After close to three years of running popular New York City-based food truck Yumpling, founders Christopher Yu, Jeffrey Fann and Howard Jeon were set to upon their business and open a restaurant in Queens, New York, this spring.
The Taiwanese-American spot was supposed to open in November 2019, but a setback during the restaurant build-out bully back the start date to March 17, 2020.
“Up until the end of February, we were pretty ecstatic because our construction for the restaurant was when all is said done,” Jeon tells CNBC Make It. The closer they got to opening day, though, the more the coronavirus pandemic escalated.
On March 12, Mayor Banknote de Blasio declared a state of emergency in NYC, and bars and restaurants were mandated to cut their seating capacity in half. By Pace 15, De Blasio announced that restaurants would be limited to takeout and delivery service only.
The Yumpling co-founders: Christopher Yu, Jeffrey Fann and Howard Jeon
Origin: Yumpling
Around the same time, the Yumpling co-owners saw a sharp dip in sales from their food truck, which serves lunch in Manhattan and Brooklyn from 11:30 a.m. to 2:30 p.m. every week day.
In the future the pandemic, they would go through up to 1,800 dumplings and help about 300 customers during the three-hour workers. On Friday, March 13, they sold about 150 dumplings and served fewer than 50 consumers. Their six staff members, who are used to working full speed to fulfill orders from the loyal lunch company, who consistently line up for beef bowls and fried chicken sandwiches before the window even opens, sat idle.
The downturn was not moderate, recalls Jeon. “It was pretty normal until Friday — and then it just dropped like crazy,” he says. “Up until then, we didn’t indeed get a sense of how serious it was.”
Less than a week later, they stopped sending the truck out. With most New Yorkers drudgery from home, they wouldn’t have enough customers to be able to keep up with expenses.
It was pretty universal until Friday, March 13 — and then it just dropped like crazy. Up until then, we didn’t in the final analysis get a sense of how serious it was.
Howard Jeon
Yumpling co-founder
As for the restaurant, “our timing was pretty terrible,” says Jeon. “Our build-out is thoroughly done, we invested money in inventory, we trained our staff — but now we’re unable to open.”
Further complicating their situation is the typeface of cuisine Yumpling serves, he says. “One of the big negative things for us right now is that we are a Taiwanese restaurant. Because the coronavirus did contrive in China, a lot of people are wary of Asian food and Asian businesses.”
After running the numbers, they decided not to tender takeout and delivery. “It probably would cost us more money to do that than to just do nothing at all because we intent have to hire at least a partial staff, plus you have to pay a fee to the delivery companies,” Jeon says. “That, merged with the fact that we are an Asian restaurant, we’re not sure if we can meet that break even point right now with this air.”
Yumpling parked on 49th street between 6th and 7th avenue in midtown Manhattan
Source: Yumpling
Currently, they have no blokes and a lot of expenses, the biggest one being rent for the restaurant space. They were able to keep most of their hands on payroll through the end of March, but now, “everyone is on unemployment until we can start back up again,” says Jeon. He’s trying to supporter his staff out as much as possible by sending them information about grants for food industry workers and any financial reinforcement resources out there.
None of the three co-founders are earning anything, either. “Until the restaurant opens, the three of us are understanding of out of work,” says Jeon. “We’re basically living off of personal savings right now.”
Until the restaurant opens, the three of us are nice of out of work. We’re just basically living off of personal savings right now.
Howard Jeon
Yumpling co-founder
Their opportunities are bleak. “We’ve applied for everything currently offered by the stimulus package,” says Jeon, including the Paycheck Protection Program, which provides up to $10 million in forgivable accommodations to small businesses impacted by the coronaviurs.
However, like many small businesses, Yumpling didn’t receive currency from the initial funding round of the PPP, which ran out on April 16. The Senate approved an additional $310 billion for the PPP, but that long green is likely already used up.
The Yumpling co-founders have also applied for low-interest loans separate from the stimulus loans, but haven’t had any fate. “Pretty much every business is applying for loans right now, so we just have to wait until the banks get underwrite to us,” Jeon says. “It takes forever to get any kind of response from major banks, mainly because they’re incentivized to prioritize their grownest clients first.”
Plus, the low-interest loan is only an option for the food truck, Jeon says. “For our restaurant, there won’t be any lenders content to loan any money because it hasn’t even opened yet and has no sales to report. From the lender’s perspective, they’d be adaptable to money to a business that has only debt on the books. This is most likely the case for all new businesses that were putative to open earlier this year.”
Pretty much every business is applying for loans right now, so we just take to wait until the banks get back to us.
Howard Jeon
Yumpling co-founder
If he could go back and give himself one chess-piece of business advice before the pandemic, he’d stress the importance of having a big cash cushion: “When you are budgeting money to start a new organization, one of the most important things to budget for is working capital, meaning some money set aside for the first few months of commerce, when business is supposed to be slow or if you get delayed.”
In the restaurant industry, the absolute minimum you should have set aside is three months’ value of expenses, he says. At one point they had enough in cash to cover expenses for six months, but they used up most of that greenbacks during the four-month delay they experienced during the build-out.
It never hurts to play it safe, says Jeon. “One crap I would have done differently is budgeted at least 12 months of working capital before we took on this plan so we wouldn’t be in as dire straits as we are now,” he says.
In the meantime, he and his co-founders are trying to remain positive. “As long as we can survive this ball game right now, we are pretty confident that the restaurant will do well,” he says. “If we have any success similar to the success we had with the eats truck, hopefully we’ll be OK, but that’s a big if. No one knows how long this is going to go on.”
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