‘Changed forever’

KILAUEA — Tom and Katie Pickett had a plan.

They’d owned and operated Kilauea Bakery &Pizza for 29 years, but were tired of the daily grind, sustaining a staff of 32 and the challenges that go with it.

The bakery was open seven days a week, 6 a.m. to 9 p.m. When the first staff member — a baker — to arrive each day didn’t show up at 4 a.m., Tom Pickett had to get out of bed and go work the ovens.

Their two daughters are both in their 30s and live on the mainland. One is a marine biologist in North Carolina, the other a physical therapy assistant in Santa Cruz, California.

The Picketts had a dream. They’d sell the bakery but remain based on Kaua‘i. But they’d also buy a motor home on the mainland and spend time traveling the country. “We were pretty ready to retire. I wanted to see what else there is in life,” Tom Pickett said.

So, earlier this year, he put the bakery up for sale. A buyer — with credible restaurant experience — materialized quickly. The transaction went into escrow. But then COVID-19 hit. The escrow died.

The bakery tried to make a go of it. Handwashing sinks were briefly installed outside, but the necessary order from Mayor Derek Kawakami that shut down restaurants except those exclusively offering takeout service required full, indefinite closure.

The Picketts realized their workers also needed help. Tom Pickett said a few days ago that Hawai‘i’s unemployment insurance system is so unreliable that, while all 32 staff members applied for benefits, only three have actually gotten money.

So, several weeks ago, the Picketts started to plan for the bakery’s reopening, in a form that will seem at once familiar and alien, on Monday, May 4. Hours will be 6 a.m. to 7 p.m.

Not just the bakery, but the entire restaurant industry on Kaua‘i will, the Picketts and other restaurant owners predicted, be radically different, and probably much smaller than before.

The intimacy of dining out may be replaced by smaller operations that end up substituting smartphone apps for servers and menus. The apps may show the food and drink offerings, take the orders and generate the checks, which will be paid through the same phones.

If restaurants are required to space their tables farther apart to comply with social-distancing requirements, radical steps will be required to bring down labor costs — a third of the operating budget for many restaurants, according to one owner.

The Picketts are hoping to avoid making the bakery unrecognizable. But a small indoor dining area is closed. Customers will not longer actually enter the building. The handwashing sinks will return. The tables and chairs under the awning outside, which made the bakery perhaps Kilauea’s best-known community meeting place, are gone, replaced by potted plants.

Menu boards will list a reduced number of offerings, though the variety of coffee drinks, teas, pastries, salads, sandwiches, soups, stews and pizza for which the bakery is known will remain.

Initially, about five employees will be brought back to work, but Tom Pickett said he hopes that if the reopening strategy succeeds, the restaurant could get back to operating on two shifts again and reemploy more workers. He applied for and received, he said, one of the federal government’s much-discussed Payroll Protection Plan loans. But when he read the terms and conditions, he decided the bakery probably couldn’t fully comply, and sent the money back.

Most uncertain in all of this are the Picketts’ retirement plans. “Sometimes you just gotta eat the dish you’re served,” he said.

The Picketts said they will tap their savings until revenues recover, though they realize that may not happen. They said they think they can stay afloat for at least two months — maybe longer. “We’re entering a period that is the inverse of the economies of scale,” Tom Pickett said. “Things will not go so well for many restaurants.”

“How will it go? I’m not sure,” Katie Pickett said. She said the April, 2018, flood events in Hanalei and environs were a blow to the bakery’s fortunes, and resulted in the restaurant slipping out of profitability. The situation had stabilized and the financial picture was approaching its pre-flood norm when COVID-19 hit.

“We can hold on, but we’re never going to be able to employ all of the people we had before,” she said.

The Picketts said it was difficult emotionally to realize how close they had gotten to living their retirement dream. “I guess it depends on which day you ask me,” Katie Pickett said. “After a few days and weeks went by” in the wake of the sale transaction falling out of escrow, she said, “I kept thinking we were so close. So close.”

Kong Lung Market Center, where the bakery is located, is also the home to three other eateries: Sushi Girl, a food trailer parked in the courtyard and owned and operated by Erin Descoteaux; the Bistro, a long established sit-down restaurant; and Palate, a wine bar. The Bistro and Palate are owned by Matt Ernsdorf.

After COVID-19 hit, all of them ended up in urgent meetings with Patti Ewing, their landlord. Ewing, all three restaurant owners said, responded sympathetically. Kong Lung also houses several retail establishments.

Ewing said she was initially inclined to simply defer April rent payments in the belief that the pandemic would pass soon enough to allow tenants to resume operation in June. But a few days ago, Ewing said she quickly realized that assumption was far too optimistic. “I honestly haven’t decided if I’m going to defer the May rents again, or just forgive them.

“The food business will be changed forever. I have 10 tenants and I’m just trying to work with them. The real elephant in the room is that 70% of our sales come from visitors. Under the best-case scenario, that’s not going to come back any time soon. I see this as a time to step back and let the dust settle.”

Sushi Girl has stayed open continuously. Descoteaux said she’s had to lay off her employees. Today, she operates Sushi Girl on her own, but takes no salary, and hopes there will be enough of a recovery to allow staffing to ramp back up. She applied for, but did not receive, a federal small-business loan.

Sushi Girl enjoys a strong local customer base, which has so far resulted in its survival, Descoteaux said. “I feel like the community still needs to eat,” she said. “I don’t have much overhead. I work very closely with local fishermen and produce farmers. I’m paying my bills.” Ewing, Descoteaux said, has been “very reasonable.”

Ernsdorf followed what has become a common strategy among Kaua‘i restaurants. He shut down the Bistro and closed Palate for seating inside, but switched to a limited carry-out menu. He instituted online ordering and customers now pick up their food at a wine and liquor store next door, which Ernsdorf also owns.

He said he applied for and got a PPP loan for Palate, but not the Bistro, because he sees no imminent reopening. He said one of his wholesale suppliers believes the mortality rate for small restaurants post-COVID may hit 75%.

He said the restaurant industry that survives will be vastly different. Returning customers, he said, will likely be unwilling to touch things like menus, so switching to smartphone apps will be required. The apps, he said, will enable reduction in staffing levels by eliminating host/hostess and server positions. Containers of hand sanitizer will be on every table.

“The safety of people is going to be crucial,” he said. “The order goes electronically to the kitchen, then someone wearing a mask brings out the food.” He said he is convinced customers will eventually prefer this system. “You’ll be able to order another glass of wine without waving for a server to come over,” he said. “Dessert sales will go up. Customer satisfaction will go up.”

The staff that remains, he predicted, will get tipped more, because in online ordering systems most customers accept a 20% tip option. “The rules have changed,” he said. Some eateries, he said, may switch to single-use service items like plates, knives and forks. He said he fears government health regulators may start rating restaurants based on their level of COVID-19 infection risk. “If restaurants can’t make people feel safe, they’re not gonna survive,” he said.

He said his takeout business featuring food from the Palate menu, has held its own, bringing in $500 to $1,000 per night.

Down the road in Hanalei, Joe Paskal, owner of Postcards, a specialty fish house, also switched to takeout service with a limited menu. He cut his prices by 50%.

He said he retained his chef and manager, but laid off the rest of the staff. “Some days, I have no people. Last night, five came in,” he said. He applied for and received a PPP loan, he said. Paskal, who opened Postcards after decades running a successful studio lighting business and electronics store in Los Angeles, says he can sustain operations for “three months, maybe four.”

After his years of unrelated business success, Paskal said, “I feel you have to give back a little.”

Revenues have been underwhelming, he said, hitting as low as zero some nights, and $120 on other days. The night before he spoke with The Garden Island, he said, Postcards enjoyed its highest revenue during the crisis.

$400.

“It’s not all about money,” he said.

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Allan Parachini is a Kilauea resident, furniture-maker, journalist and retired public relations executive who writes periodically for The Garden Island.