tuesday. It said 1,575 people countywide are now hospitalized with Covid-19 and a quarter of those patients are in intensive care. The total number hospitalized is twice the number recorded two weeks ago, according to the release.

Barbara Ferrer, director of the county department of public health, has repeatedly implored residents to “stay in as much as possible.”

But restaurant owners say they are not the cause of the hospitalization spike. A lawsuit filed last week by the National Restaurant Association seeking to prevent the ban from taking effect claims that less than 5 percent of the county’s Covid cases that come from “nonresidential settings” come from restaurants.

Sign Up for the undefined Newsletter

By signing up, you agree to TheRealDeal Terms of Use and acknowledge the data practices in our Privacy Policy.

“The Department of Public Health has identified more Covid-19 cases at a single Northrop Grunman facility in Palmdale than in the entire restaurant sector,” according to the lawsuit. On Tuesday, an L.A. County Superior Court Judge denied the bid to immediately halt the ban.

Business groups claim they did not have a seat at the table when the L.A. County Board of Supervisors and Gov. Gavin Newsom issued recent Covid restrictions. The state imposed a 10 p.m. to 5 a.m. curfew that lasts through Dec. 21.

“Public officials have chosen not to talk to us,” said Rachel Michelin, executive director of the California Retailers’ Association. “Unfortunately, the only recourse is to file a lawsuit,” she added, in reference to the restaurant association’s complaint.

Restaurant operators and landlords have also been negotiating deals to keep tenants from closing up. “Businesses are hanging on by a thread,” said Matthew Fainchtein, a retail broker at Cushman & Wakefield.

Many landlords are also in a difficult position, Fainchtein said, with deals that often include tenants paying a percentage of their earnings instead of a base rent.

The city of Los Angeles, by far the largest municipality in the county, must nonetheless follow all county health edicts because it does not have its own public health supervisor.

“We’re doing our damnedest to help the restaurant industry,” said Monica Rodriguez, an L.A. City Council member who opposes the outdoor dining ban. But, Rodriguez added: “The ball is in the county’s court.”

By contrast, Pasadena and Long Beach, which each has a public health officer, can make their own restaurant policy. Pasadena has already announced it will maintain outdoor dining.