We need to shift our mindset from holding things together to relaunching: Boqueria CEO

Yann de Rochefort, Boqueria Founder & CEO, joins The Final Round to discuss the state of the restaurant industry, the impact of PPP loans on it, and how restaurants will have to shift as states begin to reopen.

Video Transcript

SEANA SMITH: Welcome back. Well, we talk a lot here on Yahoo Finance about the devastating impact that the coronavirus has had on the restaurant industry. I mean, just take a look at the jobs picture alone. Employment in this sector has fallen to its lowest level in more than 30 years, and the restaurant industry has lost nearly three times more jobs than any other sector. So for more on this, we want to bring on Yann de Rochefort. He's founder and CEO of Boqueria. It's a chain of Spanish tapas bars with locations in New York and Chicago and also Washington DC.

And Yann, we know it's a hard time for you right now, so we really appreciate you taking the time to come on this show and share your story. But let's talk about the impact that coronavirus has had on your business. You've been forced to close your restaurants. You've been a huge advocate for independent restaurant owners. So talk to us just about how you're navigating this time of uncertainty and what you're hearing from your peers as some restaurants do start to reopen across some states.

YANN DE ROCHEFORT: Sure. Well, first of all, thanks for having me on. It's great to have a platform to even tell this story. There are a lot of us who are talking on WhatsApp groups and on email chains, and we really appreciate the opportunity to tell our story. So you know, we made the decision to close on Friday the 13th, aptly named, before the authorities asked us to close because we just didn't see any way to morally continue to be open, given the uncertainty there was regarding the health situation. And you know, two days later, New York, Chicago, and DC followed that up.

So we decided very quickly to hibernate, to-- we unfortunately had to lay off all of our employees. I think we laid off 98% of our employees within a week because we felt that was the only way that-- to-- the only way to preserve our chances of surviving. We closed all of our restaurants. We didn't have a strong delivery business before we closed, so we took some time to reinvent ourselves a little bit, to tweak our menu so that we could reopen when the time was right with delivery.

We now have-- we've reopened one location for delivery. We're generating about 20% of the sales that we used to there, which is about a tenfold fold increase in delivery business. So that's going well, but it's still really a breakeven situation at best. As you know, third party fees take a huge chunk out our sales. If a restaurant normally makes 10% to 20% profit, if things are going really well, if that restaurant just did delivery, it would make no money because all of that profit would go to third party fees. So it's a tough situation, but we're doing what we can to ramp up, develop some learning, build a new revenue stream, and be ready once we get the green light to reopen.

ANDY SERWER: And, you know, what about taking money from the PPP? Have you been able to do that, and what's been your take on the government programs, just generally?

YANN DE ROCHEFORT: Yeah. So we have. In the second round, we were able to get a PPP loan. I think that the PPP was well-intentioned, and it was designed at a time that we didn't-- the government didn't really know how long this was going to last. And the intent was to sort of maintain things and hold the status quo. And I think we need to-- the government needs to shift its mindset because that-- by the time PPP money started flowing to restaurants particularly, but to businesses generally, that ship had already sailed. Millions of people were already out of work. So the idea that the PPP could keep people employed was defunct the day that money started to flow.

I think that we need to shift our mindset holding things together to relaunching, to reopening, to maintaining businesses. And so like a lot of other-- like the Independent Restaurant Coalition and a lot of others, what we're advocating is that the time to spend PPP money and have it be forgiven be considerably extended because right now, we have until the end of June.

We can't even open legally in all of these locations where we have restaurants. So we really can't spend it, and the amount that would be forgiven at our current spending levels is minimal. So that time needs to be extended. And if people can't spend it during that time for whatever reason, the time to pay it back, if it converts to a loan, should be extended. Again, all that is really shifting the mindset maintaining things because that ship has sailed to rebuilding and reopening.

RICK NEWMAN: Yann, Rick Newman here. Since you're talking about your laborers, your workers, and your payroll, what's your best guess about the portion of your workers you will be able to re-employ again? I'm going to assume it's not 100%, you know, based on--

YANN DE ROCHEFORT: Wish it were.

RICK NEWMAN: --an assumption that there is some kind of consistent-- slow but consistent-- reopening.

YANN DE ROCHEFORT: Yeah, I wish it were. And we're-- like most restaurants, we're in a bit of a catch-22 where, you know, hiring more workers given low sales means losing more money until-- unless we can get that forgiven. So to answer your question directly, I think that if we can generate 60% of our former sales, we might hire back 70% to 75% of former employees. We'd like to hire back all of them.

We just sent them a survey a couple of weeks ago because we wanted to get a sense of how many people wanted to come back. And 97% of our employees said that they wanted to come back and work for us. So that's great news. I just hope that we're in a position where we can employ them and employ them productively because we have customers to serve.

SEANA SMITH: And then Yann, when you get those employees back into the restaurant, how far along are you guys in planning for what kind of PPE they're going to need, what the layout needs to look like--

YANN DE ROCHEFORT: Very far.

MYLES UDLAND: --how they'll move through the restaurant? Because I think, you know, once this shock dissipated to some extent, you hear from so many restaurateurs that what the experience even looks like is-- like, it's mind boggling compared to what it was in February.

YANN DE ROCHEFORT: Yeah, I think we have to get very creative, and we're working on that. We're working with Delfini Sanmartino, an architectural firm that was designing our next restaurant which is to open in Nashville, to figure out creative ways of doing that so that you don't feel like you're having lunch or dinner in the restaurant-- in the hospital cafeteria, right? All those plexiglass dividers don't make you feel very welcome.

So rather than taking out furniture, we want to leave the furniture in. We want to furnish it. We want to put plants. We thought at one point about putting mannequins, and I see one restaurant did that. We want to, you know, to the extent possible, have fun with it and still make it feel full, make it feel like a place that you want to be that has energy and balance that against making sure that our guests feel safe and they feel that we're taking the pandemic and their health risks seriously. We also have to think about our staff, of course.

We are actually partnering with Casanella, another restaurant group out of New York, and working on a trade association that would focus on providing-- on communicating best practices and safeguards to restaurants and creating sort of a safe table or safe eats, if you will, sort of seal of approval that would help restaurateurs parse through the myriad instructions they're getting from the CDC to your local town council. Every one of us is sifting through all of these different directions about what should be cleaned and how, et cetera. It would be great if there was one organization that could relieve us of that burden and say, look, these are the best practices, and this is what you need to do to conform to local legislation, as well as let the guests know that this restaurant is following best practices. So that's an initiative we're working on. We're looking for sponsors right now, actually, to create that sort of seal of approval and collaborative organization.

SEANA SMITH: All right, Yann de Rochefort, founder and CEO of Boqueria. We really appreciate you taking the time, and we wish you all the best.

YANN DE ROCHEFORT: Thank you.

SEANA SMITH: Thanks so much for joining us.

YANN DE ROCHEFORT: Appreciate your time. Thank you.