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Despite economic stimulus, restaurant industry continues to suffer

Yahoo! Finance's Melody Hahm joins The Final Round to discuss the continued impact of the COVID-19 outbreak on the United States' restaurant industry.

Video Transcript

JEN ROGERS: Let's bring in Melody Hahm out in California. Melody, so given the backdrop of some of the numbers we've had coming out, we just were hearing from the president in Washington about small businesses, how important-- I mean, we know that they are important for job creation, but just how critical they are.

And restaurants are a really big part of that, and we're continuing to see them really struggle, just having talked to a few people that own restaurants, just trying to figure out what to do with their employees, whether to do delivery. It's a real one, two, three punch here. What have you been finding?

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MELODY HAHM: Exactly, Jen. And I think even the prioritization from the government standpoint, right, just trying to define which kinds of restaurants are the most important. Of course, right now, we have been relying heavily on takeout and delivery.

But when you think about the fine dining space that employed a huge swath of workers-- we actually had a chance to speak with Danny Meyer, the founder of Union Square Hospitality Group, and of course, the founder of Shake Shack as well. And he's known, right, for this term called enlightened hospitality, to be able to bring delight and joy to the dining experience. And he laid off over 2,000 workers over the last couple of weeks.

And in an interview with Yahoo Finance this morning, he essentially was saying, hey, we deserve to be protected under the stimulus package, which originally had stipulated that you can only have up to 500 employees to be qualified, right, as a small business. And here's what he had to say about why he believes that Union Square is a good example of a company that deserves the attention and the aid.

DANNY MEYER: Just to be clear about something, Union Square Hospitality Group is a series of smaller restaurants, meaning that each one of our restaurants has far fewer-- generally, they have about 100 to 150 employees. And they're all separate businesses. Now our name, Union Square Hospitality Group, is a family name for a number of businesses.

So I can speak as a small business owner, and I'm also aware of how this impacts larger businesses because I'm chairman of the board of Shake Shack, which is a public company. But I think that the two issues we've been looking at all along have been the health crisis on one hand and the economic crisis on the other.

And we have taken a position that the safety and health of our employees and our guests is thing number one. Because I don't want to be in a position ever of looking back on this time and saying that because we made the choice to ask our employees to come work and cook food for people, that we put somebody in harm's way.

MELODY HAHM: A pithy quote right after that excerpt, saying, "hey, I don't want to be known as the great unemployer as we look back at this. I want to be known as the best employer that can sustain the future." Of course, with job losses, I don't know if that's necessarily the case.

When I speak to much smaller entrepreneurs here in LA as well as in northern California, I spoke with one person who runs a company called Sushirrito. He has six different locations. It's a very popular sushi burrito hybrid chain. And he closed down four locations, kept two open solely for takeout and delivery purposes.

And it's been interesting to see the community be galvanized because even the employees and the workforce, originally he gave them the option, hey, you could either give up your shift entirely, or you can split it off so you can have 10 hours a week, five hours a week, just because we don't have enough jobs. Most of the staff chose the latter option, so people are cobbling ways together.

But I think, you know, looking at the fine dining space at large, that is the biggest risk here, just because people won't, A, necessarily have the discretionary income to go to those restaurants, B, a lot of innovation is happening with the takeout space there, but Danny Meyer is an example of someone who isn't necessarily jumping into wanting to really cut those margins down even more by offering the takeout option. So yes, this is a segmentation within the restaurant industry even that I find particularly fascinating. And we'll see who ends up coming out surviving and coming out stronger.

JEN ROGERS: Yep, and on that other side, to see what kind of changes are made in the end, I found that also really interesting as people try and think about that. And of course, [INAUDIBLE] was writing about that. Will we go to restaurants? But they're going to take out more tables. What does that do to margins for people that even do want to go back? Lots of big questions about what is going to be changing, how people are trying to figure out what their business model looks like. And that goes for major league sports as well.