According to Ezekiel Vázquez-Ger, my guest on this week's Special Sauce, everything was going swimmingly at his new Washington, DC, restaurant, Seven Reasons. The place was packed almost from the minute it opened its doors in April of 2019. A rave review followed in The Washington Post in October, and then, a month later, Esquire named it America's Best New Restaurant of the year. It even survived a fire that started at the bar next door.
It was all good, until it wasn't. The coronavirus pandemic hit, and Ezekiel had to close his doors in March and lay off all of his employees. But, as you'll hear Ezekiel describe, he and his chef and co-owner, Enrique Limardo, along with their employees, banded together in creative ways in order to survive.
The Seven Reasons story is hardly unique. The pandemic is forcing independent restaurant owners and all the people that make up those restaurants' supply chain to tap their creativity to reimagine their businesses in ways that go way beyond take-out and delivery.
The outcome for these endeavors is uncertain, but if you care about the vibrant food culture we've created in this country, you can't help but root for all of these folks to succeed. We need as many of these people to make it to the other side as possible.
Once you hear Ezekiel tell his story, I'm sure you'll want to do something about the situation he and the hundreds of thousands of small food business owners, and their millions of employees, find themselves in. I urge you to visit the website for the Independent Restaurant Coalition to find out what you can do to help.
Production note: With everyone hunkered down in place we are no longer able to record Special Sauce in a fully equipped studio with an experienced and skilled engineer. So if the sound quality of this episode isn't up to snuff, know that we are working on all aspects of the production within the context of the new reality we're all living in. Better things and better sound lie ahead.
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Ed Levine: According to Ezekiel Vázquez-Ger, my guest on this week's Special Sauce, everything was going swimmingly at his new Washington DC restaurant Seven Reasons. The place was packed almost from the minute it opened its doors in April of 2019. A rave review followed in the Washington Post in October, and then a month later Esquire Magazine named it America's Best New Restaurant of 2019. It even survived a fire in July that started at the bar next door.
It was all good until it wasn't, when the pandemic hit. He had to close his doors in March and lay off all of his employees. But as you'll hear Ezekiel, his chef and co-owner Enrique Limardo, and his employees, banded together in creative ways in order to survive.
The Seven Reasons story is hardly unique. The pandemic is forcing independent restaurant owners and all the people that make up those restaurants' supply chain to tap their creativity to reimagine their businesses in ways that go way beyond take-out and delivery.
The outcome for these endeavors is uncertain, but if you care about the vibrant food culture we have created in this country you can't help but root for all of these folks to succeed. We need as many of these people to make it to the other side as possible.
Once you hear Ezekiel tell his story I'm sure you'll want to do something about the situation he and the hundreds of thousands of small food business owners, and their millions of employees, find themselves in. If that is indeed the case I urge you to log on to saverestaurants.com to find out what you can do.
EL: Hold on, I'm sorry.
Ezequiel Vázquez-Ger: Okay, there it is. Okay. My name is Ezequiel Vazquez. I'm the owner, the co-owner of Seven Reasons, a restaurant in Washington, DC.
EL: How long has Seven Reasons been open?
EV: So last week it was our first anniversary. We opened on April 16th, 2019.
EL: Tell me about the arc of the effect of the pandemic on your business and I mean we should say that Seven Reasons was called the Best New Restaurant of 2019 by Esquire. You've gotten lots of press. So I assume business was pretty good-
EV: That's correct.
EL: ... until that moment.
EV: Yeah. So we opened doors a year ago. We started pretty well. It's funny because with Enrique, with my partner, we always say that we have opened and closed and opened again this restaurant at least three times in the last year, because a couple of months after opening, I think it was in July ... We opened in April and in July the building next door to us caught fire. Part of the fire expanded to our building and we had to close and, not only that, the firefighters used our restaurant as the place where they were eating but then they were fighting the fire next door. So they destroyed our place.
EL: Man, you've had a lot of bad luck.
EV: Well, yeah, but at the same time we had the good luck that our landlord is a great guy. He has a small construction company, a family company, so he brought all his family to the restaurant to repair it and in less than two weeks we were up and running again. And from that moment onward, it's been very good. I mean with The Washington Post naming us the Best Restaurant of the Year, then Esquire magazine naming us the Best New Restaurant in America. The year was amazing. We actually ... I mean we had good margins. We made good money last year. We started this year in an incredible way. This is my first restaurant. I come from a completely different background. I'm a trained economist. I worked as a political consultant for eight years here in DC and at one point I was tired. I wanted to do something different in my life and in that process of figuring out what that was, I met Enrique. He was working at a restaurant in Baltimore and with my wife, we completely fall in love with his food and from there onwards, we started a friendship that then turned into business partners.
EL: Got it. So you're getting all these accolades and then I assume ... like at what point did you notice that there were changes to your business?
EV: So I would say that by the end of February, maybe first week of March, reservations started to decline a little bit. Not a lot. I would say 10-15% which... it wasn't a problem. And then everyone told me it was more of a systemic thing, the time of the year, et cetera, before the spring starts. My wife, however, was telling me, "Hey, pay attention to this that's happening in China. It might be big, it might affect the restaurant." And I was super skeptical at the beginning. I really didn't pay much attention until the news is starting to come more and more and then everyone started to become more aware about it. And at some point, we realized, okay, yeah, this is definitely going to affect. But at the same time it wasn't affecting us that much. I remember the weekend before closing, we actually broke a record. I think it was on a Friday or Saturday. We broke record in sales and it was a little bit...
EL: And that was like March 13th or something?
EV: Yeah, I think it was the 12th or 13th and I remember that time with the restaurant full, packed, people waiting in the door. I grabbed Enrique from the kitchen and I tell him, "Hey, I'm a little bit afraid you know because we're hearing all this news and everyone's coming here anyway. There's something that is not right here. We should close." And he tells me, "No. You are crazy. How are we going to close?" And we had that conversation and we decided to wait a few more days and see what happened. And that Monday, a couple of days after that, the order came directly from the DC Government and we had to close and that was on March 15th I think. The next day we got together and we said, "We have to give it a try to do delivery and takeout business." I honestly didn't thought it was going to work, but I was going to give it a try anyway. At that moment we thought, okay, this might be two, three weeks, maybe a month. It's not going to take more than that. I mean we could stay closed but, at the same time, we have 44 employees, people we have responsibilities with. We didn't want to let them off the hook to everyone. It was a really complicated situation.
EL: But first you laid them all off, right, so they could-
EV: Yeah, I did so that many of them could ask for unemployment, et cetera. The thing is that also in our staff we have a lot of Venezuelans working with us. Many of them that flew their country because of the political situation and people who are asking or waiting for their political asylum. A lot of immigrants, many people that because of being immigrants and not being US citizens, they couldn't apply to unemployment. So that was key also in making the decision to continue to be open with the delivery and takeout service and at least giving it a try and see how it works. So we reopened for delivery on that same Tuesday. We didn't do very well. On Wednesday, it was a little bit better. Thursday, a little bit better and on Friday after sending out an announcement of what we were doing, et cetera, it was crazy. I was home and around 6:15 I started getting calls from Enrique, from my general manager, saying, "Hey, close the system. Close the system. We have to stop taking orders. We're getting so many orders." And I log into the POS and I saw that orders were coming in and in and in and at some point the system crashed. Orders stopped flowing to the printer. It was a complete disaster. So we closed the online system we were using back then. We started calling people saying, "Hey, I don't think we're going to fulfill all the orders today. I'm so sorry. Please order back tomorrow." We run out of food in the kitchen. It was just incredible. We got like 300 orders within 15 minutes.
EL: Wow. And do you think that they were regulars at the restaurant or do you think they were people who couldn't get reservations because the reservations were so hard to get?
EV: I think it's both. I mean at that point we didn't know, but now we switch all the system from the POS delivery app that they have to Tock. Tock gives us a much better way to organize all these orders because it treats each order as a reservation, so it's very easy to get organized. I guess what we're seeing now is we have a lot of regulars, but a lot of new people too. I would say, I don't know, 40% regular, 60% new customers.
EL: And did you start then, in reacting to the demand, did you start hiring back people?
EV: Correct. So that first week of delivery, we were just with our staff that was on salary and by the following week we started hiring back. The second week, the third week, the fourth week, each week we continued to hire more. Now we have, I would say, a hundred percent of the kitchen staff is working and a good number of the front of the house staff is working too. In the last payroll, we have 25 or 24 employees working. Some of them doing less hours than they did before. Some of them making less money. But still in this situation, it's something that makes us very proud and very happy.
EL: It's so surprising, right? Because that's not the story we're hearing from most chefs or restaurateurs, and so it must have been a really pleasant surprise to you.
EV: It was. It was. I mean at the end what we realized is that people want to go and eat and, in our case, I think it was probably easier. I mean we did a lot of things and we continue to do a lot of things to keep people engaged because at the end I think that's the key, how you get engaged more and more with your small community, with the people that live around you so they can continue to come and order, et cetera. But for us, I think it was a little bit easier than for many other restaurants because of the success and the recognitions we had last year. So if someone tries and is not able to do it, it's probably not because they're not trying hard. It's because it's a completely different situation. So that's something that's a plus on our side.
EL: How much of the business have you regained?
EV: So before closing, we were doing between $75,000 to $85,000 a week. Sometimes a little bit more, sometimes a little bit less. That was the average. Now, the first week we did very little. We did around $26,000. The second week, $50,000. The third week, $60,000 and from that moment onwards, it continues around that, between $50,000-$60,000. Last week was a little bit slower but we expect business to continue to pick up in the next few weeks. So I would say we're, I don't know, 30% down, 35% down which given the situation I think it's amazing.
EL: It's amazing. And did you apply for any of the government programs?
EV: We did apply initially to the PPP. We didn't get it. Then two weeks ago or last week we were told by Chase that we were approved waiting for additional funding from Congress. We was approved last week so in theory we're going to be getting it this week or maybe not. However, in that period, we found out about a different program that is part of the CARES Act, that in our case we think is more beneficial. It's called the Employee Retention Credit. Basically what that program does, it gives you a tax credit equal to 50% of the salaries and wages you pay up to $5,000 for each employee. And it's automatic and the IRS refunds you the money automatically once you file a form.
EL: Got it.
EV: There's basically no condition. Everyone whose business has been hurt because of this situation or who's suffering or has a government regulation that doesn't let them continue to do business as usual, they can apply.
EL: Got it.
EV: So in our situation, we did the math and we think we're better off with this other program so we withdraw the application to the PPP so that someone else who's in more need than us can use it.
EL: Because the PPP turns out to be not ideal for independent restaurants, right...
EL: ... in terms of the terms of the loan and how fast you have to repay. You have two months and you have to spend it all—75% of it on salary—and there are all those limitations. So it seems like the tax credit program is a much more efficient thing for independent restaurants.
EV: Exactly. I guess it depends on the situation of every restaurant and also this other program it runs between March 12th to December 31st so maybe if a restaurant is closed now and is not spending a lot, once they are allowed to reopen and they start hiring people back, 50% of everything they pay and up to $5,000 per employee is going to go back to them. So I think it's a very good incentive.
EV: In some cases, the PPP might be better. It's something, a math that every restaurant has to do. But yes, I agree with you that the PPP is not perfect. It's far from perfect and the fact that you have to use that money in the first eight weeks to return into a grant, it makes it almost impossible with the current conditions.
EL: You've sort of developed an entrepreneurial training program for your staff. Tell me about that.
EV: So one of the first things we did when this happened ... You know, we always have this philosophy of how do we get employees more involved in the company. Our goal is once we open a second restaurant, we always thought about establishing a stock option program or something so that every employee that has spent a certain time or that we believe that has a great future can invest or become a partner, et cetera. Because at the end, my goal is ... and you were saying this the other day. Generally, what happens is that a sous-chef fights with his boss and then decides to go on his own and open his own restaurant. And if that happens here for me, it would be like the end. That's the last thing I want to happen.
EV: I want everyone who works here, I want to help them, to train them, to coach them and hopefully in the future to invest in their own projects. So with that in mind, a while back, we were talking with one of our line cooks, who's a great guy, a super talented person who had a concept that he has been trying to develop for a while. So he came to us and he told us, "Hey, this is my concept. Would you mind taking a look?" And we did and it was super interesting, very well done. So we talked back then, we gave him some advice, et cetera. For the time being, it stopped there. When this crisis started and we closed, he came back to me and he says, "Hey, Ezequiel, do you think it's a terrible idea to launch this concept in the middle of this crisis?" And I said, "Will, you're a genius. This is exactly what we should be doing."
EL: And what was the concept?
EV: It's a healthy burgers concept. It's chicken burger. I mean now it's chicken burgers, in the future it’s going to be salmon burgers and some other things but it's chicken burgers with a Latin touch and with some sides, something affordable, mostly for lunchtime. And it's very, very good. So we talked and we said, "Okay, use our kitchen, use our resources, buy from our purveyors. Use our technology to sell. We're going to promote you, et cetera. And do it." And we started that around five weeks ago too or four weeks ago and it's been very good. He's been making some money. He's been keeping himself busy, learning a lot, costing his product, deciding on pricing all with our guidance, so it is fantastic.
EL: That's great.
EV: So last week we launched the second one. It's cakes by Génesis, who is our pastry sous-chef so she's launching a line of cakes, four different variants, layer cakes. We announced it last week and in, I would say, less than an hour, we sold out. So now she's working hard to have 50 cakes ready for this week and starting to sell for next week. And we have a few other ideas which, depending on the timing and how long this is going to continue, we'll decide if we launch them or not.
EL: So it's essentially an incubator for their businesses.
EL: They have to pay you for the supplies or the ingredients.
EL: And then do you become a partner eventually or right now it's still just all their business and they just have to pay for whatever they spend?
EV: So I was talking to someone who told me, "Hey, you should sign a contract or something." I said, "You know, in the middle of this situation, I don't want to talk to a lawyer, prepare a contract. It's not the way to do it." So no, for now we're not partners. They are just doing it. We're advancing them whatever money they need, et cetera. And, of course, part of their revenue covers the restaurant expenses. But yes, if after this they decide to go on their own and do it on theirself, it's completely their idea. They can do it. Hopefully, they will give me an opportunity or they will give us the opportunity to invest and be their partners but it's going to be completely up to them.
EL: So what do you think, as obviously we're all reading a lot about how the country is going to open up economically for various sectors, what do you think the immediate future holds for restaurants like yours?
EV: It's going to be difficult. I think if it was difficult until now, it's probably going to be more difficult in the next few weeks once they allow us to open because I mean whatever guidelines are out there, I'm pretty certain that we're going to have to reduce capacity, probably cut seats by 60%, increase size between tables and for most restaurants that's going to be a problem. Actually, I think one of the reasons why many restaurants closed before their states ordered them to close is because there was already an order to reduce capacity. And for a restaurant with slim margins to be profitable or to even break even at 50% capacity, it's going to be very, very hard. I guess here it's going to be a very personal decision of each restaurant, how they're going to be better off, and I think there's going to be a need or at least an understanding on the importance of management behind everything that happen in a restaurant, that it's not only going to be about the food you serve but how you manage the very limited resources that you're going to have. I guess this is something that each restaurant is going to have to think on their own. Here we are more or less putting together ... I mean not more or less, we're putting together a plan and depending on the different scenarios, we already have an idea of what to do. But certainly it is going to be a big challenge, a very big challenge.
EL: What's interesting is that maybe it's going to force you and everyone else to come up with a different business model. If you can only do 50% of the covers that you normally do, but maybe if the takeout and delivery part of your business stays that strong, then it can become additive, right-
EV: Absolutely. Yeah, absolutely.
EL: ... rather than reductive and that would enable you to become a self-sustaining business then.
EV: Absolutely. For many restaurants, I'm sure that's going to be the solution, to continue to promote both lines of business. In our case, I think it will be very difficult to do both because we don't have enough storage space, kitchen space, to do the production for both. So I don't know. Maybe if we decide to continue with the delivery, we'll have to go out and find a kitchen or find another kitchen or something. That's going to require money. It's going to require investment. So those are all decisions that we have to work on.
EL: Have you been reading about like in Hong Kong they opened and they only take reservations, there are no walk-ins. They basically put tape over tables that people can't use. They only accept four tops. You can't have six people eating together. You can have maximum of four and if you add all those things together and you only get to 50% capacity and you were probably filling every table probably twice a night...
EV: That's the idea, yeah.
EL: ... it's going to be really hard to make up all that lost revenue. It's going to force you to a different financial model.
EV: Yeah, exactly. It's a different financial model and I guess if it's going to work or not, it will depend on how the restaurant was structured before, the kind of lease agreement they had, if there’s a possibility to renegotiate a lease or at least get some temporary amendment or part amendment, et cetera. But yes, in our case, we're a little bit lucky because the way our restaurant is distributed, it has three floors. I mean it might be a little bit easier. What we are thinking about is to create three different experiences in each sector of the restaurant and treat each experience almost as a different restaurant or at least as a different ... as a different experience. And in that way target different audiences and try to turn at least every table two times every night and to reach as many people as possible. We are probably not going to make the same as before but I think, in our case, the idea we have I think is going to work and we're going to be pretty pretty good.
EL: So you're going to essentially have three different concepts within the Seven Reasons building.
EL: You're going to have three different ... One might be, you know whatever, a burger concept. One might be something else.
EV: No, it's going to be the same food. The thing is that on a different floor we have a very open kitchen, completely open kitchen, so we're going to use that open kitchen concept to elevate the experience and do an experience completely focused on the presentation, on the cocktail preparation, et cetera. Then we have a very nice bar next to this main room, let's say, so if they allow us to seat at least five, six people in the bar, it usually seats I think 13 or 14, we're going to have an experience much more focused on the cocktail creation and all related to that. And in the second floor, second and third floor that is to have more of the usual casual experience. So it's probably going to be the same food maybe with a little bit more focus on the presentation and on let's say the fine dining part on the first floor and a more cocktail focus on the bar, and a more casual experience on the second floor. Always around the same food, the same concept, the same style. With our restaurant, I think our characteristic has been almost a fine dining restaurant but in a very casual and fun ambiance. There are no tablecloths, loud music, very little light. So I think as long as we can continue to be that vibe with a restaurant at 50% capacity, I'm confident.
EL: Yeah. So what would you like knowing the sort of parameters of how you're going to be able to open with maximum 50% capacity? We need restaurants like yours to succeed and to stay open just for the culture, just for all the cultural value you bring to your city, your neighborhood and to everyone who eats at Seven Reasons. What could the government do for you, knowing that there are going to be these changes moving forward?
EV: You know, I usually don't like to ... and I don't want to sound pretentious but at the end I mean there can be a change to the PPP ... I think probably for most restaurants and not in my case but for most independent restaurants, I think that changes in the PPP and giving them ways to access cash flow, especially for the reopening, et cetera, is going to be extremely important. But at the end, it's impossible that the government will solve every restaurant's particular situation. So there needs to be an adaptation, a re-understanding of what's going on and a component of being creative and reaching people in new ways and finding new ways to generate revenue. I mean I'm sure there are many ways the government can help especially with money or maybe with tax breaks, with payroll tax cuts, et cetera. It's going to be very important but at the end it's going to be a mix of that and how every restaurant adapts to the initiative and mainly with a big focus on management. I always want to be very specific with this word because I think management is going to matter a lot in the next few months, even years.
EL: So it's going to take all the creativity and optimism that it takes for all entrepreneurs to succeed these days right? Those two things really have to come together for restaurants like yours to sustain themselves.
EV: Exactly. Everyone who at some point in his life was crazy enough to open a restaurant and they did it because they had this spirit inside, this passion inside of opening a restaurant and starting a business or taking risk, you know, and that risk that they took whenever they started is probably the same risk that they're going to take again. And I think that everyone that has this position to change and to take this as a challenge, I'm sure they're going to be fine or they're going to be good at the end. It's going to be tough. It's a matter of having a smile on your face, a good attitude and trying to do your best. Read, get advice, but never let someone or some circumstance let you down.
EL: Are you Venezuelan?
EV: I'm from Argentina.
EL: You're from Argentina. And how is the pandemic affecting Argentina as far as you know?
EV: It's bad. I mean it's not bad in terms of the pandemic itself. There are not many cases yet. It's bad because of the restrictions they are imposing to people. You know in Argentina we have quite the authoritarian regime, the same in Venezuela and in Argentina in particular there are restrictions they are imposing to people. People might have different ideas or visions on how to deal with this, but Argentina is very tough. They're imposing restrictions on older people that they can't leave their houses. They are closing, and for me this is crazy, they are closing flights until September so no one can leave the country until September. In Argentina, the situation is very complicated. In Venezuela, it's even worse because in Venezuela, there is no information of what's going on.
EL: Yeah, and it's basically at this point a failed state.
EV: Yeah. Yeah, it's a failed state. Venezuela's a failed state. It's run by a dictator. It's terrible and this, of course, it's getting things worse. Here in the States, I mean with unemployment and everything, still there is some promising future because of this country. In poorer countries, especially in Latin America, it's going to be extremely hard. Because here people I mean they can lose their jobs. It's tough. I mean it always depends on the personal situation, but there I mean they are already poor countries that are getting even poorer, so...
EL: For sure. So do you still have family in Argentina?
EV: I have, yeah. My parents are living in Argentina. My sister is living in Argentina and I have family in Venezuela too. My wife is from Venezuela.
EV: I was lucky enough that I could bring my mother-in-law and her sister right before all this started. They are living with me now. But yes, in Venezuela there is no gasoline now. They're one of the biggest oil producers in the world. There's no gasoline industry.
EL: That makes no sense. Well, Ezequiel, thank you so much for sharing your experience with us and I can't wait to come and try your restaurant.
EV: I hope so. We're here waiting for you. Hopefully, I don't know, two months, a month from now.
EL: Yeah, exactly. All right. Take care of yourself. Thanks a lot.
EV: Thank you so much, Ed. Thanks again.
EV: Bye bye.
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