Musso & Frank's Kept 84 Employees on Payroll as the Restaurant Took 'Six-Figure' Losses

Tami Abdollah

Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.

Musso & Frank's Kept 84 Employees on Payroll as the Restaurant Took 'Six-Figure' Losses

Musso & Frank's Grill, a restaurant known for its star-studded regulars, hearty comfort food and killer martinis, first opened its doors 100 years ago as the Spanish Flu was ravaging large portions of the world's populations. It survived Prohibition and kept its doors open through the Great Depression, World War II, and the challenges of the 2008 financial crisis and recession.

Then this novel coronavirus hit.

In March, it was forced to temporarily close its doors for the first time, ever. And now Musso & Frank's is being closely watched by the Los Angeles small-business community as a harbinger of what could happen to their own insurance claims, after dot.LA reported the restaurant filed a federal lawsuit against its insurer, alleging breach of contract and bad faith for not covering losses due to the COVID-19 pandemic.

A day after the iconic L.A. restaurant filed suit against Mitsui Sumitomo Insurance Company USA Inc., which is in New York, the Echeverrias spoke with dot.LA in a candid interview about their hopes and concerns for the famed Hollywood spot during and after the pandemic.

The father-and-son owners John and Mark Echeverria just want to keep the business running, to support their staff and survive.

"We will make it through this, we've been able to learn from our generations before this how to handle difficult situations (but) a case could be made that this is the most difficult situation the restaurant has had to go through," said Mark Echeverria, the chief financial and operating officer for the restaurant and fourth generation of the family-owned restaurant. He said it was devastating to walk through the restaurant and see everything packaged up and shut down.

The restaurant has vowed to keep its employees — "the family" — on payroll, but has also sustained massive financial losses, been denied its insurance claim, and is pondering how it will pivot to deal with an uncertain future for the sit-down restaurant industry as a whole.

Unlike many restaurants and businesses throughout the country that have had to furlough or layoff their staff, Musso's has kept its entire 84 person staff on payroll, without any cuts to salary since L.A. Mayor Eric Garcetti ordered restaurants and bars to not serve patrons on their premises a little over a month ago.

In doing so, the restaurant has sustained losses that "exceed six figures," said John Echeverria, who is Mark's father, Musso's president as well as an attorney. John Echeverria was reluctant to detail the exact amount of losses the restaurant has sustained because it is still being determined and also due to the pending lawsuit.

"We didn't want anybody to go on unemployment because I was afraid people were going to get lost (amid the surge of applicants), so we wanted to do everything we could to keep them on our payroll and really support themselves in this process," Mark Echeverria said. "The decision to do it was easy, the logistics of how to get it done was far more complicated."

Early last week, the restaurant started getting funding through the U.S. Small Business Administration's Paycheck Protection Program, Mark Echeverria said, which guarantees forgivable loans of up to $10 million to eligible businesses. Such loans can be forgiven if businesses maintain staffing and employee salary levels for eight weeks and use loan proceeds for only qualifying expenses.

The Echeverrias said they consider their staff to be family. John, the father, noted that some have worked at the restaurant longer than Mark has been alive.

For a restaurant that is built on an in-person, sit-down experience, the Echeverrias have been trying to figure out what comes next in an uncertain future. Musso's has never done takeout or delivery and when the closures came, they said they came so quickly that there was no way to put the infrastructure in place to do something like that and also maintain the experience of being at the restaurant.

"It's hard to say what the future is going to look like, the only certainty is it's gonna change," Mark Echeverria said. The restaurant is working on creating contingency plans, depending on what the county's health department requires for sit-down service restaurants. But whatever happens, a key lesson from generations past is that maintaining the core experience is crucial for survival.

"We're not changing anything conceptually, we're not changing the menu or anything like that," Mark Echeverria said. "We're going to really keep the consistency of the experience as intact as we can."

Despite the lengthy history of the restaurant that goes back to the era of the Spanish Flu, their company minutes only go back to 1928.

"We've got some pretty good documentation on how our generations before us handled some really difficult times," Mark Echeverria said. They've tried to stay true to those lessons, which include taking care of the family, keeping the business going and staying consistent.

The Echeverrias say they're disappointed by their insurance company, to which they have paid premiums in excess of $46,000 annually for the last two years, yet denied their claim.

"It would be nice if the insurance company would honor the business operation," John Echeverria said. "We had no exposure to the coronavirus, none was found in the restaurant. Not one employee was stricken by the infection, no customer complained about an infection, so it's really not that the business suffered directly from the coronavirus. The predominant cause of why we had to close was the mayor's order. And whether he ordered it because of coronavirus or ordered it because there were rabid coyotes roaming the city, the fact is that the actual cause for the closure is…the government order."

John Echeverria said he's been in contact with other entities who have also been impacted by denials of their insurance claims for business interruption insurance as a result of the pandemic, but he declined to identify them citing confidentiality. A spokesperson for Mitsui Sumitomo said Wednesday that the company does not comment on pending litigation.

One impact of not receiving business interruption insurance, Mark Echeverria said, is that fixed costs aren't covered, which impacts partners and vendors the restaurant has dealings with.

"This does really snowball down, and it's not just the business owners…it's really the team, vendors, partners," Ecehverria said. "There's a lot at stake here."


Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me, or ask for my Signal.

Subscribe to our newsletter to catch every headline.


New E-Scooter Company TukTuk Hits LA Streets

Maylin Tu
Maylin Tu is a freelance writer who lives in L.A. She writes about scooters, bikes and micro-mobility. Find her hovering by the cheese at your next local tech mixer.
Yahya Dabbagh
Image by Maylin Tu

Yahya Dabbagh isn’t your typical micromobility startup CEO.

For one, he takes a personal approach to customer service. When he feels a rider is trying to game the system by reporting a scooter broken, in order to earn a free unlock (valued at $1), Dabbagh sometimes will call them up.

Read moreShow less

Robot Bartenders, Space Construction and a Weight Loss App: Highlights From Techstars’ LA Demo Day

Samson Amore

Samson Amore is a reporter for dot.LA. He holds a degree in journalism from Emerson College and previously covered technology and entertainment for TheWrap and reported on the SoCal startup scene for the Los Angeles Business Journal. Send tips or pitches to and find him on Twitter @Samsonamore.

Robot Bartenders, Space Construction and a Weight Loss App: Highlights From Techstars’ LA Demo Day
Andria Moore

On Wednesday, Techstars’ fall 2022 class gathered in Downtown Los Angeles to pitch their products to potential investors in hopes of securing their next big funding round. dot.LA co-sponsored the demo day presentation alongside Venice-based space news website Payload.

Read moreShow less

Derek Jeter’s Sports Trading Card Company Brings in $10M

Kristin Snyder

Kristin Snyder is dot.LA's 2022/23 Editorial Fellow. She previously interned with Tiger Oak Media and led the arts section for UCLA's Daily Bruin.

sports trading cards
Arena Club /Andria Moore

Sports trading card platform Arena Club has raised $10 million in Series A funding.

Co-founded by CEO Brian Lee and Hall of Fame Yankees player Derek Jeter, Arena Club launched its digital showroom in September. Through the platform, sports fans can buy, sell, trade and display their card collections. Using computer vision and machine learning, Arena Club allows fans to grade and authenticate their cards, which can be stored in the company’s vault or delivered in protective “slabs.” Arena Club intends to use the new cash to expand these functions and scale its operations.

The new funding brings Arena Club’s total amount raised to $20 million. M13,, Lightspeed Ventures, Elysian Park Ventures and BAM Ventures contributed to the round.

“Our team is thankful for the group of investors—led by M13, who see the bright future of the trading card hobby and our platform,” Lee said in a statement. “I have long admired M13 and the value they bring to early-stage startups.”

M13’s co-founder Courtney Reum, who formed the early-stage consumer technology venture firm in 2016 alongside his brother Carter Reum, will join Arena Club’s board. Reum has been eyeing the trading card space since 2020 when he began investing in what was once just a childhood hobby.

The sports trading card market surged in 2020 as fans turned to the hobby after the pandemic brought live events to a standstill. Since then, prices have come down, though demand remains high. And investors are still betting on trading card companies, with companies like Collectors bringing in $100 million earlier this year. Fanatics, which sells athletic collectibles and trading cards, reached a $31 billion valuation after raising $700 million earlier this week. On the blockchain, Tom Brady’s NFT company Autograph lets athletes sell digital collectibles directly to fans.

As for Arena Club, the company is looking to cement itself as a digital card show.

“Providing users with a digital card show allows us to use our first-class technology to give collectors from all over the world the luxury of being able to get the full trading card show experience at their fingertips,” Jeter said in a statement.