After winter storm, Nashville restaurants face losses as rent is due

When Winter Storm Fern swept through middle Tennessee in late January, about 250,000 Nashville Electric Service customers were without power, forcing businesses to dump damaged inventory while absorbing days of lost revenue.

For restaurants, the disruption has exposed a familiar vulnerability: Margins are so thin that there’s little room for a sudden shock. When wages, utility bills and rent continue to pile up while restaurants go dark, even a brief closure can quickly turn into a crisis.

When a dangerous storm like Fern hits, diners’ habits change almost immediately, according to new data from the Feather Small Business Index.

Across the greater Nashville area, shoppers flocked to grocery stores ahead of the storm, leading to a 113% increase in food sales on Jan. 23. Once the ice freezes, they spring into action, with restaurant sales plummeting 88% on Jan. 25 compared to the same Sunday a year ago.

Disruptions of any kind, from shutdowns due to the COVID-19 pandemic to ice storms, can trigger cascading decisions that leave landlords choosing between rent and wages and even put long-standing restaurants at risk.

Industry experts say timing is especially important for independent, full-service restaurants, which typically operate on profit margins as low as 3% to 5% per month.

“This is why businesses that people love fail,” said Michael Shemtov, a co-owner of Butcher & Bee restaurants. The restaurant, under the umbrella of Honest to Goodness Hospitality Group, has been open on Nashville’s East Main Street for a decade.

Some businesses in Nashville were without power for up to 13 days. Combined with impassable roads and damage to already expensive perishable items, the storm caused significant financial stress during what is typically one of the slowest seasons of the year.

Middle Tennessee restaurants take big financial hit in ice storm

After power was restored, Butcher & Bee owners surveyed the damage and estimated $60,000 to $70,000 in lost revenue and $5,000 to $10,000 in discarded perishable items.

Shemtov and partner Jake Mogelson were trying to balance the cost of providing coolers, staff over the busy Valentine’s Day weekend and paying the $25,000 monthly rent for the Main Street space.

To buy some time to weather the storm, they asked their landlord, Nashville-based McGavock Pike Partners, for a one-time two-week rent extension for February, but were denied.

Amber Rico, a representative for the landlord, wrote in an email on February 3: “The landlord has confirmed that February rent is still due on the 1st and any late fees, interest or events of default will be assessed under the lease.”

“We need time,” Mogelson said. “A matter of days may determine whether people can return to work.”

The Tennessean reached out to McGavock Pike Partners for comment but did not receive a response. However, the next day, Butcher & Bee received an additional invoice for back rent related to the billing error, according to emails provided by the restaurant group.

Shemtov said the group ultimately used personal funds to pay rent to avoid penalties while absorbing storm-related losses.

Not every restaurant has this option.

Storm-related losses mount for Nashville restaurants

Tutti da Gio restaurant owner Giovanna Orsino announced on February 6 that the restaurant would close its Hermitage location, citing ongoing challenges exacerbated by the storm.

“After many long conversations and careful reflection, we have made the difficult decision to close the Hermitage Museum,” Orsino wrote on social media.

Orsino said the restaurant faces “ongoing challenges with staffing and ongoing support related to this specific location,” as well as broader economic pressures affecting small businesses.

“The recent winter storm ended up being the final push, making it clear that we could not continue to stay open at the Hermitage,” she said.

The impact of the storm was felt across the city.

At Bad Idea, nearly all the goods in the kitchen were missing, according to David Breeden, the former executive chef at The French Laundry, who took over the kitchen in January. All condiments, prepared foods, sauces, meats, etc. must be destroyed.

“You can’t take any chances,” Breeden said. “This is simply impossible.”

Breeden said restaurants typically operate on thin profit margins — 15 percent is considered lucky during good weather months — and every day of business counts. A week without service can be devastating.

“You can get a whole month out of a week,” he said. “It’s just a huge setback and it’s going to be really hard to get out of this.”

The chef said the impact of the storm extended to employees and customers, many of whom also had to deal with food at a time when groceries were expensive and deal with costly home repairs and cleanup after the storm.

“There’s a product element. There’s a people element. There’s a guest element,” he said. “People have been without power for 10 to 12 days. They can’t go out to eat.”

His biggest concern is for workers who have lost wages because their homes were without power.

“That’s 25 percent of their monthly income,” Breeden said. “How many people have this?”

As ice storm hits, restaurants help feed Nashville

In the process of damage control, restaurant and hotel workers across Nashville stepped in as infrastructure failed.

Prince’s Hot Chicken partners with World Central Kitchen and the American Red Cross to distribute free meals in multiple communities. Brown’s hosted a parking lot picnic. Edley’s Bar-B-Que is offering a free pork barbecue sandwich at its Middle Tennessee locations. Resting Taco Face offers free burritos.

On West End Avenue, Pizza Hut employees stayed at a nearby hotel to keep the restaurant open, serving hot food and walking to deliver pizza to neighbors who were without power.

Together, these efforts form a patchwork safety net, largely supported by the city’s food and hospitality communities.

James Beard-nominated Folk, Rolf & Daughters and Junior chef Philip Krajeck said the reaction reflects the nature of the industry.

More: East Nashville modern American restaurant named one of America’s best

“That’s what hospitality is,” Krajek said. “It’s about the same idea.”

Folk was hit by a power outage that knocked out service for nearly a week. Krajek’s staff worked hard to secure everything, transporting perishable items to Junior, which still had power.

But some losses are inevitable, forcing us to make tough decisions even after the immediate crisis passes.

“As a business owner, you have to ask yourself, ‘Do I want to file an insurance claim?'” Krajek said. “It’s the slowest time of the year, so business disruption is tricky. If the risk of interest rates going up or down is high, you try to mitigate and go with the least bad option.”

Krajek said the storm highlighted the vulnerability of small, independent restaurants, even when they are deeply embedded in communities.

“I’m concerned about the local restaurant industry. These are small independent restaurants that are owned and operated by people who came here or chose to open here, and they don’t have huge private equity backing,” he said.

He contrasted these restaurants with large conglomerates operating on a large scale and food contracts with large suppliers.

Krajek said smaller businesses “are a thread that supports our agricultural community and the people who farm in Tennessee, whether it’s vegetables, dairy, cheese or protein, all of those things make cooking and here unique, and to me, that’s the real draw.”

Contact senior dining reporter Mackensy Lunsford at mlunsford@tennessean.com.

This article originally appeared in The Nashville Tennessean: Nashville restaurants losing revenue, food after winter storm