- Food and beverage tax revenue dropped 15%
- Some restaurants report 4th quarter losses up to 60%
ROCKFORD — Rathskeller Rockford reopened its doors under new ownership Oct. 4, breathing new life into an iconic northwest side eatery that had closed the previous December.
While traditional German cuisine, baked goods and cold beer are once again being served up in the shadow of the Auburn and Main streets roundabout, business is still hindered by restrictions put into place to stop the spread of the novel coronavirus.
“I would say given the circumstances, we’re doing OK,” Rathskeller Rockford co-owner Jonathan Griffin said. “The reality of restaurants is that the majority of them can only make a profit with 85% occupancy. We’re far below that as far as occupancy, in terms of seating capacity.”
The coronavirus pandemic stripped an estimated $57.4 million out of the Rockford restaurant and bar industry in 2020, according to food and beverage tax data.
City officials were expecting worse. The 15% decline in food and beverage tax revenue last year amounts to one half of the city’s initial forecast and, while some restaurant owners were devastated by losses as great as 60%, others were propped up by increased curbside service and delivery.
“It certainly wasn’t as bad as we expected it to be,” said Carrie Hagerty, the city’s finance director. “It still is a significant drop from the previous year, but still well below what we had budgeted as far as revenue goes. It obviously reflects the efforts to support local restaurants and I think it’s pretty obvious that people still continued to order carry-outs and support their favorite local businesses throughout the pandemic.”
The city of Rockford collected $3,156,319 in 2020 through its 1% tax on food and beverages sold at restaurants and bars. That’s a drop of nearly $575,000.
The tax revenue is funneled into the city’s Redevelopment Fund, which provides subsidies for the BMO Harris Bank Center, the Coronado Performing Arts Center, UW Health Sports Factory and other downtown development projects.
“Those obligations can’t be dialed back because we have a decline in revenue,” Hagerty said. “They have to be paid. So, we prioritize those payments first out of our Redevelopment Fund. Any new development would be a tough sell to the City Council when we have a decline in revenue.”
The pandemic crushed restaurants here and across the country, with $240 billion expected to be stripped from the industry in 2020, according to the National Restaurant Association’s “2021 State of the Restaurant Industry Report”, released on Jan. 26.
The report said as many as 110,000 restaurants closed for business temporarily or for good across the nation last year. The industry finished 2020 nearly 2.5 million jobs below its pre-coronavirus level.
Rockford saw its share of restaurant closings as well, including Kuma’s Asian Bistro at 420 East State St., Five Forks Market at 6565 Lexus Drive, Ronit’s Kitchen at 116 N. Madison St. and Spot Cafe at 628 7th St.
Since Jan. 25 when the nine county-Rockford region moved into phase 4 of the state’s COVID-19 mitigation strategy, restaurants have been allowed to serve parties of up to 10 people and maintain a capacity of up to 50%.
Lucha Cantina, 1641 N. Alpine Road, reopened to limited indoor dining on Feb. 10, and is operating at about 35-40% capacity, restaurant owner Joshua Binning said.
The restaurant has attempted to weather the COVID-19 storm through a bustling curbside pickup business since the onset of the pandemic.
“In 2019, (curbside) was a small fraction of our sales and for the majority of 2020, it was all of our sales,” Binning said. “It’s not even comparable to previous years’ numbers, the amount of to-go that we’re doing right now. It’s very exciting for us.”
Lucha Cantina is partnering with DoorDash and Grubhub for delivery service, but Binning said the restaurant plans to make deliveries as an in-house operation in the future.
Wired Cafe, 414 E. State St., is also open for restricted indoor dining but has been hurt by a dramatic decline in downtown foot traffic during the pandemic, owner Crystal Douglas said.
“Our morning regulars are back but we’re still not bringing in the meetings and such that we used to have. I imagine (it’s) because everyone is still doing that by Zoom,” she said. “We rely so much on the offices that are down here and the people who are driving their kids to school. People are really supporting us and offices are ordering up to 20 box lunches at a time. So that helps, but as far as people having lunch meetings or just getting together with friends, that’s just not happening.”
According to Douglas, business at Wired Cafe was down almost 60% in the fourth quarter of 2020 compared to the same period in 2019. Business declined about 55% in January compared to the same month in 2020, before the pandemic hit.
“Right now, the only things keeping me afloat are loans and grants. If it wasn’t for those, I’m hemorrhaging money right now,” Douglas said. “I’ve gone from eight employees to four and they’re just family. I’m trying to stay optimistic. Having the people back in here has been very energizing and I didn’t realize how much I missed them.”
Rathskeller Rockford co-owner Jonathan Griffin looks forward to busier days ahead.
“It’s always a challenge to market but in a pandemic, when fewer people are going out, it’s harder just to get people in,” Griffin said. “But, the love from the community is definitely evident and we’re very appreciative of all of those who count us as friends and part of the community.”
Lucha Cantina’s Joshua Binning remains upbeat about the future, despite business plunging 40% in 2020 compared to the previous year and staff being cut nearly in half.
“The menu we just came out with last week has 10 or 11 new items, we’ve got a whole new to-go operation that we didn’t have before and we’ve got a ghost brand with Ranchero Pizza that we didn’t have before,” Binning said. “We’ve found ways to be innovative and found unique ways to run our business. I think it (pandemic) has made us better operators.”