American restaurateur Ming Tsai says 15% of restaurants are not coming back

Chef & restaurant owner Ming Tsai joins Yahoo Finance’s Alexis Christoforous and Brian Sozzi to discuss how the restaurant industry is responding to coronavirus.

Video Transcript

- We just heard Randy Garutti CEO of Shake Shack come out here and keep it real about the state of his business and the restaurant industry. So as a restaurateur and an owner of Blue Dragon in Massachusetts, what's the state of your business right now? Are you paying employees? What are you doing with the stimulus plan?

MING TSAI: So like for every business, every day is different. We closed Blue Dragon down the Friday before the state actually closed down everything in Boston. I closed it down, because people were still gathering. We tried to take the half the rest tables out for separation. This young crowd didn't pay attention.

Actually, there was a toast for a coronavirus with a group of millennials. And once I saw them toast coronavirus, I'm like, OK, we're cutting this off. We're closed. Proudly, never closed Blue Dragon all the way. I had to let go 25 of my 28 people. I kept my three salaried people to try to keep the lights on.

Starting that Monday, we've started no contact to go, so for the delivery people and for people that can pick up. Completely no contact protocol, mask, hair nets, gloves, the whole nine yards. You pick it up outside. And honestly, we were doing about 10% of normal revenue.

So any business you're in, 10% of normal revenue, you're not going to cut it. Fortunately, so we were just at the point two weeks into it. But what are we going to do then the Lee initiative? So Chef Ed Lee, my buddy from Kentucky, with a very smart partnership with Maker's Mark, the bourbon company.

Ed Lee approached him and said, look, you have all this promotional money for every major city for the next four months. Those gatherings, those promos, those parties aren't happening. Give us that money, that seed money, and we'll seed restaurants across the country in different states. So Ed called me to do Boston, so now, we have proudly set up a food bank. It started this last Monday.

Anyone in the restaurant industry with a pay stub can come, pick up dinner for one or dinner for four to cook themselves plus a whole board of toiletries, including besides deodorant, then the Purell's and stuff, bags of rice, dried rice, bags of beans, tuna fish, spam. Reason being, there's nothing more normal than to be able to cook at home. I mean, it's just been a nightmare, and we talked about the bailout that came from the government.

It's not bad, and we're getting into it. I've already applied for the SBA, all that stuff. That's great, unless you are under the radar. Unless you are one of the millions and millions of employees that work for any service industry, a hotel, restaurant, landscaping, and actually, will not get an unemployment check, will not get any bailout money.

They're the ones that actually under the radar, usually, send money home. They have nowhere to go there. They're the ones that are just going to suffer the most. Which in most disasters, the poorest who suffer the most. But economically, right now, it's so scary. I mean, I'm going to repeat what Randy said.

Restaurants are a community. Restaurants are the glue of the community, and I love what José Andrés wrote last time in the New York Times op ed last Sunday about the government needs to seat all restaurants, pay for their food, their lodging, their people, and give food out free. These restaurants, mom and pops need to be working. Once they're closed, they're closed.

I mean, there's 15%, 20% Chinatown restaurants that are permanently closed. Never coming back. In New York, you have Alfred Portale's Gotham Bar and Grill in Toro. Great restaurants. Here in Boston, we just had a steakhouse, Fleming's, just close. These are mainstay restaurants that we're actually doing pretty good, but they cannot sustain.

So we need a bailout. Otherwise, you said 30% early, Brian. I think 50% of mom and pops could maybe not get through this. Because even with this bailout money and the SBA loan, it's assuming you're going to bring back full staff, and no one brings back full staff during something like this. You're not going to have full staff, so you're not going to get that full reimbursement. It also does include the inventory you need to buy in.

You need to buy booze, again, and fish, and veg, and protein. So all of this is like, oh yeah, they'll just reopen miraculously. That doesn't happen. As you know, just one last point. As you know, when I do open my doors in, say, May or June, there's not going to be a line of 200 people coming into my restaurant, right? Everyone was affected by this, so it's tough. It's really tough.

- I mean, you've called this catastrophic for restaurant workers, and you point out that oftentimes, many of them are living paycheck to paycheck. You started something called the Restaurant Strong fund. It's an online fundraiser. Can you tell us what that is, and how has it been going?

MING TSAI: Sure, so I've really be doing three things. So The Lead Initiative is the one that's doing the food bank. Restaurants Strong, hats off to our buddies at Boston Beer Works, so Sam Adams. They reached out to Ken Orange, and myself, and Chris Coombs. We did an event called Boston Bites Back right up to the marathon bombing.

So Sam reached out and says, how can we help? They're so generous. And with seed money from Sam Adams through the Greg Hill Foundation of 501Z3, we started promoting. We have to save the industry. We called Restaurants Strong. We've collected over $500,000, which is a great amount of money, and then started passing out $1,000 checks to anyone in the restaurant industry that had a pay stub.

That's people bluntly legal or illegal. It didn't matter. If you needed the money, we paid it out. We paid out 510 checks, so $510,000. So it's an awesome thing which we did. There's 16,000 restaurants in Massachusetts alone, so it is a drop in the bucket.

And it does provide hope, but like I said, 500 people at a 16,000 restaurants got help there. So we need what we did with Restaurant Strong literally times 1,000. They smartly, now, Sam Adams has contributed $2 million to the cause, and they're going over to about 15 different cities in the country. Greatly needed, but we need about 50 Sam Adams to step up, like the Maker's Mark, like a lot of big companies, like Apple stands up.

Everyone needs to stand up to realize that we can't not, not eat, right? If the car companies close down a little bit, the cruise lines, and the airlines, and the big banks, that's still OK. Because I don't need to buy a car today.

However, I do need to eat today as does everyone else, and I have been eating. And there's so many people that are right now with-- they have this much money. Do I pay rent, or do I eat or pay for food? And at a certain point, it's going to break, and that's what we're scared of.

- Ming, real quickly. I just want to confirm to any of your employees that are watching. You expect to be open by June the latest?

MING TSAI: That's what we're hoping. Yeah, I mean, again, they say, New York in two weeks, super speaking. And Boston, three weeks, it's going to peak. What does this fallout look like after the peak? I mean, literally, how many people are going to be sick?

You know, one of my issues is just I didn't expect this as I'm new at this is we had the budget with the lead initiative bring back five or six cooks. One cook, too scared to ride public to public transportation and jumping in an Uber. I completely get it. One has an elderly father at home. He can't risk to be exposed.

One daughter has a fever. He's not going to risk exposure to us, so all these nuances that have never happened after a 9/11 or Katrina. There, we just went in and cooked. Here, it's just about safety first, and we're wearing everything possibly safe. But at the end of the day, we will get through this.

And if I could just add my one bit to every restaurant person thinking about this, I mean, this is-- I've cried all my cries, all my tears. So I've done that. It's so hard for us right now. You really need to just take care of the person to your right and to your left. I've been saying this.

Right now, the divisiveness of this world, this country, is going on for so long. That's got to stop. There's only three types of people in this world now. It's not skin color. It's not political view. It's not race. There's healthy. There's people that are caring, and there's people that are dying.

That's it, guys. There's three people in the world. Either you're healthy, you got the virus, or you're dying. So knowing that, that's a level playing field. You have to take care of your guy on your right and your left. Because that may be all you have left.

We have to take care of each other. We have to be kind, and I hope. I just pray that little guiding light that's going to come out of this is we do realize we're all the same, and we have to take care of each other. And food is the best way to start this process.

- All right, well said. Let's leave it there. Ming Tsai, chef and owner of Blue Dragon, I appreciate your thoughts. And we're certainly rooting for you.

MING TSAI: Thank you so much.