Restaurants

Constant openings and closings may be 'death knell' for restaurants, says Junior's Cheesecake owner

Key Points
  • Junior's Cheesecake owner Alan Rosen told CNBC that restaurants would be in serious financial trouble if they have to reopen then close back down due to the coronavirus pandemic. 
  • "This opening and closing could be the death knell of restaurants in this country," Rosen said on "Power Lunch." 
  • "When people are buying up food, then you throw out $100,000 worth of food, it's the end of you," said Rosen, who has three restaurants in New York City and one in Connecticut. 
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Junior's Cheesecake owner Alan Rosen told CNBC on Monday that restaurants would be in serious financial trouble if they have to reopen then close back down due to the coronavirus pandemic

"This opening and closing could be the death knell of restaurants in this country," Rosen said on "Power Lunch." "When people are buying up food, then you throw out $100,000 worth of food, it's the end of you. " 

Rosen's family owned business has three locations in New York City and a fourth in Connecticut. So far, he said only its location in Brooklyn is open, serving takeout. 

New York City restaurants were set to be able to offer indoor dining this week, but officials scrapped those plans Wednesday as Covid-19 cases rose across other parts of the country. Restaurants in the city started offering outdoor dining in late June. 

Officials in other parts of the country also are taking steps to rollback some of their coronavirus reopening plans, particularly targeting businesses like bars. In Texas, for example, Gov. Greg Abbott ordered bars to shut indoor service back down and reinstituted a 50% capacity limit for restaurants. 

And on Monday, the mayor of Miami-Dade County in Florida responded to the state's spike in Covid-19 cases by again restricting dine-in service for restaurants. Gyms and banquet facilities also were ordered to shut back down. 

Cheesecake sits for sale in the Bakery display counter of Junior's restaurant.
Andrew Burton | Getty Images

Rosen, whose grandfather founded Junior's in Brooklyn, New York, in 1950, said he has taken a cautious approach to resuming service at his restaurants. That is why he has been waiting to use funds Junior's received through the Paycheck Protection Program, he said. 

"You have to be really slow and really take your time," Rosen said of reopening restaurants. "I got to be honest, the PPP, if used properly, will save the industry." 

Rosen received some criticism in April after he detailed on CNBC his intention to wait to use the roughly $5 million in PPP funds that Junior's received until the restaurants had a "very clear pathway to success." At the time, Rosen said he would have used up all the money if he had to wait until June to get the green light to reopen. 

"We believe that because we waited from way back in April and didn't exhaust the funds, we now have the chance to be successful for another 70 years," Rosen said Monday. 

In the last four weeks, Junior's has added about 100 people to its payroll as it moved to reopen its Brooklyn location for takeout, Rosen said. Each of the four restaurants got separate PPP loans, and he said only funds for the Brooklyn location are so far being used. 

He said Junior's plans to open its location on 45th Street in Midtown Manhattan next, followed by its one nearby on 49th Street. Its location at Foxwoods Casino in Connecticut doesn't "even have the optionality to be open," he said. 

Lawmakers in Washington approved changes to PPP a few weeks ago, giving recipients more flexibility in order to have the funds be considered a grant, not a loan that they would have to repay. Rosen said there remains uncertainty about the program's exact parameters, but believes his company is in compliance. 

"I think the rules are still being thought out. I don't think anyone knows all the definitive answers, but if the government is not allowing us to provide service and to be open, I mean to me, it seems that we're complying," he said. "We're doing what we have to do. We can't go break the law to use the PPP funds." 

Rosen stressed that Junior's would proceed with its reopening and the rehiring of employees during the coronavirus pandemic in a way that is "really smart and really thoughtful." 

"We want them to be fully employed. We them to be employed for the balance of their careers with us, not for 2.5 months. ... We want this to be a slow build back to 100%, with everyone's safety in mind," he said. 

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