With the hurricane season officially continuing until Nov. 30, Gulf and East Coast restaurant operators face more than two months of potential stormy weather ahead.
Hurricane Gustav, which smashed into the Louisiana coast Sept. 1 and forced evacuations inland by nearly 2 million people, magnified concerns about preparations for foreseeable disasters, ongoing tangles with insurance providers and costly interruptions of business.
Many lessons were learned after the $41 billion in destruction caused by Hurricane Katrina in August 2005. In the wake of Gustav, whose property damage toll was pegged at $2 billion to $10 billion, operators in Louisiana found themselves better prepared than they had been three years ago.
They also were eager to share what they’d learned about disaster preparedness with peers who might yet find themselves girding for savage storms.
“We’re more knowledgeable, and therefore our staff and our guests are more knowledgeable about how to deal with these big hurricanes,” said JoAnn Clevenger, owner and general manager of Upperline, the 25-year-old New Orleans restaurant she was able to reopen four days after Gustav made landfall.
Melvin Rodrigue, chief operating officer of the historic Galatoire’s restaurant in the city’s French Quarter and branch location in Baton Rouge, La., said: “Before Gustav, we scaled back on purchases to make sure we didn’t have a lot of food in the cooler, and we made sure we could get it dumped should we not get power back”—mindful of rampant spoilage-related damage to refrigeration equipment after Katrina.
The French Quarter Galatoire’s didn’t lose power at all during Gustav, but nearly a week after the storm hit, power still hadn’t been restored inland in Baton Rouge, which suffered heavier damage to its electrical grid. As many as half of Louisiana’s residents were without power for almost a week.
After Katrina devastated much of New Orleans, Galatoire’s was unable to reopen until New Year’s Day 2006 because all refrigeration gear had to be replaced due to food rot during the monthlong evacuation.
“Make sure you don’t lose your equipment,” Rodrigue warned peers facing the remainder of the current hurricane season.
A day after Gustav struck, Galatoire’s crews in Baton Rouge removed all perishables and transported as much as possible to the New Orleans flagship, where business in the 130-seat dining room was bustling, though the 110-seat upstairs dining area was closed.
Meanwhile, the scope and cost of insurance against storm damage and business losses remain challenges.
Clay Dover, president of the 73-unit Raising Cane’s chain, based in Baton Rouge, said insurance rates have increased since Katrina.
Clevenger said her rates in New Orleans have nearly doubled.
Dickie Brennan, a member of the famed family of restaurateurs and owner of Bourbon House, Palace Café and Dickie Brennan’s Steakhouse in New Orleans, said: “Insurance rates are higher than ever, and you get less coverage. My fear is that it will get to a point where cost outweighs the benefit.”
However, Rodrigue, who renewed Galatoire’s property insurance recently, said he’d found that rates were starting to come down.
“The insurance market has softened up quite a bit,” he said. “I renewed the last week of August and saw about a 17- or 18-percent decrease in premiums. The capacity is opening up from what it was immediately post-Katrina.”
The market for business interruption insurance has changed too.
“It’s not difficult to get it,” Rodrigue said, “but insurers are putting some more reasonable caps on it. For the Bourbon Street location, the cap is about $2 million. That’s a big number, but the policies that I had before were much more generous. For example, for a power outage, in the past I could claim business interruption just if, say, a substation down the street from me blew up and I didn’t have power. Now there has to be physical damage to the property.”
Clevenger, too, purchased business interruption insurance, but found later that “it only went into effect if there was damage to my building.” Unable to collect anything for her Katrina-related sales losses three years ago, she laments that she hadn’t considered the limitations of the policy she bought.
“I didn’t know the questions to ask,” Clevenger said. “I don’t think a lot of small, independent restaurateurs have a lawyer on staff. We try by the seat of our pants to make sure we are covered, and I didn’t.”
As a silver lining, however, she found her policy did provide loss-of-product coverage, enabling her to make a financial recovery for spoiled foodstuffs. Clevenger doesn’t need to invoke that coverage in Gustav’s wake because electricity wasn’t cut off to Upperline this time and no goods were lost during the recent evacuation of New Orleans.
“Since Katrina, we keep an up-to-date list of cell phones, land lines and e-mail addresses,” Clevenger said. “We learned in Katrina that text messages can often go through when calls don’t.”
Raising Cane’s established a toll-free number and a website to communicate with employees, Dover said. As Gustav approached, 34 of the 58 company-owned restaurants closed, but many were reopened within two or three days.
“There was a storm team that tracked the storm, communicated its progression and met twice a day leading up to the storm,” Dover said. “Each restaurant then had specific closing-down emergency procedures” covering how to secure the buildings, tie down rooftop apparatuses and store products.
Brennan, needing to safeguard three restaurants in one city, also followed a carefully prepared disaster plan.
“The week before a storm we reduce purchasing, and then a day or so before, we consolidate the majority of our inventory to our one facility with generators,” he said. “This allows us to have the ingredients we need to open as soon as possible.”
At nearby Commander’s Palace, which didn’t have electricity for several days after Gustav, chef Tory McPhail and his staff quickly used up perishables to fix meals for police, firefighters, medical personnel and National Guard troops.
Clevenger learned several tips for extended evacuations after Katrina that she put to good use in protecting her refrigerators’ contents as Gustav approached.
“If you are going to leave, put your food into double-strength, extra-heavy garbage bags and tie them up tight,” she said. “It will be in good condition if you can return in three days,” and if the electricity goes out and the food spoils, disposal can be easily done by one person.
In addition, she advises operators to keep a clear plastic container in the freezer filled halfway with water. Just before any evacuation, turn it on its side. That way, after return, it will be apparent that “if it’s completely melted and the ice is horizontal not vertical like you left it, you know the power has been out long enough for it to melt and refreeze.”
In coping with any potential disaster, “the No. 1 thing is to have contact with staff so you know how to reach them and they know how to reach you,” Clevenger said, “and you have to have courage and hope.”