Detroit restaurants face new challenges, less commuters, heading into second pandemic winter

On a typical afternoon in a typical year, Detroit restauranteur Tom Teknos says the decade-old Hudson Cafe on Woodward Avenue is normally bustling with downtown office workers stopping in on their lunch hour.

“Obviously during the day we had a lot of business people and a lot of business lunches here. Catering was [also] a huge, huge part of our business,” Teknos recalls.

That changed in 2020, when the 20-year industry veteran was forced to lay off 100 of his 134-person staff across six restaurants, including Hudson Cafe and the Jagged Fork’s five Metro Detroit locations, due to restrictions related to COVID-19. Like many local restaurants, Hudson Cafe, which is open for breakfast and lunch, was forced to pivot, transitioning to a carry-out model that resulted in a 45% decrease in revenue last year.

“I’ve never had to lay anybody off in my life,” Teknos says. “It still bothers me to this day.”

Hudson Cafe was able to return to in-person dining last summer, staff were brought back, and earlier this year the restaurant’s revenue finally bounced back to its pre-pandemic levels. However, Teknos says he’s noticed an increase in carry-out orders recently as fall sets in — a trend other restauranteurs in Michigan have expressed concerns about as health officials continue to raise alarms about rising new cases of COVID-19 across the state.

Of the state’s restaurant operators, 58% said in August that their establishments had “experienced a decline in customer demand for indoor on-premises dining in recent weeks as a result of the increase in coronavirus cases due to the Delta variant”, according to data from the Michigan Restaurant and Lodging Association. Of those, 23% said it was unlikely their restaurant would still be open in half a year if business remained the same. 

While crowds are increasing, Detroit area restaurants are still facing enormous hurdles through the ongoing pandemic. Photo: Steve Koss.

The virus isn’t the only challenge local restaurants are facing this fall, though, as staffing shortages, delivery delays, and supply chain issues create stubborn new obstacles for owners and staff heading into their second winter of the pandemic.

For Teknos, the pandemic has highlighted the connections between his industry and others. Shortages in affordable parking for staff due to nearby lots closing amid the pandemic, opening the restaurant an hour later to accommodate employees with school-age children (Teknos says work-life balance is a priority), unpredictable deliveries, and rising business costs have all required big adjustments for the small restaurant in recent months.

“My deliveries used to get here at 5 a.m. and we’d start prepping at six, but today, for example, they walked in at 9 o’clock, so it kind of sets everything back,” Teknos says.

Those delays are tied to larger issues in the global supply chain, which has experienced staffing shortages and other challenges since last year and impacted a variety of businesses at every level, contributing to the rising costs of products and ingredients that many business owners rely on to operate — costs Teknos says he can only pass on to his customers so many times.

“I’ve had to raise our prices twice in the last year,” Teknos says. “But I can’t charge people $30 for an omelet.”

Bash Original Izakaya opened in 2020, amid the upheaval of COVID-19. Photo: Steve Koss.

Against the Odds

Across town at Bash Original Izakaya, which opened last year in Woodbridge just before the pandemic hit, owners and staff experienced a similarly unpredictable year.

“We knew it would be a long run to actually become profitable, just because typically when we research restaurants, it takes anywhere from 18 to 24 months,” says co-owner Ben Nolan. “What’s really cool is we did hit [that goal] even with COVID.”

Pivoting from a traditional izakaya to offering carry-out sushi in response to restrictions on indoor dining last year, Bash was able to build clientele amid the pandemic even as a brand new restaurant. Nolan credits their success, which defied even his own expectations, to a variety of factors including a team of talented chefs, smart marketing tactics, and experienced management that prioritized the financial wellbeing of waitstaff — a move that may have helped stave off a potential staffing shortage.

Tom Myers (left) and Ben Nolan at Bash Original Izakaya have been able to navigate the challenges of COVID-19, but are still facing the same issues as fellow local restaurant owners. Photo: Steve Koss.

“We were paying waitstaff $10 an hour when it was just carry-out […] When we opened back up, I said, ‘We’re going to remain at that number,’” says co-owner Tom Myers, adding that he was concerned about losing staff to busier, more established restaurants amid the pandemic. The plan worked, and Bash was able to retain 90% of its employees (about 15 people) by offering higher hourly wages until the restaurant was able to fill its dining room again.

As a brand new restaurant without an established clientele, marketing was another point of concern throughout the pandemic — remedied by hiring a marketing company specializing in restaurant promotion and utilizing the reach of popular food delivery apps to mitigate lost neighborhood foot traffic.

Although Nolan says delivery apps were “instrumental” for attracting customers and getting the word out about the fledgling restaurant, their fees, which he says were around 30% of gross revenue, were steep.

Photo: Steve KossStill, Bash was able to turn a profit earlier this year (Nolan says they’re now bringing in around three times more business than in 2020), and even landed some high-profile catering clients over the summer including several local and visiting professional teams when sports returned.

Despite their success, Myers and Nolan admit there are still challenges to contend with amid an ongoing pandemic. Like many of their fellow local restauranteurs, they’ve also experienced delays in deliveries and grappled with ever-increasing costs of ingredients in recent months.

“Every day is the ‘Great Unknown’ at this point,” Myers says. “All I can do is compare it to where we were at last winter.”

Yanni Dionisopoulos has witnessed a drop in customer numbers at Woodbridge Pub, courtesy of remote and virtual work trends. Photo: Nick Hagen.

Defending a Legacy

One block away at Woodbridge Pub, a popular hotspot for neighborhood locals and Wayne State University students, co-owner Yanni Dionisopoulos found himself struggling with setting new business hours last year as the college and nearby offices went virtual, depleting the restaurant’s normally busy lunch hours — a trend that continued into this fall.

Since reopening last summer, Woodbridge Pub has remained open only for dinner, with revenue down 30% to 40% compared to pre-pandemic levels.

“When school is in person, fully, we’ll reconsider [opening for lunch],” Dionisopoulos says, explaining that the daytime hours still aren’t busy enough to bring in what he describes as an already-overworked staff of six, down from the usual 12. 

“We’re down to a handful of staff that we’ve had since we reopened. We’ve been very blessed that they’ve been sticking around and helping out even with the long hours,” he says.

Like other local restauranteurs, Dionisopoulos says supply chain issues and product shortages have added to his challenges this year, with the prices of ingredients and supplies nearly quadrupling pre-pandemic costs — a problem Dionisopoulos has also faced at the other restaurants he operates around the city, prompting him to remove some items from the menu.

“It’s definitely been a challenge. It’s very overwhelming and very frustrating because we’ve been in the business for over 21 years and we’ve found ourselves in a new norm where it’s not as sustainable,” Dionisopoulos says. “It takes a toll on you when you have to raise your prices on something that used to be very cheap before COVID.”

In Greektown, Dionisopoulos also co-owns the Golden Fleece (the district’s longest-standing restaurant was originally opened by his father and uncle in April 1970), Exodus Lounge, and Bakalikon, a Greek market he and his partner began working on just before the pandemic. As a Greek American whose family business has operated there for over 50 years, Dionisopoulos says the market was part of an effort to preserve the authentic Greek culture and heritage of Greektown — something he worries could be lost over time as businesses struggle.

“One of the reasons we pursued the [market] was for the foot traffic,” Dionisopoulos says, noting that visitors to the typically tourist-heavy district have declined over the last couple of years as casinos, sports, concerts, and other events that normally drew in crowds, as well as visitors from Canada, were all stifled by the virus. As a result, business has been leaner than originally expected.

At the Golden Fleece, lunch has come back strong, though Dionisopoulos says dinner has remained unpredictable after returning to dine-in service last year, with unusually late rushes and sometimes erratic weekends.

Amid the uncertainty, Dionisopoulos remains hesitant to set any expectations as he prepares for the coming winter, though he’s thankful for the support he’s received from loyal customers throughout the pandemic.

“I’ll be completely honest — I don’t have any high expectations right now. I’m just grateful to be here,” Dionisopoulos says. “We’re still operating and still open and able to make ends meet, even without making a profit. But we can only tolerate that for so long, so we’re just expecting a better spring and summer next year.”

Photo: Steve Koss.