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Is Dallas’ Restaurant Industry Headed Toward a Big Fall?

Mi Cocina's Ray Washburne says capacity limits and business interruption insurance will be key factors.
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Ray Washburne talks with WFAA's David Schechter during a Virtual Board of Advisors event for the Dallas Regional Chamber.

For restaurant owners and landlords, there is going to be a huge hesitancy to sign new leases if the future remains cloudy in the coming months. That’s the perspective of Charter Holdings President and CEO Ray Washburne, co-founder of M Crowd Restaurant Group.

Despite occupancy at restaurants opening back up—75 percent as of this Friday—there’s still a lot of frustration among restaurateurs when it comes to being able to expand seating while adhering to social distancing guidelines.

“The big difference that you are going to see from this is over capacity restaurants—a of them have been over-leveraged, to begin with—aren’t going to reopen,” Washburne said during a recent virtual Board of Advisors event hosted by the Dallas Regional Chamber.

In the wide-ranging interview, Washburne touched on how social distancing is impacting the restaurant industry and new trends that will emerge from it. He also talked about plans for an entertainment district downtown—and what is going on with President Trump’s Great American Economic Revival Industry Group. Among the topics the group has discussed: business interruption insurance and force majeure issues in leases.

Washburne can see both sides of the matter. “I own shopping centers, and I have restaurants,” he said. “The lead out on this is the insurance companies and the banks that hold the mortgages. A lot of the discussion is how the government can get involved somehow with the business interruption insurance side and the litigation that is going to get involved.”

For example, Washburne points to how a restaurant in an area where hurricanes have hit can file for business interruption insurance—even if it is not damaged—because the area is part of a national disaster zone.

“Well, the president has claimed the whole United States is a disaster zone, and so has the governor in our state,” he said. “The discussions are really about the health and safety of our employees, the health and safety of our customers, and then how do we deal with this from a legal standpoint with the insurance we’ve all paid for, for years, and now it’s time to collect.”

Another concern is what happens when Payment Protection Program funds run out.

“PPP for so many people has paid the rent for March April and May—the truth is all going to come in July and August,” Washburne said. “If we’re still 50 percent [occupancy] and PPP is not extended, or new money is not inputted into the program, that is when the big fall is going to begin.”

During the interview, Washburne also talked about:

  • Restaurant trends: “How long will people want to be served by someone with a mask and gloves,” Washburne questions about the longevity of such regulations. “A lot of things that are getting touched (like menus). I think that is a change we will see more of.”
  • Entertainment district: Washburne is redeveloping the former Dallas Morning News building, a nearly 8-acre site that has an underground connection to the Dallas Convention Center. Plans include turning the historic 1940s DMN building into a 130-room boutique hotel with 250 apartments on top, building a 2,000-2,5000-seat concert facility in the former press room, and 12-15 bars and restaurants along the street. Click here to read more in Dallas Innovates.
  • Presidential election: Forget everything you’ve seen thus far when it comes to numbers and polls, Washburne said about the upcoming election. “Poles and rhetoric don’t matter till after Labor Day. It just doesn’t matter at this point.”

Click on the video link below to watch Washburne’s entire interview.

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