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Indybay Feature
Pandemic in Poor Country
by Michelle Ann Stanton (stantonm [at]
Wednesday Apr 29th, 2020 8:51 PM
How the COVID-19 Pandemic is Affecting Small Businesses in the Restaurant Industry in Lake County, California
Pandemic in Poor Country:
What is Happening to Small Restaurants in Lake County, California

The COVID-19 Pandemic is affecting all areas of business; Restaurants are among the hardest-hit during the stay at home orders and public shutdowns. In March 2020 alone, restaurants lost more than $45 billion in revenue and nearly 3 million restaurant employees lost their jobs. Lake County California is the poorest county in the state. With about 75 restaurants in total, the vast majority of restaurants in Lake County are privately owned, small businesses. The average daily revenue is anywhere between $2,000 in the smaller cafes to $30,000 in the more “fine dining” type restaurants (which there are only 4 or 5 of). Average yearly revenue of all Lake County restaurants combined is a consevative $45 million.

Since COVID-19 Pandemic began, and the stay at home orders have taken place, many of the smaller businesses remained open for the following week or two, for take out only, but quickly realized they were losing money. Paying employees was costing more than they were making in return. Many of these restaurants remain temporarily closed. Other restaurants were forced to lay off employees in order to remain partially open. None of the restaurants offer dine in, and only a few have very limited delivery options. Some businesses laid off employees and still are forced to remain temporarily closed. Many businesses have had to reduce hours of operation, as well as hours on employees schedules. Many businesses have no clue if they will survive this pandemic or not, and some have already closed for good. Lake County restaurants that have remained partially open, whether reducing staff or not, have seen an average loss of $2,000 per day.

The CARES Act is a federal stimulus package for businesses and individuals affected by the coronavirus pandemic. Part of this package is the Paycheck Protection Program (PPP), is a Small Business Administration loan program designed to give small businesses financial relief. Businesses can apply for up to 250% of their monthly payroll. For example, if a business’s average payroll is your payroll is $10,000, they can apply for a $25,000 loan. These loans will be forgiven if 75% of the money is used to pay employees. This is great news for large publicly traded companies with hundreds of employees (one of which received $20 million), but for small mom and pop restaurants the amount is not enough to stay afloat. To add to concern, less than 6% of businesses who have applied have received the loans, and only 9% of those awarded went to the hospitality industry. “Banks, naturally, will profit. Collecting fees ranging from 1% for loans over $2 million to 5% for loans under $350,000, they stand to make billions from the PPP.” (Peterson, 04/18/2020)

Total available funds were almost completely depleted within days. Due to a specific clause in the PPP, restaurants run by freelancers and sole proprietors, such as catering companies and food truck owners, were not able to even apply for funds until April 10, one week after loan applications officially began. Some of the County’s wineries have restaurants, and many offer catering as well. There are a few food trucks run by small families; these businesses will be faced with some difficult decisions in the coming weeks.

Some of Lake County’s finest dining establishments are found within one of the county’s many casinos. Most of the casinos in Lake County belong to already struggling native communities who, due to a specific clause in the PPP, are not entitled to and will not be receiving any kind of funding whatsoever. Businesses whose sole income is derived from gamblig are not eligible to apply, and although Lake County casinos have these restaurants and some hotels, under the guideline of said clause, businesses who receive a third of gross income from gamblimg are not eligible either. Most of the casinos have been completely closed since March. One of the casinos I spoke to has severed all employees from the company and is in fear of remaining closed permanently. Many of the restaurants and small businesses of Lake County fear the same.

Within the last few years Lake County has seen a positive trend in tourism spending that has greatly helped the community. Restaurants, wineries and casinos combined make up the majority of revenue seen in Lake County. Not only are small businesses in a state of unknown, the country as a whole is taking a major hit financially, and this is sure to have impacts on all areas of living. This is an ongoing story and time will tell the fate of many of the restaurants of Lake County. With only so much help being offered, and only to such a small number of businesses in need, some of the temporarily closed signs may soon read “for sale”.

Hildebrand, Kurt. CoronaVirus Bailouts Rules Preclude Small Casinos. The Record Courier. April 05, 2020
Peterson, Lucas Kwan. The PPP is Letting Small Restaurants and Businesses Die. Los Angeles Times. April 18, 2020
The National Restaurant Association
Lake County California Information Portal
Paycheck Protection Program Information Fact Sheet
US Small Business Association
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