Restaurant owners, employees feeling pressure from unstable economy

Prolonged pandemic has put local business owners and workers in a tight spot as inflation drives prices up and workers demand more wages

VISALIA – Pedro Mendez comes from a family of generational Central Valley restaurant owners who’ve devoted their lives to creating places for others to eat, laugh, make memories and enjoy life. Mendez has owned Visalia’s Chapala Grill for 18 years, and his parents also own Azul in town.

The last two years of the pandemic have been hard on restaurant owners like the Mendez’s and businesses that deal directly with people. In 2020 the federal government helped businesses hit hard by the pandemic with the Paycheck Protection Program (PPP) loans. The state paid out billions in unemployment to Californians out of work. But those times have long since passed.

A 7% inflation rate in the United States—the highest in over four decades—combined with ongoing supply chain issues have driven overhead through the roof for businesses like Chapala Grill. Mendez said prices for their raw materials, beef, pork and produce are “ridiculously high right now,” and buy-order minimums that were $300 are now $550, increasing the risk of not having enough food, or too much—both options are an operating loss for restaurants.

Mendez said he’s been blessed to have held on to the same tried-and-true crew for years, with the exception of a few cooks and employees who have left since the pandemic began. He’s operating Chapala Grill short-staffed and having to charge more to loyal customers for less service.

“Even when we’ve increased our prices, when I’m making more money, we’re still losing money, because everything is so expensive,” Mendez said. “We have a sign on the front door that says, ‘We’re short staffed, your order might not come out as fast as normal, please bear with us.’ 99% of our customers are regulars, and they understand because everywhere they go, they see the same thing.”

Chapala Grill used to operate seven days a week; now Mendez said they are closed on Sundays and from 2-5 p.m. everyday just to catch up and give his employees a breather. At Azul they are down to one cook, and Mendez said his parents have had to close Mondays and Tuesdays for the last four or five months. His mother has been coming in to help out a few days a week, but Lupus and other health issues have sidelined her for months. Mendez said times are harder than ever now.

“Not even through the whole 2008 recession did I feel like it was this stressful,” Mendez told The Sun-Gazette. “My parents have been in the restaurant business for over 45 years, they started up in Watsonville. They’ve never dealt with anything like this whole employee shortage thing.”

Chapala Grill owner Pedro Mendez takes payment from a customer in Visalia. He has become a larger part of his restaurant’s workforce as employees have only trickled back following the end of unemployment insurance bonuses.Photo by Rigo Moran
Where are all the workers?

Nick Huerta owns downtown Visalia’s The Pickled Deli. Like Chapala Grill, he’s been fortunate enough to have a core group of employees who have held the line with him through the pandemic at the quick-service deli. Huerta attributed The Pickled Deli’s employee tenure to a positive workplace environment.

“I would say I have about 60% who’ve been with me since the start of the pandemic,” Huerta said. “I think that’s because I’m active, I’m there, I’m in the weeds with them. I think that’s what really makes a difference. Retention is good because we’re involved in our restaurants…how much is it worth to be in a good, friendly, caring environment that we have fun at?”

But positive work culture alone won’t hold the line forever. Good employees, like anyone else, can only run short-staffed for so long before burnout sets in, and business owners risk losing their best employees.

State Employment Development Department data shows the unemployment rate decreasing, but as CalMatters reported on Monday, Jan. 24, the most recent Goldman Sachs’ 10,000 Small Business Voices survey, 98% of small business owners in California say difficulty hiring is affecting their bottom line. Visalia is no exception. Both Huerta and Mendez have experienced the same phenomena when trying to refill their ranks: lots of calls from people interested in a job, but few, if any, show up to the interview.

“I get the feeling that some people are still hesitant to find employment,” Huerta said. “Unemployment is still kind of poisoning the well, unfortunately.”

At Chapala Grill, Mendez had over 30 interviews scheduled in the last few months. Only two showed up, and both are no longer working at the restaurant.

“When they call, they say they have a ton of experience, that they’ve worked in a ton of different restaurants before. The few that actually came, we tried them out, and they couldn’t even chop an onion,” Mendez said. “Not only that, but they’re asking for $18 an hour…we can’t even afford to pay $18 an hour right now.”

Mendez said a starting line cook at Chapala Grill makes $16 an hour. He understands that life under pandemic requires constant risk evaluation, and some are clearly saying the pay is not enough.

“If someone shows up to work and they start getting a headache, they’ve got to go home, because you don’t want to put the rest of the crew at risk,” Mendez said. “We just have to follow the guidelines and not take a bigger risk. We have a waiter here whose father has cancer, and he’s going through chemo. Definitely don’t want to put him at risk of bringing COVID home and passing it onto his dad. It’s tough.”

Chapala Grill has been short staffed for months and has struggled to entice new employees to come into the fold. As a result they have taken care to ask customers to bear with them through service.Photo by Rigoberto Moran

California has long been a millennial first-time homebuyers nightmare largely because of Proposition 13, which has incentivized older Californians to not sell their homes through significant property tax breaks, driving up the cost of housing in the golden state. As a result, many young adults in California live in multi-generational homes with their parents and even grandparents.

When the catastrophic nature of the pandemic was realized in March of 2020 and businesses, schools, universities shuttered their doors and daily life came to a grinding halt, many young Americans moved back in with their families. Pew Research Group data shows that in Sept. 2020, for the first time since the Great Depression, a majority of young adults aged 18 to 29— 52%—were living with their parents.

During this time, unemployment rates skyrocketed to levels also not seen since the Great Depression. Federal and state government unemployment bonuses began rolling out to those who’d lost their jobs, and many Californians were making more in unemployment than they ever did at their minimum-wage service industry jobs.

Unemployment bonuses tapered off by October 2021, and in Tulare County, young adults were asked to re-emerge into independent life in an extremely impacted housing market where more demand than supply has caused housing prices to soar. The inability for young adults to move out and gain some independence has left those looking for work having to constantly evaluate risk versus reward of potentially exposing their older loved ones to disease.

All the while, the virus rages on, in the first month of 2022 infecting more Americans than ever. In early January, the U.S. Census Bureau’s “household pulse” survey clocked about 8.8 million people who were out of work because they were sick or caring for someone with symptoms of COVID-19, the highest number by far since the survey began circulation in mid-2020 in the early days of the pandemic.

Inflation has driven the cost of living up, and workers have demanded more wages. Inflation has also raised the overhead for businesses to stay afloat, and payroll is generally the most expensive part of running a business. Economists are seeing prices rise across the globe, and where globalization was a stabilizer against inflation in the 2008 economic crisis, The Washington Post reports that it appears to be driving inflation up this time around. There doesn’t appear to be a quick fix. Business owners like Mendez and employees looking for acceptable work are left with more questions than answers.

“We’re doing the best we can with what we have, and that’s all we can do, really,” Mendez said.

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