What It Takes to Keep a Bar in Business During a Pandemic

Deciding to start a small business requires a combination of faith, delusion, and masochism. I had healthy amounts of all three when, a little more than a year ago, a friend and I opened a place in Oakland called North Light, a hybrid of a bar, café, and book and record shop. My wife* and I had tended bar in our 20s and 30s, and we often fantasized about opening our own spot. So when that friend, Lee Smith, called to ask if I might be interested in partnering on the project, it felt like I’d been waiting by the phone for years. Since Lee and I both had full-time day jobs — he’s a concert promoter; I was finishing a book — we knew we’d need to assemble an experienced team to manage North Light. We had a lot to learn, but we figured, How hard could this whole thing be?

Lee and I signed a lease on a location less than a block from where I live, and after we’d slogged through a year of tasks that cascaded down the front and back of each day’s to-do list, the county officials stamped our final inspections. We threw a couple of big opening parties in January 2019, and we were off. North Light was everything I wanted in a neighborhood bar. It provided a place to work over lunch or coffee before sliding into happy hour with friends; it was full of books and vinyl; it served food and drinks until late; it had an airy back patio. For our book and record shop, we asked a handful of writers, musicians, and artists to select the inventory. All the people we approached — from Patti Smith to Michael Ondaatje, Rebecca Solnit to Pico Iyer, Samin Nosrat to Michael Pollan — agreed to curate a shelf of favorite books and write blurbs about why each title was important to them.

But my exhilaration around opening quickly evaporated. Keeping the business afloat, solving problems, fixing things that broke, developing systems of operation — tasks I’d always enjoyed — now provided unending stress. Why in hell did I decide to do this? I began asking myself while answering emails from bed at 4 a.m. In our case, we didn’t do it for money: Since our day jobs supported us, Lee and I decided to pay off our investors and lenders before we might see a profit ourselves. Our motivation came from elsewhere — a desire to contribute something to the neighborhood and to participate in an industry we loved.

Although North Light felt like a success during those first months, we’d scan the numbers each morning to find that we were losing money. I had a hard time understanding how a full room and strong sales could still add up to a loss. When putting together our business plan, we’d built our financial projections by counting our seats, estimating a per-check average, guessing how long a customer might stay, balancing revenue against costs — and basing all these calculations on business plans from similar establishments owned by friends. Yet it seemed we’d been way off the mark.

I called those friends for advice. “Sounds like you’re right where you should be,” they said. To succeed, we’d have to get busier while also refining our business model to be increasingly lean — two opposing forces. Labor is the biggest area to tighten, along with reducing food waste and lowering our cost of goods sold. If we could trim those expenses, while boosting sales, North Light might survive.

When a bar or restaurant raises initial funding — in our case, several hundred thousand dollars to cover all aspects of the build-out, permitting, design, hiring, inventory, and more — it’s essential to factor in runway money, expecting that the business will operate on a loss for roughly a year. We’d heard that most new restaurants — 60 percent by some estimates — didn’t survive the first year. But I hadn’t expected to be this terrified. We’d put our reputations and relationships on the line, asking our friends to invest. We also had 14 employees whom I’d come to care about deeply. I would lie awake nights thinking about what it would mean to fail and how many people I’d be letting down. As we watched our accounts dwindle week by week, our concerns became more existential: Do we admit defeat, apologize to our staff and supporters, and relocate our families to a remote scrap of Wyoming? Or do we go begging for more cash? Neither of these options was appealing.

Gradually, we turned things around. Our systems of operation became more efficient. This involved adjusting how and where drinks would be picked up by servers, which hours and days we even needed servers, how and by whom food would be run and tables bused, and a hundred other minor corrections and improvements. Refining these systems allowed us to run with a tighter staff schedule, which not only shrunk our labor costs but also ensured that our employees would earn more in tips — a necessity if we were to retain talented staff. While our expenses crept downward, more people came through the door each day as word about North Light spread.

We finally got out of the red in our seventh month: The bottom line of our July P&L statement revealed a whopping profit of $24. A laughably small victory, but it signaled that this thing we’d been agonizing over might succeed. Month after month, we built on that growth, and by the end of the year, things were looking up. It felt satisfying to send an annual report to the investors and share our confidence: “All in all, it was a terrific first year. … We reached profitability much sooner than the industry norm, and our trends continue to be very positive. We’ll soon see how COVID-19 affects our business. Many establishments are suffering greatly, yet so far we’ve been OK.”

The day after sending that note, I spent the afternoon on our patio, and it was full, guests huddled over laptops or meeting friends for end-of-the-week drinks and snacks, their dogs napping under the tables. Many companies in the Bay Area had begun to encourage or insist that employees work remotely, which for a lot of people, apparently, meant logging their hours at a neighborhood bar. Guests were more or less keeping their distance from one another, while occasionally slipping little containers of hand sanitizer from their bags. It felt good out there. Still, I didn’t quite trust it. We analyzed our numbers to divine what was coming. It wasn’t a great Friday but not terrible — about 25 percent off the norm.

Weekend brunch started slowly and didn’t pick up much. I sent a note to staff outlining new safety measures, conveying the following: “Everyone must wear gloves at all times. If you’re not actively engaged with a guest, you should be sanitizing surfaces — tables, chairs, stools, bottles, counters, shelves, floors. Door handles must be disinfected on a 15-minute schedule. This will slow our service, but that’s OK. Safety is everything. If anyone feels sick or wants to practice social distancing and stay home, we will get your shift covered. And, finally, we’re going to try to stay open for our regular hours for now, but prepare for lean times. Plan your personal finances for the coming weeks.” That evening, I peered out my living room window toward the entrance of North Light. The neighborhood was quiet. Our sales for the day finished down 50 percent from a typical Saturday.

By Sunday, nearly 40 local bars and restaurants had announced temporary or permanent closures. Ohio shut down dining establishments, allowing only takeout and delivery. New York City and Massachusetts followed. Governor Gavin Newsom announced that bars and nightclubs in California would have to shutter. Technically, North Light is a restaurant, so the order didn’t apply to us. That afternoon, we removed half our tables and barstools to keep customers socially distanced. But we were quickly reaching the conclusion that we would have to close our doors for the safety of the public and our staff.

I asked our general manager, Den Stephens, to start calculating our burn rate by creating a list of unavoidable costs — rent, utilities, upcoming taxes and payroll, insurance, accounting, loan payments, vendor bills. Our ability to defer these expenses could shift our monthly obligations by $20,000 or more, which could be the difference between surviving for a few weeks, a few months, or possibly longer, with the understanding that these bills would all come due eventually.

That evening, once my kids were in bed, I walked over to North Light to meet my best friend, Kooko, a wine salesman who subsisted solely on commission. Rarely a night passed that he wasn’t visiting friends and clients in their establishments across the Bay Area. “And now,” he asked, “what the fuck am I going to do?” He was talking about the collapse of his professional world as much as his social life. His wine orders had already dropped 90 percent.

We drank several rounds and chatted with the bartender, Zach. Now and then, a couple came through the door and settled at a candlelit table to sip a nightcap, but there were never more than six or eight people. You could feel a sort of stillness creeping in — as if most of the city had vanished. Zach put Operation: Doomsday by MF Doom on the turntable. The first track featured an edited dialogue from the 1960s animated TV show Fantastic Four. A man asked, “Why don’t you tell him about the time we faced Doom?” A woman cheerily replied, “All right! Well, as I remember, Doom had threatened the world leaders with destruction of every major city on Earth.” A telephone rang in the song. The woman said, “Would you believe it? It’s Doom on the phone!”

After Kooko left, I drank one more whiskey slowly, feeling the room, giving way to sentimentality, recognizing that this would be our last night for a long while — or maybe for good. I set my glass on the bar, elbow-bumped Zach, and walked the half-block home along an empty street.

The next morning, I poured a cup of black coffee and sat alone in the living room while my family slept. One thing that stunned me when we opened North Light — a reality that I was never aware of while bartending — is how close to the cliff’s edge most establishments are perched. This is even true of those spots that are impossible to get into on a weekend night. A rough month, or even a bad week, could send a bar or restaurant to its demise. Cash flow is always a challenge, partly because profit margins are too thin — usually between 2 and 6 percent — to ever get substantially ahead. Most of us who own bars and restaurants keep a running list of projects and repairs that we don’t have capital to pay for.

Just before noon on Monday, March 16, Bay Area counties announced a shelter-in-place order — the first such mandate in the country. All bars and restaurants had to close, with the exception of takeout and delivery. North Light wasn’t designed as a to-go business, so the painful decision we’d already come to — that we would have to shut down — had now been made for us. I shared the news with employees and investors and posted a notice on our website, social media, and North Light’s front door.

My biggest concern was our staff. I wanted to continue paying them, but if we did, we would wipe out our cash reserves in less than a month: We would essentially be offering them severance, since, if North Light didn’t survive the closure, our employees wouldn’t have jobs to return to when the world reopened. Our staff had lives and pursuits beyond North Light, of course, but regardless of how they spent their hours away — one bartender is a jewelry maker; another is an award-winning drag performer; we have a musician, a surfer, a nonprofit founder, a DJ, a poet — their jobs had provided the means to pay rent, buy groceries, and support their ambitions. But now, with little warning, they’d been set adrift. When you hire employees, you enter into an unspoken contract: You trust them to take care of your business — to represent, enhance, and realize your vision — and in return, you promise them a stable income and supportive environment. You’ve also made an emotional commitment to their well-being. I felt that, suddenly, I couldn’t hold up my end of the deal, that I was failing them.

Den made sure the staff had all of the necessary paperwork to file for unemployment. He organized our perishable food for them to pick up along with their final paychecks. For one sick employee, he delivered a care package to her front door, containing lemons, ginger, and honey syrup — the ingredients for virgin hot toddies. When news spread of our closure, friends and customers sent messages asking how they could support North Light and our staff. We established Venmo and PayPal accounts, and donations began posting within minutes. More than $8,000 eventually came in. It didn’t add up to a huge amount for each employee, but it certainly helped.

After some debate, we decided to get bids on boarding up our façade. I’d always been turned off by overt displays of security. I used to tend bar at a classic dive in Portland, Oregon, and when I returned to visit, I found that they’d filled a front window with that nauseatingly cute sign, “Smile! You’re on Camera.” I wondered why anyone would choose to patronize a place that advertises a distrust of its community. Once, after a petty thief had been on the loose in our neighborhood, I talked with our friend Hillary, who owns Roses’ Taproom across the street, and we discussed the option of installing visible security cameras. She said, “That’s just not the world I want to live in.” I loved that answer, but in this moment it seemed that the more responsible act was to protect North Light.

In France, President Emmanuel Macron announced a suspension of rent and utility payments for small businesses during the shutdown, an act that I expected would help many places outlive the crisis. It was unclear how our own government might support the country’s 30 million small businesses. Rumors of stimulus packages and bailouts ricocheted around the industry, but many of us worried that the proposals being floated by the White House and Congress would prove inadequate or impossibly restrictive. Our commitments were too complex and vast to be solved by a loan earmarked mostly for payroll. We make monthly payments to more than 40 separate food and beverage purveyors (many of them farms and family-owned enterprises), our point-of-sale provider (which manages our payment system), a restaurant-equipment rental company, our landlord, and others.

Our confidence in the federal government further dipped when, the morning after our closure, the White House hosted a call with the food-service industry. The participant list included Domino’s, Chick-fil-A, Subway, McDonald’s, Papa John’s, Wendy’s, and a handful of other large food corporations and conglomerates — hardly the sort of leaders who could represent establishments like ours.

I wandered over to North Light that afternoon to check on things and water our plants. I’d been alone in the space many times, but now it felt unnerving — like encountering the ghostly ruins of a civilization — as I imagined guests and co-workers moving through the room. I stepped behind the bar and reached to the top shelf for a favorite bottle of mezcal and poured myself a shot. I raised the glass to this place we’d built, to our scattered community, trying to summon some optimism, but I couldn’t. My eyes brimmed, yet before I could wallow in self-pity, a woman danced up the sidewalk and stopped in front of North Light, belting out the chorus to Bon Jovi’s “Livin’ on a Prayer.” I held the mezcal aloft and watched her arms swing in big circles as she sang.

Late in March, the president signed the $2 trillion Coronavirus Aid, Relief, and Economic Security Act, a rescue package that included $349 billion for the Paycheck Protection Program (PPP) for small businesses. Lee and I passed dozens of articles back and forth, but the details were frustratingly scant. It seemed that we could apply for a forgivable loan if we used it largely for payroll — yet our business was closed by state decree, so it was difficult to understand how paying employees not to work might help save North Light. We would have eight weeks to spend the funds, during a shelter-in-place order. Our representative at the bank couldn’t answer any of our questions, since the Small Business Administration, which was backing the loans, had provided so little information. We prepared our application anyway.

On that same day, the Oakland City Council passed a statute prohibiting evictions on commercial and residential leases. Discussions with our landlord had been promising, but since rent was our largest potential expense by far, we were relieved to know that our lease wouldn’t be immediately canceled if we bottomed out.

Den constructed a cash-flow analysis, which allowed us to work through the next four months of expenses. We prioritized our smallest purveyors, who we knew were also struggling, and settled our balances. Many of our midsize suppliers granted us deferments until we could start generating revenue again. Chase Bank paused our loan and interest payments until August. We’d also been able to suspend our garbage, recycling, and compost programs and get at least two months of deferred rent. Yet even with this relief, the projections were bleak. Unless we could reopen or receive an influx of capital from somewhere, we would likely run out of money by mid-summer.

On Friday, April 3, the massively chaotic registration for the PPP loan opened. Some banks activated their application portals well before others, and since the loans were structured as first come, first served, the system was blitzed. Lee fired off North Light’s application, and a confirmation notice pinged back to us, soon followed by emails that urged us to finish the already-completed forms. At one point, we were even sent the paperwork of another business altogether. There was no way to check in, and our Chase rep claimed he couldn’t access our status. By the time the bank finally filed our application, the floodgates had been open for three days. It didn’t take long for bad news to roll in. PPP funding had quickly run dry, reaching only 20 percent of applicants. We weren’t among them.

When details emerged over where the funds had ended up, we weren’t surprised. Loans were handed out to more than 250 publicly traded corporations, many of which had remained open or weren’t facing nearly the same level of hardship as independent small businesses. Class-action lawsuits followed against a number of banks — including Chase — claiming that they’d shuffled their applications to favor bigger companies whose loans would result in fatter processing fees. As Congress began battling over how to replenish the aid funding, we grew closer to the moment when North Light would be out of money.

Waiting idly by for the government to rescue us didn’t seem wise. Besides, even if we received a loan, that hardly guaranteed our survival. We knew that once society reopened, whatever that meant, we’d be operating at a diminished capacity, likely serving somewhat anxious customers — a reversal of our original business model, built on a lively room and an intimate connection between staff and guests. We’d be facing a similar set of challenges to those we had to overcome during our first year: How do we cut costs, make adjustments, and reach profitability before we go bust? It was clear we would need to reinvent ourselves, or we wouldn’t have a chance. So we considered starting with a takeout program, knowing that it would have to be an essential element of our future. Launching it would also allow us to reengage with our community, which was at least as valuable as the prospect of raising a bit of revenue.

Yet opening back up wasn’t an easy decision, because losing even a hundred bucks would speed us toward bankruptcy. We ran profit-and-loss models to try to account for every potential cost and had to guess at much of it, since there was no precedent for what we were facing. A major concern was public health. We had seen too many local businesses not take safety seriously. We’d have to be vocal about our measures: Initially, only two staff members would be allowed in our space once they’d passed temperature checks, and they’d always wear gloves and masks; everything would be regularly cleaned and disinfected; pickups would be arranged for zero contact.

Newly relaxed state regulations permitted us to sell prepared cocktails, wine, beer, and spirits to go. We added a food menu of snacks and pizza kits as well as a list of books selected by Patti Smith, Samin Nosrat, Michael Chabon, and George Saunders. Our intent was to offer what so many people seemed to want when seeking distraction from their daily anxieties — happy hour at home and something good to read.

There’s no tidy conclusion to this story. It may end with a popped cork and sparkling rosé on the house, or we may have already welcomed our final guest. Millions of other small-business owners are grappling with the same uncertainty. I keep thinking of  W. H. Auden’s “September 1, 1939,” a poem he wrote at the outset of World War II, when the planet was hurtling toward another calamity. The poem’s speaker sits in a bar in midtown Manhattan, contemplating whether he has the courage to side with hope in the face of darkness. It closes with this stanza:

Defenceless under the night

Our world in stupor lies;

Yet, dotted everywhere,

Ironic points of light

Flash out wherever the Just

Exchange their messages:

May I, composed like them

Of Eros and of dust,

Beleaguered by the same

Negation and despair,

Show an affirming flame.

When this pandemic abates, we’ll need to gather with friends and family but also with strangers. We’ll need communal spaces in which our affirming flames can converge. I picture a bar on a Friday night — the seats full, Prince on the turntable, a couple kissing in the doorway, a bartender reaching forward with fresh drinks, the kitchen calling out orders, a constellation of candles glowing across the room. Whether this is a future vision of North Light or of your favorite local haunt, meet me there.