Portsmouth restaurants struggle to stay alive in COVID-19 world

It’s a pleasant July evening during the biggest vacation week of the year, but COVID-19 has cast its shadow on downtown Portsmouth’s bustling summer sheen. Instead of elbow-to-elbow tourists at cocktail-studded tables, restaurants are operating at 50% capacity or less. Some are still shuttered.

Opening the doors this summer means restaurateurs have had to pull off a new modus operandi and a new look. But, they say, that alone doesn’t ensure their viability. A safety net of federal and state aid, as well as creative, agile policy changes on the part of city government, are also critical if they are going to make it through the winter.

“We are all writing the playbook as we go,” said chef Matt Louis, who co-owns Moxy and The Franklin, which are temporarily closed, and Street and Luigi’s West End Pizzeria, which are open. “The only way forward with a chance to break even under the current guidelines is the magic trifecta of revenue from indoor-outdoor seating and takeout. The pressing reality now is that most places in Portsmouth can’t hit all three.”

That’s why two of Louis’s establishments are still closed more than three weeks after the state’s restaurants were given the green light to serve customers indoors. The seating capacity limit of 50% in the four New Hampshire counties hardest hit by COVID-19, Rockingham, Hillsborough, Strafford and Merrimack, dealt an added blow to Portsmouth restaurateurs, many of whom pay high rents for small spaces. Restaurants in the state’s other, and more northern counties, can operated at 100%, but still must keep patrons at least 6 feet apart.

Despite their disastrous impact, Louis is not complaining about the government mandates.

“The future is unknown and, frankly, what is black and white is that our businesses cannot survive like this,” he said. “But I don’t disagree with the guidelines. I don’t see any other way this can be approached. It’s a tough spot to be in.”

Louis, a James Beard award semifinalist chef, says there is little hope The Franklin will hit the trifecta. The narrow sidewalk out front is paved with uneven, broken bricks. There are no parking spaces to extend into. Its fine dining menu with an emphasis on oysters does not lend itself to a takeout model. And due to the restaurant’s design, which features a spacious bar in the center, it accommodates about 30 to 35 socially distant seats, as opposed to the 76 they had B.C.-19 (before COVID-19).

“I don’t see a way we are going to break even, but we are going to open because we have to roll the dice and hope the damage is minimal. We still have expenses, including rent to pay,” Louis says. “Luckily, our PPP (Paycheck Protection Program) loan is extended to the end of October. We have a better chance at survival and getting loan forgiveness by opening. If we don’t get our PPP loan extended, The Franklin has zero chance of making it.”

Louis was able to open Luigi’s and Street because they have patio space out front and a strong takeout following. He is working with the city to create more outdoor capacity for Moxy.

Last month, Louis was among the 5,466 New Hampshire business-owners who received a grant from the $400 million Main Street Relief Fund, distributed to the state as part of the federal CARES Act. According to the governor’s office, each grant covers 17% of a business's losses.

That aid, Louis says, is critical.

He estimates without government assistance at least 90% of all independently owned restaurants will go under.

“Believe me, I don’t want more government assistance,” he said. “But these are just the facts. I don’t foresee any other way.”

The Portsmouth Brewery also got a Main Street loan and has pulled off the trifecta model, reopening as Gov. Chris Sununu’s phased strategy for restaurants allowed. But that is no silver bullet. Utilizing an existing patio and additional seating in a paved lot behind the restaurant for outdoor seating is little more than a Band-Aid.

Given the state’s regulations, the brewery is generating about 50% of its typical revenue.

“At that rate, we are a literally not making a profit,” owner Peter Egelston said. “We are likely operating at a deficit or breaking even. Nothing can fix that until we have more capacity. We are happy to be open, but this is not a long-term solution.

“This is the time of year restaurants are usually putting money in the bank. The fact that none of us are making money, much less putting it in the bank, is a real concern. We’ll be going into the slow winter season without the cash reserves we normally have.”

Louis, and other owners of downtown restaurants, have uniformly echoed that concern. When considering the long view, the months of January and February bring dire predictions that call to mind the Game of Thrones’ ominous “winter is coming” catchphrase.

“The scariest part for me is not the outcome of outdoor dining,” Louis said. “It’s winter when we will likely see an economy in recession, unemployment and federal aid dry up. January and February – that’s when we will see the true ramifications of all this.”

Still, al fresco dining is a key part of the immediate response. In a city where there are more restaurant seats than residents, city councilors recognize the industry’s symbiotic connection to Portsmouth’s economy and culture. They formed the Portsmouth Citizen Response Task Force on June 1 to provide assistance to businesses in jeopardy, including restaurants.

Since its first meeting June 9, its 21 members have been working with city officials and an independent group of locals to create more outdoor opportunities and a CDC-compliant path forward. Soon after its formation, the city approved outdoor dining permits for 40-plus restaurants in a 3-day period. By the end of the first week of July, barricades were up throughout the downtown and dining tables stood on what used to be parking spaces.

Task force member Russ Grazier said its goal is to act as quickly as possible to create revenue-generating opportunities specifically for restaurants, retail and performance venues. The group currently has a subcommittee to transform the Bridge Street parking lot into a pop-up performance/retail space with the Black Trumpet as the anchor restaurant, a beer garden, and guest restaurants, including Louis’s Moxy.

A second subcommittee is working on downtown street dining.

“We are putting a high priority on safety and recommendations from the state while ensuring Portsmouth businesses don’t go under during the pandemic,” Grazier said. “Everyone is putting in a strong, good-faith effort to make Bridge Street happen. The challenge is we are fighting time and accelerating all our planning. As a result, we are tackling a lot of problems concurrently. It’s been challenging in that respect, but it is going to happen and we hope to get about three months of activity there.”

The task force was aiming to get the Bridge Street pop-up going by July 15, but that date is not confirmed.

“We are working with Public Works to handle issues like water, heat, sewer and electricity there,” Grazier said. “Typically, you don’t see public-private partnerships like this, but the city is so concerned that they are taking on tasks they wouldn’t typically take on.”

Egelston said innovations like transforming Bridge Street could be part of shifting the paradigm for the city – and the country.

“Imagine your home as a doll house,” he said. “What if you took the roof off and dumped everything out? When you went to put all the pieces back, would it look the same as it did before? Probably not. This is an opportunity to put the pieces back in a way that makes sense for now.

“I think you can expand that idea to relate not just to local businesses, but to all of society. Everything has been shaken up and we have an opportunity to put the pieces back in a new way that makes sense. We don’t have to put everything back the way it was.”