Apr. 27—This is the third of five parts in our series on the impact of the COVID-19 pandemic on Portland’s restaurants.
Closing the doors of Vinland on Portland’s Congress Street last summer not only upended owner David Levi’s life and that of his four employees, but also affected more than a dozen vendors he relied on for the all-local fine dining restaurant.
In seven years of business, more than a third of his revenue had gone back into the Maine economy, supporting farmers, fishermen, local food producers and restaurant supply vendors.
When the restaurant shut down with the pandemic’s arrival in Maine last March, and then permanently in August, there were no more regular orders for butter from Casco Bay Creamery or vegetables from Bumbleroot, Goranson or Winslow farms, all within an hour of the restaurant. The same went for coffee from Speckled Axe, just down the street, or bottles from Devenish Wines and New England distilleries, and cheese from Hahn’s End in Phippsburg. It also meant closed accounts for the restaurant’s linen and solid waste services.
“Every dollar that was spent on food and beverages was flowing through the local economy and much of it was really staying in the local economy,” Levi said. “That is not the kind of thing that people who are casually dining there would consider or think about, those broader economic implications.”
The impact of the momentary collapse and stunted recovery of Portland’s restaurants has reverberated across an ecosystem of businesses. Many of those are still in survival mode, grabbing whatever federal and state aid they can and changing business models and practices to earn new revenue and hang on for better times.
As the days grow longer, vaccination rates increase and consumer confidence grows, businesses along the restaurant supply chain see the light at the end of a long, dark year. But even if 2021 proves strong, it will take much longer for the industry to fully recover, and some think it will never be the same.
“COVID-19 has been a challenging time for people who are relatively invisible when you go into a restaurant,” said Sarah Hach, co-owner of Maine Food for Thought Tours in Portland. The food-tour company has been at a standstill for almost a year now, the same as many of the establishments it frequents.
“While it has been tough for us that we can’t operate our business, it is hard to know that all of our partners have been struggling through this pandemic in their own ways,” Hach said. “I don’t believe our economy can afford to have this sector fail.”
In 2018, Maine’s hospitality sector supported at least 20,000 people not employed directly by restaurants and hotels, according to a University of Maine economic impact study. Those supporting businesses generated almost $3 billion that year.
The hit to supporting and supply chain businesses during the pandemic mirrored the battering that Maine’s hospitality establishments took. In 2020, the supporting workforce had 5,000 fewer jobs and made $1 billion less in revenue than two years before, according to a study by University of Maine economists Todd Gabe and Andrew Crawley.
The pandemic’s effects are not unique to Maine. The economic impact of the U.S. food service industry was about $2.5 trillion in 2019, said Michael Kaufman, a former food service executive and a senior lecturer at Harvard Business School.
“About 96 percent of what comes into a restaurant as revenue goes out of the restaurant in terms of wages, supply chain, as well as rent, utilities, etc.,” Kaufman said. “Roughly $1.3 trillion goes to fishermen, farmers, manufacturers and distributors; that is a lot of money,” he added. “The flow-through of restaurants is enormous.”
Before the pandemic, Upstream Trucking distributed more than 2,000 pounds of fish weekly to Portland restaurants. In January, the company was lucky if it sold a quarter of that, said general manager George Parr. Every one of the company’s six employees was collecting partial unemployment over the winter because sales were so bad.
“We’re hanging on by our fingernails,” Parr said at the time.
By April, Upstream’s sales rebounded as its major restaurant customers reopened. The staff was back to working full time, and Parr expected improvement as restaurants reopen patios and when summer tourists start arriving. Still, the blow the company took makes Parr question what the future holds.
“We’re on the other end of it, but I don’t know if this is ever going to go away,” he said. “I don’t know if people are going to go out to eat sitting side by side at full capacity — it’s never going back to the old days, I can assure that.”
Native Maine, a specialty food supplier in Westbrook, laid off a third of its 100-person staff after restaurant sales — half its annual revenue — collapsed last March. It lost more than a quarter of its revenue last year, President Vinnie Caliendo said.
To make it through, Caliendo started delivering directly to consumers and got funding through government loan programs and grants to distribute food to needy families.
“That is the way we are surviving,” Caliendo said. “Just like the restaurants trying to keep the doors open, we are in the same boat.”
This spring, the company’s sales were still down 20 percent from 2019, but were steadily improving. It recovered about 60 restaurant accounts, including seasonal clients and year-round establishments that shuttered for the winter. Caliendo expects to have a full staff by May and pre-pandemic-sized orders by summer.
Even then, it will take at least a year to recover from the pandemic losses, he added. The rule of thumb is that a 10 percent fluctuation in business is manageable, a 20 percent change is painful, but surviving a 30 percent drop is “Herculean,” Caliendo said.
“We are living on borrowed time. To recover from that is going to take a whole year from now presuming everything is ‘normal,’ ” he said.
Maine groundfishermen were nearly shut down when restaurants — their primary customers — closed or reduced service. Almost 80 percent of the value of seafood is consumed in restaurants, particularly fish like haddock, pollock and flounder, said Ben Martens, executive director of the Maine Coast Fishermen’s Association.
“We have lost that high-end restaurant market for the fresh seafood we are proud of bringing across the docks in Maine,” Martens said. Without a stable market, groundfishermen tied up their boats instead of losing money. Fishermen Feeding Mainers, a donor-funded program set up by the association, kept some fishermen in business selling their catch to provide meals for hungry Mainers.
A rebound of the market, however, is tied to when, and how well, Maine’s restaurants recover, Martens said.
“There is going to be a long tail on this crisis when it comes to restaurants and our fishing industry,” he said. “With all those restaurants gone, there is a lot of question in my mind about what demand looks like on the other side of this.”
Restaurant closures and restrictions nearly eliminated the market for kegged beer, forcing some local brewers and distributors to change course midstride.
Before COVID-19, restaurants and bars made up 60 percent of sales at Vacationland Distributors, a small, local craft beer-focused distributor in Westbrook.
The 12-person company avoided layoffs by cutting every other cost, President Nick Bezanson said. As dire as the situation seemed last spring, the bump in summer tourism and heavy retail allowed it to come out of 2020 with flat sales. Even so, his company’s future depends on the survival of the region’s bars and restaurants.
“That is our bread and butter,” Bezanson said. “Long-term success for us means there is a successful independent restaurant scene. Frankly, we don’t want to do anything else.”
Breweries themselves made quick changes too. As keg sales disappeared and canned beer sales boomed, many had to install or make upgrades to canning lines, said Sean Sullivan, executive director of the Maine Brewers’ Guild.
“It is a lot cheaper for a brewery to throw 15 gallons into a keg than it is to can that same amount of beer,” he said. “The consumption is still there, but it is more expensive.”
Before the pandemic, 70 percent of Allagash Brewing Co.’s sales were from kegged beer distributed to 18 states — primarily its popular Allagash White.
That changed overnight, and the brewery turned to a can line, installed only months earlier, so it could turn out beer for retail stores on a scale like never before.
Founder Rob Tod “thought we could pull back and weather the storm or move forward with a lot more packaged beer,” said Brett Willis, a marketing specialist at the brewery. “We launched more packaged beers on a national distribution level than we ever have.”
With federal aid and strong retail sales, the brewery was able to avoid laying off any of its 140 workers. Now, its sales are split evenly between draft beer for bars and restaurants, and beer in cans and bottles for retail sale.
“I don’t think anyone at the brewery wants to go back to being so far into the draft territory,” Willis said. “We are prepared for both situations. We have changed our business enough so we can thrive if draft doesn’t come back to the same level.”
Farmers and food producers that had grown to meet demand from Portland’s food scene had to reinvent their business models when steady wholesale customers became unreliable.
Before last March, Dandelion Spring Farm in Bowdoinham sold 60 percent of its produce to restaurant accounts, mostly in Portland. Almost overnight, owner Beth Schiller transitioned to selling community supported agriculture boxes and attending farmers markets to make up for lost sales.
“From the farm perspective, that was the pivot, and it worked out fine for us,” she said.
Moving into a new growing season, Schiller bet restaurants would rebound. She’ll still sell directly to customers, but said there is anxiety in the farming community that the booming farmers markets last year won’t endure as people return to pre-pandemic buying patterns.
“From a farm budgeting perspective, I am counting on restaurants increasing their sales from last year,” Schiller said. “I am not necessarily counting on them to come back to 2019 levels, but better than 2020.”
Looking ahead, Schiller plans to avoid the chance of seasonal market shocks by planting crops she can store and sell year-round, and plans to open for farm dinners to create a new revenue source.
“One thing I am carrying over is to be a more balanced 12-month provider than really counting on sales for just six months out of the year,” Schiller said.
THE OTHER VENDORS
Food and beverage businesses were obvious casualties in the pandemic’s disruption to restaurants. But the downturn also pummeled vendors that wouldn’t come immediately to mind.
“When indoor dining shut down and restaurants were looking at decreased revenue, flowers were high on the list of things they could do without,” said John Sundling, a florist and owner of Plant Office in Portland.
Before the pandemic, about 40 percent of Sundling’s business was catering to 11 Portland-area restaurants including hot spots such as Eventide Oyster Co. The pandemic lockdown was “an immediate drop in income,” Sundling said. “That was a big part in deciding to let my part-time staff go, I just knew I wouldn’t be able to pay them.”
Even when restaurants reopened, many only had patio service and low sales, and were not in the market for plants or flower arrangements. Sundling kept in touch with some of his closest clients and has had some orders, but is focused on selling plants at his shop, instead of recovering commercial accounts.
“Instead of being my bread and butter, as they come back, it will be nice, really exciting, but it is not to the point that I am depending on them to keep the business going,” Sundling said.
Minuteman Press in South Portland lost much of its orders for restaurant menus, along with huge printing runs for events such as the Cumberland Fair and the Maine Brewer’s Guild summer beer festival, as well as yoga studios, amusement parks, tourism businesses and nonprofits.
“A good chunk of our business was concerts, events, hotels, motels and the travel industry,” owner Eric Bennett said. “There were some customers that didn’t do anything all year because they couldn’t.”
Bennett laid off two people and trimmed every other cost he could, even changing the brand of paper stock he used. Some of his losses were offset by demand for labels and other material from the booming cannabis business.
Getting into spring, there are signs of life — hotels and restaurants are starting to place orders in advance of the summer tourism season. Minuteman Press will make it, but the past year has been tough.
“When you talk about the ripple effects of the pandemic, it affects everything,” Bennett said.
Read Part 1: Threatened by coronavirus, Portland’s restaurants turn the tables
Read Part 2: On Middle Street, a culinary hub embodies an industry under siege