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Montana Restaurants Struggle Financially Through Stay At Home Order

Interior of the Red Lodge Brewing Company taproom.
Megan Kalb-Koenigsfeld
Red Lodge Ales Brewing Company
The tap room at Red Lodge Ales Brewing Company sits empty on Apr. 8, 2020.

While restaurants, tap rooms and bars in Montana are allowed to provide take out and delivery service during the governor’s stay-at-home order, many business owners say they’re making a fraction of their normal sales.

Lauren Reich and her husband opened Little Star Diner in Bozeman less than three years ago. She says until recently, the farm to table restaurant actively discouraged take out orders since certain dishes don’t taste the same after being heated up in a microwave.

That changed when the Gallatin City County Public Health Department on Mar. 16 ordered restaurants to close to the public with the exception of take out, delivery and drive-through service.

"I feel like we basically started a new business,” Reich says.

Reich says she and her husband transitioned to selling take home meals and launched a meal subscription service. People pay upfront to receive one or two meals each week for a month.

“Part of the reason why we wanted to do the pay ahead subscription is so that we kind of had that knowledge of like, ‘OK, this is how much is coming,’ and gave us a little more predictability in our decision making,” Reich says

Reich says between 60 and 70 families have subscribed. Still, sales are a fraction of what they used to be.

“Restaurant margins are so low anyway that it’s, you know, if you take out two to three months out of your year of revenue, that’s like a pretty big deal. I think there’s a chance that quite a few restaurants will not survive this, and we could be one of them. I mean, it’s hard to tell because we don’t know how long it’s going to last,” Reich says.

Reich says she and her husband paid off their debt from opening Little Star just a few weeks ago, and the idea of taking out another loan isn’t very appealing. But she says they’re looking into a low interest, forgivable loan option through the $2 trillion federal relief package.

Under the Payment Protection Program, businesses with fewer than 500 employees can apply for low-interest loans through banks approved by the Small Business Administration. The SBA may forgive the loans under certain conditions like keeping workers and wages intact. Only funds used for payroll, rent, utilities and mortgage interest over an eight-week period can be forgiven.

Other options for small businesses include the Emergency Economic Injury Grant and the Small Business Debt Relief Program.

Montana had over 2,800 eating and drinking places in 2018 that generated more than $2 billion in sales, according to national and state level restaurant associations.

Sam Hoffman, president of Red Lodge Ales Brewing Company and Last Chance Cider Mill, says he has applied for a loan and is in the process of another. He says he’s not sure when he’ll hear if they’ve been approved by the Small Business Administration.

“It’s one thing to say, ‘We’re going to give $350 billion to small businesses, and it’s another thing to administer. My understanding is there have been both in Montana and around the country a flood of applications for these loans,” Hoffman says.

On Thursday morning after YPR aired this story, Hoffman said he recieved notification that his SBA Payroll Protection Program application was approved. He said via email the loan would help his business survive a few months. 

KTVH in Helena reports Montana banks processed a thousand loan applications the first day they were available and that as of Tuesday, the amount of loan requests nationwide had already hit $800 billion.

Hoffman says his business is still able to sell cans of beer and cider to grocery stores, but they’re losing about 40 percent of their retail sales.

He says sales from growlers and take out orders are less than 10 percent of what they used to be when the pub and tap room were open.

“One of my hopes is that our elected officials are not telling themselves that everything is fine because bars and restaurants and breweries can sell growlers to go. It is not fine. Yeah, I mean I understand why we’re doing this, but at some point, if we can’t open, well, we’re not going to be here,” Hoffman says.

Hoffman says Red Lodge Ales has half a dozen rehearsal dinners and receptions scheduled June through August and one has cancelled already.

Both Hoffman and Lauren Reich in Bozeman say they’re worried what will happen if they can’t open for summer, which is their busiest season, and concerned that even if they do open by then, the employees they laid off during the closure may find other work in the meantime.

Over in Missoula, Katie Foster, the manager for Bridge Pizza, says closing dine-in services in Missoula and Helena locations resulted in a huge financial hit, but the company recently broke its record for deliveries and take-out.

“By a lot,” Foster says.

She says Bridge Pizza was already set up to deliver food and prepare takeout orders before the pandemic.

“I think that would be really difficult to have to set something like that up. We already have a staff of drivers, and we already have all the insurance and delivery to go items and boxes and that sort of stuff,” Foster says.

She says they just had to make some adjustments for contact-free deliveries and transactions.

Foster says Bridge Pizza has also tried not to reduce hours for employees by adjusting duties and schedules, and increased the number of delivery drivers.

Bridge Pizza also started offering products like cheese, meat and lentils from local farms on its website. Foster says the profits go directly to the producers.

“So that has been really nice because people will order, like, two cartons of eggs, a gallon of milk and then two pepperoni pizzas, and it’s kind of nice way to make sure you have groceries for tomorrow and dinner for tonight,” Foster says.

Foster says she’s grateful Bridge Pizza has the infrastructure to do deliveries, but she hopes life will return to normal as soon as it’s safe to do so.