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East Coast restaurants are dealing with the impact of Hurricane Sandy, the 1,000-mile-wide pre-Halloween storm that pushed into the densely populated Northeast on Monday with gale-force winds, sea surges, flooding from torrential rains and ensuing power outages.
Operators from Massachusetts to Virginia braced for the worst, with many closing or limiting hours as the so-called “Frankenstorm” spun leftward out of the Atlantic and onto land.
The hurricane was expected “to have a considerable impact on restaurant sales and earnings during calendar fourth quarter,” said Bob Derrington, managing director of Northcoast Research, in an analyst’s note Monday.
• Hurricane Irene gone, effects remain
• 3Q earnings expectations mixed for restaurants
• More restaurant industry operations news
“The hurricane has definitely slowed our grand opening,” said Anthony Simmons, manager of a new 9,500-square-foot, 279-seat Gordon Biersch Brewery Restaurant that opened Monday on the waterfront in Baltimore.
Speaking at lunchtime, Simmons said the new restaurant, which is located less than 30 feet from the piers, was serving mostly emergency workers and crews that were sandbagging in the area.
“It’s raining like crazy and getting colder,” Simmons said, adding that the restaurant planned to close before its planned grand-opening-day dinner daypart as potential guests stayed at home due to the storm.
Hurricane Sandy was expected to deal a blow to October sales figures for restaurant chains with significant numbers of units in the region, though the immediate impact is more on casual-dining than fast-food brands, experts said.
Stephen Anderson, senior restaurant analyst with Miller Tabak + Co. LLC, said in a note before the storm that “in terms of the Knapp-Track benchmark index, we think Sandy itself may turn a fractionally positive comp in October into a fractionally negative one but push November comps to the 1-percent level or better.”
Most affected would be Miller Tabak-covered brands like Dunkin Brands, Cheesecake Factory, Chipotle, Darden Restaurants and Panera Bread, Anderson said, adding, “We anticipate the intermediate-term effects of lost sales will be made up at least partially by the following weekend.”
Derrington of Northcoast Research said a hurricane’s “greatest impact” to profit and loss statements typically comes first from loss in same-store sales and then in higher costs, such as food spoilage, repairs and labor. The same-store sales impact is usually difficult to measure in such as situation due to the typical spike in sales for stores able to re-open once power is restored.
“In the case of most bigger hurricanes in Florida, stores away from the storm's path and along evacuation routes get a boost to same-store sales offset by a negative impact to stores within proximity to the storm's actual path,” Derrington explained. “However, following the storms initial impact and as recovery repairs begin, restaurant sales tend to rise given the influx of repair personnel and consumers unable/unwilling to cook during the recovery periods.”
Derrington added that casual-dining chains are typically hurt from hurricanes more than quick-service chains due to the considerable number of employees needed to operate them, who often don't show up for work — especially if public transportation is limited. New York City, for example, shut down the subways and bus service on Sunday, the night before Hurricane Sandy hit.
Quick-service restaurants can stay open with fewer employees, he added, and they benefit from hurried consumers with their drive-thru service.
Derrington said the impact of Hurricane Sandy will be seen mostly in fourth-quarter earnings reports, so the full effect won’t be known until companies report in January and February.
Among restaurant companies covered by Northcoast Research, Derrington said those with significant presence in the Northeast and Mid-Atlantic included Ruby Tuesday with about 44.3 percent of its restaurants in the region, Brinker International with about 32.6 percent, Panera Bread with about 32.6 percent and Cheesecake Factor with 28.2 percent.
Contact Ron Ruggless at [email protected]
Follow him on Twitter: @RonRuggless
Economists React: ‘Naive’ to Think of Sandy as Stimulus
Superstorm Sandy will influence the U.S. economy for at least the next few months. Gauging the disaster’s effect requires assessing economic activity that might be lost entirely against activity that is substituted with other products or services (like when entertainment spending falls but hardware-store sales rise).
Here’s how some economic forecasters look at Sandy’s effect on the nation’s economy. Estimates for the storm’s influence on fourth-quarter economic growth range from a noticeable negative (as much as a 0.6 percentage point hit to annualized growth in the quarter) to mostly negligible once rebuilding efforts are taken into account. All of the analysts cautioned that storm-damage estimates are still early.
--On a national scale, $30 billion to $50 billion in economic losses would represent about 0.2% to 0.3% of nominal GDP. Part of these losses will eventually be made up by reconstruction activity, but it would be naïve to put forward the view that a hurricane is in some sense a stimulus for the economy. There's no guarantee that reconstruction activity will be extra activity, on top of what would otherwise have occurred, rather than a substitute for that activity. … The effect on growth for the fourth quarter will not be catastrophic but might still be noticeable, especially in an economy with little momentum anyway. Suppose that the affected regions lose just 25% of their overall output for two days that is not recoverable later. That would knock about $25 billion annualized ($6 billion actual) off GDP, and could take as much as 0.6 percentage points off annualized fourth-quarter real GDP growth rate. --Gregory Daco and Nigel Gault, IHS Global Insight
--Whatever the direct losses [from storm damage], they will not be visible in the economic indicators, which focus on the flow of new production, sales, and employment, rather than the stock of existing wealth. (They are therefore a poor measure of the impact of a natural disaster on the nation's well-being.) Nevertheless, Sandy is likely to be visible in the monthly economic indicators. In the very short term--that is, the October 2012 data--the impact is likely to be negative, as workers are forced to stay home, capital equipment is either unusable or idled temporarily, and shops are closed. In the slightly longer term--that is, the remainder of 2012 and the first few months of 2013-- the impact is likely to be positive because workers make up for lost output, capital equipment is brought back online, consumers make purchases that did not take place during the disruptions, and the rebuilding of damaged property begins. The positive longer-term effects are typically large enough to push the level of activity above the path that would have materialized without the disaster. If so, the positive longer-term impact on the growth rate of activity will exceed the negative short-term impact. … We also do not expect a noticeable effect on the quarterly GDP numbers, as the negative impact on output in October and the positive impact on output in November/December are likely to broadly cancel out. --Jan Hatzius, Goldman Sachs
--Economic growth will likely be reduced by 0.1 to 0.3 percentage points in the fourth quarter. .. Property damages do not subtract from economic activity. The homes, buildings and automobiles damaged or destroyed by Hurricane Sandy were produced some time ago and were part of GDP from earlier periods. The cleanup, repair and reconstruction of these damaged properties do add to GDP, however, and will likely provide a modest boost to economic growth in 2013. We estimate reconstruction could add around 0.2 percentage points to growth in the first and second quarters of 2013. … Coming up with the total economic impact from Hurricane Sandy thus involves two estimates. The first is losses to personal and public property, which we believe will be around $40 billion. The second is the decrease in short-term economic activity, which will also likely to be reduced by around $30 billion in the fourth quarter, but economic activity will be bolstered by more than that during 2013, as personal and public property is repaired and replaced. --Mark Vitner, Wells Fargo
Check our interactive map to view the areas of New Jersey's Bayshore region that were hit hardest by the storm. The map is viewable on desktop computers and mobile devices.
A hundred miles to the southwest, on the other side of the state, Mike Coombs crouched in the palomino-gold meadow grass. It was not going to be a good day for farming. His back ached from the shift in temperature. A brisk breeze from the west had turned east and would be bringing moisture in off the Delaware Bay, and a wet “medda,” as Mike called it in the faintly Southern twang of this part of New Jersey, meant he wouldn’t be cutting hay anytime soon.
Three thousand acres of salt hay, and all but 500 were thrashed and drowned by last October’s storm. The surge from the Delaware Bay pushed mountains of water up the estuary’s tributaries, slashed levees, smashed through sand berms and flooded meadow and marsh it tore through homes and businesses and shifted so much sand it clogged rivers, creeks and streams.
“All we’re asking for is, could you please just come out to the Bayshore communities?” said Joe Derella, Freeholder Director for Cumberland County. “I don’t think that’s unreasonable. I think that’s fair because they’ve been devastated.”
Part of Cumberland County’s dilemma is that it has suffered one blow of hard luck after another. Nine New Jersey counties met the federal threshold of 1 percent tax assessment losses, which the governor had no part in determining. Cumberland came up just short, though Derella said four of the county’s Bayshore townships lost between 8 and 10 percent.
Where state aid is concerned, Gov. Christie says he’s had to make difficult choices, but that doesn’t mean he isn’t aware of the struggles of Cumberland County’s residents.
“I understand they suffered some damage there, and that they have needs going forward, but they suffered significantly less damage than those other nine counties,” Christie said last week in an interview with The Star-Ledger. “And so I understand that everybody wants to be attended to with that same level of attention — that’s not possible. And so I make these decisions based upon the level of devastation and the degree of need, and that’s where we spend most of our time. That being said, we’ve done things for Cumberland County. We’ve done significant things.”
But while $1.6 billion has been allocated so far to the nine hardest-hit counties, Cumberland has received less than $2 million from the state, according to Derella and a number of the Bayshore mayors. That number does not include FEMA money or National Flood Insurance payouts that have gone directly to individual residents and businesses.
The people of Down Jersey bowed under the weight of Sandy’s destruction, and when a vicious nor’easter hit two months later, their knees buckled. It wasn’t about being ignored — they were used to that, they were fine with that — it was about being ignored when so much was wrong. The storm shattered lives and livelihoods, sweeping away precious fishing grounds that sustain thousands and contribute millions to the state economy.
Commercial fisherman Bob Bateman standing outside his work shop behind his house in Bivalve. Bateman's property continues to flood during full moon high tides because of a breach in the bank of the Maurice River about a half mile away. Bateman had four feet of water in his home during Hurricane Sandy.
Spend time on the wide grass prairies as they cut salt hay or on the bay as they rake oysters. Drink a can or two of Bud with them, walk the drenched land with them and see for yourself how nothing much has changed since Sandy throttled the Bayshore. Be sure to stop along the beachfront, too. Homes that once huddled here against the storm now form ghost towns from which only occasionally a man or woman emerges, specterlike, to claim not all is lost. Do this and you will see and hear for yourself what it means to die not from a natural disaster, but from neglect, with no one to help, no one who has the governor’s ear and no experience asking for public money after a disaster.
Meghan Wren, the executive director of the nonprofit Bayshore Discovery Project, even resorted to swimming 13.1 miles across the Delaware Bay on Aug. 3 to raise $25,000 for her program as well as the Cumberland County Long Term Recovery Group and the Rising Tides Forum, which aims to prepare the area for future storms and sea-level rise.
With more than $30 million in property damage alone, the 300,000 residents of the Bayshore region are living in a limbo from which no one sees a way out. They are shy, self-sufficient and resilient and have been for 350 years they are used to living on little and asking for less. But in all the generations of all of Down Jersey, they have never been tested like this.
“We don’t have a boardwalk, we don’t have a casino, but we’re still important. We’re people with lives and homes and it’s really sad,” said Kathryn Weisenburg of Fortescue. “That song ‘Stronger than the Storm’? That song breaks our heart.”
'SERENGETI OF THE WEST'
It’s easy to see why wildlife biologists and conservationists refer to the Delaware Bayshore as the “Serengeti of the West.” The land stretches to the horizon, Kansas-flat, revealing a painter’s palette of green. Asparagus, iris and morning glory grow wild by the side of the road. And over islands of water in the middle of meadows, snowy egrets flutter awkwardly to earth like tetherless kites. So flat is the western coast of the state that many who live here have a view of both sunrise and sunset and the constellation Cassiopeia can be seen year-round.
Sixty-five miles of New Jersey’s Delaware Bay coastline is an estuary where freshwater streams and rivers mingle with the saltwater tides, and more than 1.6 million people live in its watershed. Annually, the Delaware Bay estuary provides $5.3 billion in ecosystem services, according to a 2011 report by the University of Delaware’s School of Public Policy & Administration, and those services directly account for 53,000 jobs.
But while the Bayshore gets attention for its rich natural resources, its residents feel overlooked.
“We’re an environmental Disneyland,” said Campbell, Downe Township’s mayor. “We’re here to take care of it, but with no money to do so.”
More than a third of Cumberland County residents and more than half the county’s children — twice the state average — live below the poverty line, according to last month’s report from the New Jersey Poverty Research Institute. But of the $780 million set aside by the state for three Stronger NJ programs, Cumberland County is eligible for none of it.
Steve Fleetwood, the president and CEO of Bivalve Packing Co., understands the value of the Atlantic coast to the state’s economy, but he’s tired, he said, of being a second-class citizen.
“I’ve lived here all my life. Nobody knows we’re here and nobody cares and that’s okay. It is what it is. But our channel needs dredging. The Bayshore is eroded. Nothing ever changes. It sure would be nice if someone recognized we were here.”
'CAN'T CATCH A BREAK'
Standing on the deck behind his mother’s house, Mike Coombs shakes his head and puts a pinch of chew under his lower lip.
Mike Coombs of Cedarville, one of the last salt hay farmers in New Jersey, baling hay on a Delaware Bay meadow. Salt water intrusion from failed dikes and strict environmental regulations may put Coombs out of business.
Mikey — that’s what his mother calls him — has no idea what “New Jersey” the governor was talking about when he cut that ribbon in Belmar back in May because nothing has “come back” for him, or the fishermen or the rest of the Bayshore.
“No weakfish, no flounder, there’s nothin’ in the bay and the salt hay is flooded,” he said. “It’s hard enough to make a dollar. I work out here in the heat with the greenhead flies. … I have hundreds of acres of meadow I pay taxes on. I don’t get a break at all.”
“Can’t catch a break” — you hear that all the time down here. If these people didn’t have hard luck, as the saying goes, they’d have no luck at all.
STORM'S LINGERING SPECTER
Just north of Mike’s meadows, in Greenwich (pronounced “Green-witch”), Martin “Reds” Morse wonders if his home will ever be completely dry again. The hurricane barreled through dozens of centuries-old levees along the Delaware Bay, including one just 200 yards from Reds’ place where a thick hose now snakes across his front lawn, pumping water from a basement that floods twice a day at high tide.
In Bivalve, Bob Bateman, a commercial crabber, and his girlfriend, Billie Jo Hill, sit at an old wooden workbench in the garage behind their home and spoon macaroni and cheese onto paper plates.
The walls of the old building are bare of Sheetrock, lined only with bloated rolls of insulation swollen from the frequent floodwaters. Sandy blew out a sand berm on a nearby river, the Maurice (pronounced “MOR-ris”), and the hurricane’s surge sent thousands of gallons of river water crashing through their house. Everything on the first floor was ruined.
Martin "Reds" Morse stands beside the mural he painted on the exterior of his garage depicting a local lighthouse, an oyster schooner and the 100-year-old shad boat "Viking" he keeps in his front yard in Greenwich, Cumberland County.
“We’re still struggling,” he said.
Just down the road from Bob’s place, next to the marina, is Surfside Products, which processes virtually all the surf and ocean quahog clams landed by New Jersey fishermen. In terms of total economic impact, Dave Bushek, director of Rutgers’ Haskin Shellfish Research Laboratory in Port Norris, estimates an annual contribution of $180 million. But the plant also sits just yards away from that sand berm breached during Sandy, and its parking lot floods now with every high tide.
Like Mike Coombs, Bob remains haunted by the hurricane. Just a few months ago, his nephew Josh was dredging for crabs and conch in the Delaware Bay with two other crewmen, all of them in their 20s, when their line suddenly snagged something on the bottom. The boat, the Linda Claire, capsized. Two of the men — boys, really — were saved, but not 23-year-old Josh. If you ask the older fishermen about it, they will shake their heads and tell you that like the hand of Neptune himself, a piece of Sandy debris surely took that boat down.
The people of Down Jersey once hunted whales off these shores, scooped up oysters and fished for sturgeon and blue crabs in the rivers and the bay. They diked the meadows for salt hay, grew vegetables and planted fruit orchards they hammered bog iron that bubbled up from the estuary into wrought iron and blew the finest Delaware Bay sand into delicate glass.
They married here and had children here — fishermen and farmers, glassblowers and gaffers, sail-makers and shipbuilders and hot-metal chargers — and when one industry went bust, they made do and found another. What they didn’t do was give up or move away, instead accepting a life in that ever-shifting liminal space between the tides and terra firma, understanding they belonged to neither. And if they went largely ignored by the rest of the state, well, that was fine with them.
In this secluded part of New Jersey, it’s common to see a family’s wash drying on clotheslines in the backyard, shirts and pants dancing jigs in the breeze. In the summer, hungry field workers follow the scent of charcoal fires and pork drippings to roadside barbecue pits.
And along Route 47, which winds, serpentine, through the meadows, vegetable, flower and fruit stands advertise specials on cockscomb, aster and marigold chives, pepper and sweet pea and all manner of tomatoes — Yellow Brandywine, Jetsetter, Bush Early Girl, Roma and Marconi Red. The stands display their homegrown wares in neat rows and overflowing baskets, but they are unattended. Instead, patrons pay by dropping money into honor boxes.
Ed "Shep" Sheppard and Martin "Reds" Morse walk along Mill Creek Dike in Greenwich, Cumberland County. Many locals fear the dike will be taken out by the next big storm.
But drive the less-traveled roads of the Bayshore and you’ll see abandoned homes and businesses, raw and vulnerable, stripped bare of their skin. They sag in the cold, swoon in the heat and list right or left as if too tired to stand up straight. On Oct. 29, 2012, when Sandy spun chaos up and down the state, Cumberland County could ill afford a disaster of such magnitude. In June, barely four months earlier, it took the brunt of a derecho, a brief but violent thunderstorm, and a year before Sandy, it was pummeled by Hurricane Irene. Each assault by nature ripped apart bulkheads, earthen dikes and sandy berms — the man-made structures that hold back the bay, rivers and creeks all along the western shore of the state. With little money available, few repairs were made and levees were left to erode even more.
“Since Sandy, just talks and no funding for fixing it,” Maurice River Township Mayor Andy Sarclette said. “The government requires a hundred meetings just to take out the trash.”
“I make policy based upon facts, and the facts are there’s significantly more damage in lots of other places in the state than there was in Cumberland,” Christie said.
The governor’s office said $3.9 million in grant-related hazard mitigation money went to Cumberland County, but those funds came from FEMA and though distributed by the state, Derella said, the amount also was predetermined by FEMA.
Direct aid from Trenton to Cumberland County amounted to a $200,000 community disaster loan to Downe Township from the Department of Community Affairs to dredge a sandbar from the middle of Fortescue Creek $756,000 for homeowner and rental assistance, which Cumberland County learned about last week and a $1 million piece of the $50 million pie the state determined would be Cumberland’s share of federal mitigation money.
Four years ago, in October 2009, Downe Township received a promise of $543,500 from the state to build a new bulkhead and resurface three major roads. Two hurricanes, a derecho and several nor’easters later, the township is still waiting.
Long before the storm, acres of heartache blanketed Down Jersey.
“Those beaches could have been protected with a jetty, but nobody cared,” said Bivalve’s Fleetwood. “We’re not only paying for everyone in New Jersey to enjoy open spaces, but no one’s worried about our own bay.”
Others believe the neglect is far from benign.
“There is no effort to breathe life back into the Bayshore,” said Mayor Campbell who blames, in part, the DEP and New Jersey’s tidewaters lease act, which allows the state to claim whatever property is below the mean high-water line, even when it shifts farther inland.
“It’s all about power and money,” he said. “They want to own the land. It’s like the Gestapo. They fly over our communities and make sure we haven’t built a pond for ducks in our backyard. They’ve regulated our land away from us without paying us for it. They have this mentality that humans are bad and everything should be natural.”
A mile of private bulkheads in Downe Township was washed away by the hurricane, according to Campbell, who has been unable to get the DEP to help pay for new ones.
The DEP said it has not received any request from the mayor for permits to build a new bulkhead.
“We’re aware of the issues and have been in touch,” said DEP spokesperson Larry Ragonese.
Ragonese said if the residential bulkhead is reconstructed in the same footprint, no permits are needed. Campbell said that wouldn’t make sense, since the only place to build a new bulkhead is farther back.
“Time is our enemy,” he said. “On the Atlantic side, they’re getting easements to put up bulkheads. I could get easements, but we don’t have the money. I will lose half the houses inland in Fortescue if we have a storm because we have no bulkhead. I asked someone from the DEP, ‘There’s nothing I can do to help my community?’ He said, ‘Nope.’âÂÂ”
“These are not simple matters,” Ragonese said. “Come to us with a plan. We’re willing to work with them and be as accommodating as we can.”
Nothing, however, comes easy here. In the months after Sandy, while the Atlantic coast slowly resumed its life and returned to normal — boardwalks and bulkheads rebuilt, amusement parks restored and businesses revitalized — the western coast of New Jersey languished:
• Today Cumberland County’s $200 million recreational and commercial fishing, crabbing and clamming industries remain devastated, and Delaware Bay fishermen say they’ve had the worst summer in decades.
• Of South Jersey's 70 centuries-old dikes, 28 are located in Cumberland County, and many that were critically eroded and degraded before Sandy were breached during the hurricane. Only a handful have been repaired.
• Ninety percent of the water just off the central part of the Atlantic coast has been surveyed for debris and 100 percent of the debris removed, according to the DEP, but on the western coast less than half the Delaware Bay has been surveyed and only a third of the debris removed, making one of New Jersey’s prime fishing grounds, in one of the shallowest bays in the United States, suddenly one of the most dangerous to navigate.
“They don’t believe anything is sustainable here anymore,” said James Watson, director of the Cumberland County Department of Economic Development about what he believes is the state’s reluctance to help. “We have 40 miles of shoreline in Cumberland County, and only 3 miles have economic development. Leave us those 3 miles so we can try and build it back.”
THE FORCE OF NATURE
Sandy peeled back so much sand and sod from the beaches and marshes you can read the biography of the Bayshore in the bits and pieces that ooze from its bluish mud: Depression glass, an old fishing reel, fragments of ceramic dinner plates and tea cups. Embedded in the sod banks that finger the fringe of the Bay are also chunks of glass called cullet, chipped from the bottoms of factory furnaces years ago and now glinting in the sunshine like pieces of frozen starlight.
The seasons here are measured by the shades and hues of the meadows and the days by the wind and the tides. Land and sea shift slowly, incrementally. Everything runs in cycles. If the eastern shore of New Jersey tells time by two seasons (winter and summer), the western shore tells time by the phases of the moon, the direction of the wind and the ebb and flow of water. Nothing stays still. Fast currents and slack tides — dead high or dead low — are bad for crabbing November brings flocks of snow geese to feast on the roots of salt hay and gnaw the meadows to nothing. Even the smallest of creatures, the coffee-bean snail, trudges laboriously up the stem of a blade of cordgrass twice a day to avoid being swept away by a high tide.
RISING TIDE OF MISERY
Before dawn yawns its way across the bay, Mike Coombs is up and ready for work. In boots and baseball cap, he jumps in his truck and rides out to one of the meadows where four generations of his family have cut and baled salt hay, prized as insulation and sold by nurseries and garden centers. On this day, just after a full-moon high tide, acres of salt hay, weakened by the wind and tides, have fallen into soft swirls like the damp curls of sleeping babies. At the edges of the meadow, water soaks the ground and pools in the tire tracks. The earth is still too wet and soft to support the weight of a tractor.
Disaster Recovery: 10 Lessons from Hurricane Sandy
One year ago, Hurricane Sandy struck, highlighting the crucial role employees and communications play in business continuity and the need to create short-, medium-, and long-range disaster recovery plans.
As Hurricane Sandy tore up the Atlantic coast in late October, 2012, 8.5 million homes and businesses lost power, according to the U.S. Energy Department. The protracted power outages, widespread damage, and lost business wrought by the hurricane—estimated to cost between $30 and $50 billion, according to IHS Global Insight—taught many companies unfortunate lessons about the importance of disaster recovery planning.
David Sarabacha, a principal with Deloitte & Touche LLP who specializes in resilience and recovery planning, says Hurricane Sandy reminded business leaders that thoughtful disaster preparation can pay dividends for a company’s ability to weather a storm. He identified 10 lessons from the recent hurricane that can help businesses better prepare for the next crisis.
Lesson 1: Take care of your employees. When disaster strikes, employees will rightfully put the safety of their families and homes first. “It’s impossible for employees to think about work when they don’t have heat or electricity, water is rising in their basements, their homes have been destroyed, or they need to account for loved ones,” says Sarabacha. “To the extent a company can either help employees prepare for a disaster or get back on their feet after one, the sooner it can return to business as usual.”
Sarabacha advises organizations to do more for employees than simply provide them with suggestions for personal preparedness and home safety. For example, he urges companies to offer alternate communications capabilities to decision-makers. He also recommends providing basic necessities such as water, food, shelter, and daycare to affected families, since private companies may be able to mobilize faster than relief organizations. And he counsels companies to help employees find or get priority service from contractors who can repair or rebuild their homes.
While acknowledging that these “above-and-beyond” efforts can grow costly, Sarabacha also argues that the added investment may be justified if business activities are truly time sensitive and hinge on critical personnel.
Lesson 2: Crisis management, business continuity, and disaster recovery plans should be detailed. Sarabacha notes that many businesses’ disaster recovery plans are fairly high level. “Executives assume they’ll figure out the details when an event takes place,” he says. “But if business leaders don’t have sufficient lines of communication available to share information, make decisions, and disseminate instructions, their ability to implement their plans will be impaired.”
Sarabacha says disaster recovery plans should establish clear chains of decision-making and empower employees in the field to take action. They shouldn’t have to wait for direction from a senior leader, whose communications may be out of commission.
“The sooner a company can take decisive actions in the event of a disaster, the faster they may be able to recover,” he says.
Lesson 3: Plan for different impacts, both in magnitude and duration. One mistake businesses make when drafting disaster recovery plans is assuming an event will only affect their organizations for 24 to 48 hours.
“Sandy brought to light the need for short-, medium-, and longer-term business continuity plans,” says Sarabacha. “Companies will likely need different disaster recovery strategies for events of different durations.”
For example, a two-day power outage may not require renting back-up office space, but a two-week power outage may. An investment bank may need to transfer work to another office so that it can process trades during a two-day or week-long outage, but transferring work for longer periods could result in burn-out for the employees taking on additional responsibilities, notes Sarabacha.
Lesson 4: Businesses can’t rely on employees’ ability to work from home. Many companies’ business continuity plans direct employees to telecommute if they can’t get into the office, according to Sarabacha. But, as Sandy illustrated, that approach quickly falls apart if employees lack power and can’t access the corporate network from their homes.
One potential solution for large companies is to transfer work to individuals at offices that haven’t been affected. To implement this strategy effectively, says Sarabacha, companies need to know which individuals possess the skills to take on various activities. Because their human resources will be constrained and overwhelmed, they’ll also have to prioritize what work gets done.
“For example, if a company can only serve 50 percent of its customers because it lacks capacity in its call centers, the company needs to decide how it will prioritize service,” says Sarabacha. “Companies should seek to avoid a situation in which they are devoting their scarce resources to their least critical activities.”
Another possible solution is to set up alternate work sites through real estate or insurance companies that rent “just in time office space” on an hourly, daily, or weekly basis. Companies need to plan how they’ll get critical employees to these sites, which may be located in neighboring states, in the event air traffic or mass transit systems are compromised, notes Sarabacha. They will also need to board employees and their families in hotels while employees are working out of state, and they’ll have to cover, track, and reimburse employees for incidentals required while working off-site.
Lesson 5: Employ alternate forms of communication. During Hurricane Sandy, the Federal Communications Commission reported that 25 percent of cell phone towers lost power, rendering many mobile phones useless. Sarabacha advises companies to use other communication mechanisms, including satellite phones. “Be sure you can get a sufficient uninterruptable power supply (UPS) battery, diesel or other fueled generator to keep the satellite phones charged,” he says.
Lesson 6: Two alternate data center recovery sites are ideal. After 9/11, many companies in the Northeast moved their back-up data centers to sites closer to home, in New Jersey, according to Sarabacha. They switched from distant backup data centers to closer ones because the terrorist attacks shut down air travel, and companies wanted to make sure their back-up locations were within a commutable distance, he adds.
Because Sandy took out companies’ primary data centers in New York and their back-up data centers in New Jersey, the hurricane demonstrated the need to ideally have two fallbacks, one nearby and one far away. Sarabacha notes that not every company can afford multiple data centers, and some companies may have to accept that it could take several days or a week to recover their data centers.
Lesson 7: The cloud isn’t a panacea. Cloud-based applications and storage have mitigated some of the impact of disasters on companies. Because those applications and data can still be stored in the provider’s data center, the applications may still be available to clients provided they have power, and the data is at least theoretically recoverable or protected.
“Too many organizations don’t fully understand what their cloud providers offer in terms of disaster recovery,” says Sarabacha. “They assume cloud data is available. They need to know for sure they can get their data and their apps, not to mention when they can access them.”
Lesson 8: Understand your vendors’ disaster recovery plans. The Thursday after Sandy, Sarabacha spoke with a client based in southern California whose business was scrambling to re-route products from its mid-Atlantic distribution center after a logistics provider in the region was shut down by the storm.
Sarabacha says his client’s conundrum illustrates the importance of having insight into vendor and service providers’ business continuity plans. His client needed to know when and how the logistics provider would restore service, given the pent-up demand the storm created.
“Even if an event like a hurricane has a limited impact on your organization, you need to realize how it might affect your third parties and their plans for a response given your reliance on them,” he says.
Lesson 9: Test your plan. Sarabacha says few companies extensively test their business continuity and disaster recovery plans. They might test one data center, but not another. They might test data recovery, but not their ability to actively restore dependent applications or to synchronize disparate systems.
“I rarely see an integrated test that reflects what many organizations were dealing with a few weeks ago,” he says. “Realistic exercises and war games must be developed and executed to simulate both the anticipated and unknown circumstances an organization may face.”
Lesson 10: Don’t make the same mistakes again. When companies recover insurance money for facilities lost or damaged by a natural disaster, they often repair or rebuild those facilities without applying lessons learned. Consequently, says Sarabacha, those companies could find themselves in the same position following the next storm.
In the aftermath of a disaster, Sarabacha advises clients to make strategic and tactical modifications to their operations and assets (e.g., buildings, equipment, inventory, technology, human resources, and vendors). For example, if a company kept one kind of product in each warehouse before a disaster, it might decide to diversify its product mix across warehouses. Making strategic and tactical changes might also mean eliminating single points of failure, upgrading equipment, hardening facilities, and using multiple vendors for different services.
Companies that lack core competencies in crisis and disaster risk management may consider outsourcing or co-sourcing arrangements with third parties that can help them plan, prepare, and respond.
“Often it takes a swift reminder, whether an extreme weather event such as Sandy or a significantly lingering economic crisis, to demonstrate that disaster preparations will continue to be a good investment in protecting an organization’s personnel, assets, and stock price.”
Restaurants are suing insurance companies over unpaid claims — and both sides say their survival is at stake
This month, the proprietors of more than 10 restaurants, bars and bakeries in Washington, including the Michelin-starred Gravitas and Pineapple and Pearls, sued their shared insurance company, joining a growing list of restaurateurs who are seeking relief from an industry they thought would protect them from any unpredictable event, including a pandemic of historic proportions.
The owners are pressing carriers to honor business-interruption policies during an outbreak that has wreaked so much financial havoc that it could bankrupt insurance companies and put at risk claims not related to covid-19. One side has few cash reserves and a trickle of revenue from takeout and delivery. The other side has an $800 billion surplus that, despite its size, could vanish in a matter of months, insurers say, if they start paying out these claims.
Both industries say they’re fighting for survival.
“I want to be there for my customers,” says Tiffany MacIsaac, pastry chef and owner of Buttercream Bakeshop, one of the plaintiffs in the D.C. complaint. “But if I could avoid doing that and just be home and know that I was safe, I mean it’s kind of a no-brainer because all of the rent and everything would be covered by the interruption insurance.”
After governments shut down dining rooms, restaurants large and small started taking their insurance cases to the courthouse: Boston-based Legal Sea Foods sued Strathmore Insurance Co. The owners of Musso and Frank, the century-old Los Angeles institution, sued Mitsui Sumitomo Insurance. A Houston restaurant company sued Scottsdale Insurance Co. Some complaints seek class-action status. Others have been filed by a single operator, such as Thomas Keller, the mastermind behind the three-star Michelin restaurants Per Se in New York and the French Laundry in California, who sued Hartford Fire Insurance Co.
These operators’ claims have usually been denied for one of two reasons: The policy specifically excluded viruses or the property had not suffered any physical damage, like after a flood, hurricane or other natural disaster. Attorneys for the restaurants don’t think the denials are as clear as the carriers say, especially with all-risk policies, those with limited coverage for viruses (like Keller’s) or those that cover “civil authority” actions such as when a city, county or state shuts down in-person dining.
All-risk policies, says Michael C. Davis, one of the attorneys representing the Washington restaurants, are “supposed to cover every single risk. It doesn’t matter whether the risk is listed. It doesn’t matter if it’s a risk no one ever heard of. It doesn’t matter if it’s Martians coming down from Mars. Unless it’s specifically excluded, you’ve got to cover it. That’s the way all-risk policies work, and that’s how they were marketed to restaurants.”
Crippled by coronavirus, restaurants want assistance from the same governments that shut them down
From New York to California, governments have told restaurant operators to shutdown their dining rooms to prevent to spread of the coronavirus. The orders have placed an untold number of workers on the unemployment line and cut off the primary source of revenue for restaurants. Now individuals, companies and nonprofit groups are trying to fill in the gaps and assist the crippled hospitality industry — by buying gift cards, setting up virtual tip jars, handing out groceries to the unemployed and other acts of charity.
But one high-profile member of the industry says it won’t be enough, not by a long shot.
“Charity can’t deal with something this big,” said Tom Colicchio, the chef, restaurateur, activist and “Top Chef” head judge. “This [demands] government intervention.” Without it, and possibly even with it, 75 percent or more of the restaurants in America could be history, he predicted.
Colicchio’s request for government intervention is being echoed around the country by other chefs and restaurateurs who have either closed establishments or reduced them to carryouts and/or delivery operations. Dozens of chefs — including such high-profile names as Stephanie Izard, J.J. Johnson, Preeti Mistry, Alon Shaya and Patrick O’Connell, the three-Michelin-starred chef behind the Inn at Little Washington — have signed a Change.org petition, asking government officials to “come to a swift plan for how you can meaningfully give your local restaurants the best chance for survival.”
And on Wednesday, Danny Meyer, the influential New York restaurateur, announced that because of the effects of the coronavirus shutdown, he is laying off 80 percent of his staff at Union Square Hospitality Group, approximately 2,000 people in both the restaurants and home office. Meyer said he has forfeited his salary “immediately and indefinitely” and that every executive in the company will take a “significant pay cut.” USHG will funnel the money from those pay cuts — plus revenue generated with gift cards — into an employee relief fund to help workers in the weeks ahead, as the pandemic continues to devastate the industry.
Meyer said in a statement that part of the reason for the layoffs is so employees can file for unemployment benefits. The state of New York is waiving the standard seven-day waiting period for workers to file.
Like Colicchio, Meyer said stop-gap measures and the kindness of strangers will not be enough.
“We cannot depend simply on the generosity of our community alone,” Meyer said in the statement. “If ever there were a time to call on the government to provide enlightened leadership, it is now. Our employees need that support to sustain their livelihoods while waiting for our restaurants to reopen. I am calling on our city, state, and federal leadership to step in with a full emergency relief package for restaurant and bar workers, and I pledge my immediate service — on behalf of, and along with other industry leaders — to help come up with economic solutions that work for all.”
When to Seek Help
People who have life-threatening exposure to a disaster, such as being in a building that shakes violently during an earthquake or being trapped in a flooded house during a hurricane, are more likely to develop PTSD, says James Shultz, PhD, director of the Center for Disaster and Extreme Event Preparedness at the University of Miami Miller School of Medicine.
Knowing when to get professional mental health help is key, Neria says. "If you can't sleep well, if you cannot concentrate, if you become angry and have emotional difficulty dealing with the daily routine, you must get help, and the sooner the better."
Asessing Hurricane Sandy’s Impact on GDP Growth
It's hard to assess the economic damage of a storm that hasn't yet passed. But some economists predicted Monday that, barring a catastrophic event, Hurricane Sandy would slow growth in the short term but have a negligible impact on, and possibly even boost, fourth-quarter growth.
"While natural disasters take a large initial toll on the economy, they usually generate some extra activity afterward," Moody's Analytics economist Ryan Sweet wrote on the firm's website Monday. "We expect any lost output this week from Hurricane Sandy will be made up in subsequent weeks, minimizing the effect on fourth quarter GDP."
Jason Schenker of Texas-based Prestige Economics said hurricanes like Sandy usually lead to a bump in economic growth, mainly through stronger retail sales. In a note to clients, he cited to "the last minute run to hardware stores and supermarkets, or after-the-storm replacement of furniture, windows, cars, and other damaged durable and non-durable goods." He said that, barring major damage to infrastructure in the mid-Atlantic region, Sandy will likely help retail sales in November.
RBC Capital Markets noted that the boost from rebuilding efforts won't be immediate. "While rebuilding efforts in aggregate can easily become a significant percentage of GDP, the impact is generally spread out over multiple quarters or even years, thereby diminishing the economic impact in the short-term," it wrote.
Pizza and hugs have a lot of similarities — both make you feel warm on the inside. Which author Dora J. Arod totally understands. So, if your mom is a fan of pizza (and who isn’t?) this quote may be perfect.
If your mom was responsible for cooking dinner, this quote from novelist and short story writer Laurie Colwin will make her feel special. There’s a chance she was thinking of her own mother when she cooked for you, as cooking (and recreating famous recipes) is an experience that’s all about family.
Chronicling The South Street Seaport's Post-Sandy Decline
The shopping mall on Pier 17 has been one of Manhattan's quintessential tourist traps for over 25 years. On a hot summer day, the tourists are like bugs circling flypaper, swarming around establishments that include Shoelaces You Never Tie, The Wonders Of Rice, and Christmas In New York. Inside this massive shed, souvenir license plates and steaming trays of cheap food are served up alongside stunning views of the lower Manhattan waterfront. When this troubled old mall is closed down at the end of this week, to be replaced with a shiny new mall designed by SHoP Architects, few New Yorkers will miss it.
But hidden on the second floor of this building is one of the neighborhood's last living connections to the South Street Seaport's past. Her name is Naima Rauam, and she has been documenting the history of the Seaport for over 45 years through her paintings and drawings. "I came here in 1966 as an arts student," said Rauam, who has maintained a studio in the mall since 2005. With a panoramic view of the Brooklyn Bridge, she is able to paint while looking out over a neighborhood that is currently stuck in a post-Sandy limbo. A neighborhood that has changed irrevocably in the past decade, and that will soon change again thanks to her landlord, The Howard Hughes Corporation.
Rauam and all of the tenants of Pier 17 have until September 9 to close down their businesses. Then the building will be shuttered in preparation for its demolition. "I am on the verge of leaving the neighborhood and am kind of in shock," said Rauam. "Unfortunately, because of all the storm damaged buildings, I can't find a space."
Many of the neighborhood businesses near Pier 17 were severely damaged by Hurricane Sandy and have not yet reopened. On the side streets of the Seaport, restaurants, theaters, and the Seaport Museum galleries have all been boarded up, abandoned, or vacated, while the Fulton Market Building, another mall owned by the Howard Hughes Corporation, has remained closed since the storm.
Given all that, some business owners in the area will be sad to see the Pier 17 mall closing. "They are shutting down the only traffic we have right now," said Amanda Zink, the owner of The Salty Paw, a dog grooming business which was destroyed by Hurricane Sandy. After the storm, Zink managed to secure a pop-up space inside an old bar at the Pier 17 mall, and has been working there since April. "It was a way to get up and running and to try to save my business."
After many months of hard work, Zink and her fellow small business owners near historic Front Street are planning to reopen with a block party celebration on October 19. "We are rebirthing the old Seaport," said Zink. "I'm thrilled to say everybody is coming back." For Naima Rauam, though, the future is less certain. "I have a storage space in Staten Island," she said. "I'll have to reinvent myself." The destruction of the mall, a building she witnessed being built, is yet another loss in a neighborhood that is increasingly unfamiliar. "To watch something I have been so intimately connected with come down. perhaps I'll have to sit shiva."
The Pier 17 mall was opened in 1985, and has had a difficult history. "For all of the high hopes attached to Pier 17 in 1985, it has always had a hard time generating a profit," according to the Times.
"Pier 17 has been a troubled complex for many years and has failed to live up to its potential," according to Crain's. Many of the current shops in the mall are aimed towards tourists.
After Hurricane Sandy, a number of businesses in the mall closed down, including restaurants like Harbour Lights and Finn's Fish Market Pub.
The entire mall will be closed on September 9th and emptied for a "complete renovation," according to the Howard Hughes Corporation. Their new mall is scheduled to open in 2015.
On the second floor of the mall, Naima Rauam exhibits her paintings and drawings, which document the recent history of the neighborhood.
Rauam's first studio in the neighborhood was located inside a smoked fish shop in the 1980's. For her last few days in her current space, she has a panoramic view of the East River waterfront.
The subject of many of Rauam's paintings is the Fulton Fish Market, which was closed down in 2005. "The city wanted to get rid of it for 90 years," Rauam said. "They didn't realize what an international attraction it was."
The fish market was relocated to the Bronx, leaving behind its old buildings. This newer section of the market was built in 1939 and is located next to the Pier 17 mall.
The building was denied Landmark status in August, according to the Epoch Times, leaving preservationists concerned that its owner, The Howard Hughes Corporation, "will tear the building down and replace it with a high-rise structure."
Across the street from the old fish market, the Fulton Market Building (right) remains empty, after being severely damaged by Hurricane Sandy. Its owner, The Howard Hughes Corporation, has has several lawsuits filed against it by tenants who "feel that the developer is manipulating the situation to get longtime businesses out and effectively charge higher rent to more premium tenants," according to Racked.
Around the corner, many of the businesses that are part of historic Front Street have remained closed since Hurricane Sandy. "Here we are almost a year later, and we just got our keys back," said Amanda Zink. "All of us got our keys on July 1."
Zink's business, The Salty Paw, is one of several empty storefronts on Peck Slip. "Before Sandy hit, we were the most bustling, up-and-coming neighborhood."
"In the end, I have to say some positive things came from this. We created a merchants association," said Zink. "We want to be different from the new Seaport. What Howard Hughes is doing is not us."
Zink's neighbor, The Paris Cafe, has also been closed since Sandy. "We've done a major restoration," said owner Peter O'Connell, standing in front of his newly restored 1873 wooden bar. "We've had to do the basement, the electric. We've redone everything here."
Though renovations continue on the historic older structures of the neighborhood, the future of the Seaport is far from certain. "The key thing that I hope will happen is that we will find a viable way forward," said Captain Jonathan Boulware, the Interim President of the South Street Seaport Museum. "For the museum and, in the bigger sense, for the neighborhood."
· Nathan Kensinger [official]
· All South Street Seaport coverage [Curbed]
· Camera Obscura archives [Curbed]