| Dire prospects for Massachusetts’ restaurant industry are prompting calls for lawmakers to slash taxes and require that insurers cover business losses from the coronavirus epidemic.
Social distancing and the statewide ban on dining have devastated the industry, even after many restaurants have continued to offer pick-up and delivery service. Responding to a survey by the Central Square Business Improvement District in Cambridge, 60 percent of businesses said they won’t survive for another eight weeks under current conditions.
Some commercial landlords are voluntarily waiving a portion of rent for the near future, taking the chance that retaining tenants is the best long-term strategy.
“We’re in preservation mode right now, so not to give relief to tenants would be doubly foolish,” said Noam Ron, a partner at Boston-based developer Hudson Group. “Whether they use that to pay their expenses or whether it’s going straight to their hourly workers is something we have no control over, but I wanted them to know that we can help.”
The Massachusetts Restaurant Association advised its members to ask landlords to reduce rents for 60 days.
“Landlords should be our partners, and they should have flexibility if they want to get their tenants back and paying rent,” the Westborough-based trade group said in a member advisory.
The National Restaurant Association estimates that the coronavirus pandemic could cost up to seven million industry jobs in the next three months, as it asked Congress approve $145 billion in direct payments to restaurants and food service facilities.
No Pandemic Insurance
Restaurants leases typically do not excuse rent even for pandemics and other natural disasters, said Joshua Bowman, a partner at Sherin and Lodgen in Boston and chair of its hospitality practice group. But many of Bowman’s landlord clients are offering rent abatements, recognizing it’s in their best interests.
“Nobody knows how long the crisis is going to go on. But we will get through it and when things start to get back to normal, landlords are going to want good tenants to remain in place,” Bowman said.
Steve Adams
Compounding the financial bind for restaurants, business insurance policies typically do not cover losses caused by viral epidemics. The Insurance Services Office, a subsidiary of New Jersey-based Verisk Analytics that advises insurers, issued an advisory in 2006 excluding losses tied to viral outbreaks from coverage.
A bill filed March 16 in the New Jersey legislature would force business interruption insurers to cover such losses, and discussions have begun on Beacon Hill about similar legislation, Bowman said.
GraffitoSP, a Boston-based retail brokerage that represents some of the region’s largest commercial developers, has been calling for a waiver of state sales taxes and meals taxes to support small businesses.
On Wednesday, Gov. Charlie Baker delayed small businesses’ required payments of sales, meals and room occupancy taxes due in March, April and May until June 20.
