Question

In: Operations Management

can you please explain in one page of a business that is doing the right thing...

can you please explain in one page of a business that is doing the right thing during corona virus

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Expert Solution

On business which is doing that right thing during the coronavirus or the covid19 pandemic is a pizzeria called Federico's. The pizza shop is located in New Jersey and is owned and operated by Bryan Morin. Bryan took out a line of credit worth $50,000 in order to meet payroll for the new month or two, ensuring that none of his employees go without pay during the lockdown in New Jersey. When Federico's story went viral on the internet and was covered by several news outlets in the United States, the restaurant received a lot of praise admiration and also tremendous support in the form of donations from several well wishers all across the country. Instead of using the donations to even out the business's losses from the principal and the interest rate from the line of credit, Federico's owner Bryan choose to use the proceeds to deliver food free of cost to local hospitals and first responders.

In order to understand why this is a good example of a business that's doing the right thing is because unlike a large or middle enterprise Bryan didn't have access to a vast array of financing options like corporate debt or an equity raise via the private or public market. Federico's is a small family owned business with razor thin margins, high capital and operational expenditure. A recent survey revealed that the average mom and pop shop or the average small business only has about 1 - 2 months of cash reserves. Another factor that makes Federico's actions even more special is that the restaurant and the hospitality industry was the worst hit industry during this pandemic. The unemployment rate in the United States before the coronavirus pandemic was around 3.5 % towards the end of 2019. As of March 2020 , the estimated unemployment rate in the United States is estimated to be around 4.4%. The reason for this was that a record number of laid off or furloughed workers filed for unemployment benefits.

It's also important to understand that larger, well capitalized corporate restaurant chains have non hesitated in laying off or furloughing their employees. Union Square hospitality laid off over 80% of its workforce, which adds upto around 2000 employees during the coronavirus pandemic. This a large corporate restaurant chain with around 22 restaurant brands under its belt. The company raised close to $43 million million though private equity investors like Resy & Tender Greens. Despite of being such a large, well capitalized firm, Union Square Hospitality wasn't taking any chances, it choose to save its cash reserves and not take on additional debt to help its employees weather through this crisis.

This is why i think that Federico's is one of the best example of a business that's doing the right thing during the coronavirus pandemic.


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