
Get in the KNOW
on LA Startups & Tech
XMusso & Frank's Kept 84 Employees on Payroll as the Restaurant Took 'Six-Figure' Losses
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 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.
- Musso and Frank's Lost Hundreds of Thousands to Keep Staff - dot.LA ›
- paycheck-protection-program - dot.LA ›
- Musso & Frank's Sues Insurance For Not Covering Covid Costs - dot ... ›
- Musso & Frank's Reopens, with Changes - dot.LA ›
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.
Subscribe to our newsletter to catch every headline.
E-Scooter Companies Are Quietly Changing Their Low-Income Programs in LA
When Lime launched in Los Angeles in 2018, the company offered five free rides per day to low-income riders, so long as they were under 30 minutes each.
But in early May, that changed. Rides under 30 minutes now cost low-income Angelenos a flat rate of $1.25. As for the five free rides per day, that program ended December 2021 and was replaced by a rate of $0.50 fee to unlock e-scooters, plus $0.07 per minute (and tax).
Lime isn’t alone. Lyft and Spin have changed the terms of their city-mandated low-income programs. Community advocates say they were left largely unaware.
A Lime spokesperson said that with its updated rate, low-income riders will still get an average discount of almost 90% off its service. He added that the startup's rates in Los Angeles are on average 50% less expensive than in most cities
“We would also like to note that L.A. riders have already saved an estimated $1 million via our Lime Access program, and we expect that figure to keep growing steadily with the new pricing in place,” said the spokesperson, who added that 2,800 low-income Angelenos have taken around 250,000 trips since the program rolled out.
Spin once provided low-income Angelenos with unlimited, free 30-minute rides. Now the company is capping the free rides to five per day. Spin did not immediately return a request for comment.
Similarly, Lyft riders were once able to get a monthly pass for $5 and pay $0.05 per minute per ride. Instead, they’ll now need to pay $0.50 to unlock the e-scooter and an additional $0.15 per minute.
The costs could add up for a demographic that is more likely than the average rider, according to data from rival micromobility startup Wheels, to use e-scooters to get to and from work.
“Lyft is now offering our Community Pass without a monthly payment to make it even easier for more riders to save,” James Boshers, Lyft associate general manager for Southern California, said in an email. Several hundred riders use the program in L.A., according to a spokesperson.
The changes were rolled out with little fanfare, but that might be a moot point. Few of the local transportation advocates dot.LA reached out to were even aware the equity programs existed.
“I mean, I'm not surprised. I think people love giving discounts as a way of showing equity, but there's got to be more,” said Oscar Zarate, assistant director of organizing for SAJE.
The city of Los Angeles doesn’t promote micromobility equity programs to potential riders; that responsibility falls wholly on companies.
“Revenue generated through the micro-mobility program is dedicated solely to enforcing the conditions of the permit,” LADOT spokesperson Colin Sweeney said by email, “which includes ensuring companies partner with community-based organizations and market their services to low-income residents among other critical safety and consumer protection functions.”
But earlier this year, Sweeney acknowledged that getting micromobility companies to even put their vehicles in low-income communities has been difficult. At first, the city offered incentives to operators, but that proved ineffective.
“As a result, our permanent micromobility program which was established last year REQUIRES operators to deploy a certain percentage of vehicles to specific neighborhoods as a condition of their permit,” he said
Image courtesy of Yolanda Davis-Overstreet
Little Outreach, But More Scooters
Despite those requirements, some community advocates say that companies are not doing enough to reach out to communities to remove barriers to access.
Yolanda Davis-Overstreet serves as vice president of the West Adams Neighborhood Council and chairs its public safety committee. To her knowledge, no micromobility company operating in West Adams has reached out to the group.
She does, however, plan to reach out to them.
West Adams, a predominantly Black and Latino neighborhood, has experienced high rates of traffic violence. One stretch of Adams Blvd between Fairfax Ave and Crenshaw Blvd saw 59 severe and fatal collisions between 2009 and 2019, according to the L.A. Department of Transportation. Last year, the department completed a number of safety and infrastructure improvements along Adams, adding two miles of new bike lanes that make it safer for e-scooters, bikes and pedestrians.
Davis-Overstreet said she’s starting to see more shared e-scooters in her neighborhood.
“It's a privilege that these scooter companies seem to have, like ‘I don't care about your space. I'm here now’,” she said. ”No, if you're going to be here, you need to be here in a respectful way.”
Yolanda Davis-Overstreet chairs the West Adams Neighborhood Council's public safety committee.
Image courtesy of Yolanda Davis-Overstreet
It’s not that she’s opposed to e-scooters, Davis-Overstreet said, but as e-scooter companies ramp up in the community, so do concerns about safety and accessibility.
She said she wants companies to figure out how to respectfully integrate into a community that is already pursuing alternative forms of transportation.
“That's another reason scooters should be connected with [our] community … How are we going to get people in the United States — in particular in L.A. — in the conversation of climate change, if we don't give them access to other tools to use other than cars?”
Alternative forms of transportation like e-scooters have the potential to make a big impact on underserved residents, especially as gas prices surge.
Eli Akira Kaufman, executive director of the Los Angeles County Bike Coalition, a Lime partner, said that Lime has been a valuable collaborator in L.A. on initiatives like First Ride Academy and Lime Hero. But he would like to see companies do more for underserved communities, like advocating for better biking infrastructure and sponsoring workforce development programs.
“Lime Access and these different accessibility programs are great. We totally applaud their intent. But what more can be done to serve our most vulnerable commuters?”
Others cited the requirement that low-income customers fill out an online form and provide proof of income to access discounted rides.
“I don't know if a señora is going to be able to do that,” said SAJE’s Zarate. “And I think people really underestimate how difficult it is to fill out these applications, provide all this documentation— and there's a stigma, ‘Oh, you're applying for these low-income things’ that also discourages people from applying.”
Zarate added that Los Angeles transportation advocates want to start a dialogue—not a fight—with e-scooter companies like Lime, Bird and Lyft.
“Working class communities have always been multidimensional in terms of their transit and how they get around. People bike all around, you feel me?,” he said. “So, I think there's a strong tradition in the community. It's just about finding ways that work for everyone.”
‘Do Your Homework’
Currently, there are six dockless e-scooter and e-bike operators in Los Angeles: Bird, Lime, Spin, Superpedestrian (LINK), Wheels and Lyft. Each runs a separate low-income program with rates varying widely. The same 30-minute ride might cost $0 (Spin, LINK) to $7.85 (Bird) plus tax, depending on the company.
The L.A. Department of Transportation requires micromobility operators to:
- Deploy 20% of their total fleet in equity zones if they operate in certain more lucrative parts of the city like Venice, Hollywood and Downtown L.A.
- Offer a cash option for unbanked customers without a credit or debit card.
- Offer a non-smartphone option to unlock vehicles.
- Offer discounted rates for customers with an income level at or below 200% of the federal poverty guidelines.
- Attend meetings with community stakeholders such as neighborhood councils and disability rights organizations.
- Partner with a community-based organization.
Here’s a run down of costs and information for each low-income program operating in the city of Los Angeles.
Wheels: Wheels for All
$1.10 flat rate for 30 minutes
Lime: Lime Access
$1.25 flat rate for 30 minutes
Bird: Community pricing
50% off plus tax
Superpedestrian/ LINK: LINK-Up
Unlimited free 30 minute rides
Spin: Spin Access
Five free 30 minute rides per day
Lyft: Lyft Community Pass
$0.50 to unlock and $0.15 per minute
Are you enrolled in Lime Access, Lyft Community Pass or Spin Access and have the recent changes affected you? Let us know!
- Escooter Startup Superpedestrian Takes to LA Streets - dot.LA ›
- Can Bird Fix the Hazards of E-Scootering? - dot.LA ›
- Can WeHo-Based Wheels Get More Underserved Angelenos to ... ›
Faraday Future Reveals Only 401 Pre-Orders For Its First Electric Car
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
Electric vehicle hopeful Faraday Future has had no shortage of drama—from alleged securities law violations to boardroom shake-ups—on its long and circuitous path to actually producing a car. And though the Gardena-based company looked to have turned a corner by recently announcing plans to launch its first vehicle later this year, Faraday’s quarterly earnings report this week revealed that demand for that car has underwhelmed—to say the least.
Among the business updates and organizational changes disclosed in its first-quarter earnings release on Monday, the company tucked in one startling number: 401. That’s the number of paid pre-orders that Faraday said it had received for its first production vehicle, the FF 91, as of March 31.
The paltry number is especially interesting given the context of the automaker’s rocky history. Earlier this year, the publicly traded company found itself in hot water with the Securities and Exchange Commission, which is now investigating allegedly inaccurate and misleading statements made by Faraday to investors. Those statements, according to an internal review by the company, include misrepresenting how many pre-orders it had received for the FF 91: Originally, Faraday reported more than 14,000 reservations on its books, but it later emerged that an overwhelming bulk of those pre-orders were unpaid—with only a few hundred actual, paid deposits on the vehicles. (What’s more, nearly 80% of those pre-orders were allegedly from a single, undisclosed company that may have been an affiliate of Faraday’s, according to a blistering report by short-selling firm J Capital.)
Faraday’s earnings report also highlighted first-quarter developments including leadership moves, production partnerships and its unveiling of the first production-intent FF 91. The company noted that it had received a dealer and distributor license from the state of California that should allow Faraday to sell vehicles online anywhere in the U.S. It also signed a lease for a showroom in Beverly Hills, and is currently on the search for a second such location in the U.S. Additionally, Faraday Future’s second car, the FF 81, will be produced in South Korea in partnership with auto manufacturer Myoung Shin, with production slated to begin in 2024.
In terms of financials, Faraday reported an operating loss of approximately $149 million in the first quarter—up from a loss of $19 million in the same period last year. The company has $706 million in total assets on its balance sheet, including $276 million in cash. Faraday’s stock closed Wednesday’s trading at $3 per share—down roughly 50% since the start of this year.
- Faraday Future Plans to Launch Its First Electric Car - dot.LA ›
- Does Faraday Future Have a Future? - dot.LA ›
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
Meet CropSafe, the Agtech Startup Helping Farmers Monitor Their Fields
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.
This January, John McElhone moved to Santa Monica from, as he described it, “a tiny farm in the absolute middle of nowhere” in his native Northern Ireland, with the goal of growing the crop-monitoring tech startup he founded.
It looks like McElhone’s big move is beginning to pay off: His company, CropSafe, announced a $3 million seed funding round on Tuesday that will help it develop and scale its remote crop-monitoring capabilities for farmers. Venture firm Elefund led the round and was joined by investors Foundation Capital, Global Founders Capital, V1.VC and Great Oaks Capital, as well as angel investors Cory Levy, Josh Browder and Charlie Songhurst. The capital will go toward growing CropSafe’s six-person engineering team and building up its new U.S. headquarters in Santa Monica.
The nascent agtech company began in 2019 as a project between McElhone and his co-founder and high school classmate, Micheál McLaughlin. Growing up in the Northern Irish countryside, the pair developed an interest in technology, which led to ideas about how such technology could aid the agricultural communities they were raised around.
“We noticed that there was a lot of really new, cool technology coming into the farming market at the time,” McElhone told dot.LA. “But every single farmer in our area hadn't a clue how to get started with all this new fancy technology, because they would have to go to training sessions or learn how satellite imagery from NASA works. And farmers—their job is to farm, not to interpret data.”
The first version of CropSafe’s software aimed to bridge that gap. At its core, the platform is an interpretation engine that scrapes and parses through troves of weather data and satellite imagery to find the information that farmers need to grow and harvest more effectively. “CropSafe did that work for you and spots useful nuggets like, ‘Hey, there's blight in field no. 14; here's the exact location and what you need to do next,’” McElhone explained.
But the project, which began simply as a tool for friends and family in Northern Ireland, started drawing attention from users around the world; to the founders’ surprise, people began offering to pay for the service. “That was kind of a turning point—realizing it wasn't just our 200 people that wanted to use it,” McElhone said. So he packed his bags and moved to Southern California at the start of this year to try to build out the software in one of agtech’s hottest markets.
McElhone and McLaughlin now believe there’s a better way forward that would position CropSafe as more akin to a fintech platform for farmers: Because the software collects so much data on farms, it can offer insights into removing bottlenecks that farmers could leverage to secure crucial financing for equipment and other needs.
“If a farm is leasing three combines this year, with the data we have on that farm [and its] crops, we might be able to say: ‘Hey, if you lease an additional combine this year, we know that you will produce so-and-so additional yield and produce $25,000,’” according to McElhone. In an ideal scenario, CropSafe could allow the financing for that combine to be approved instantly on the strength of the data on its platform; the farmer clicks a button on the app, and the combine gets delivered the next day.
So far, McElhone is tight-lipped about partnerships in this area of its business, but said announcements should be coming this summer. The company is also considering offering farmers insights into the best times and places to sell crops, with CropSafe taking a small cut of revenues for the service. (The idea is that farmers would only pay when they see increased sales from using CropSafe’s insights, McElhone said.)
But the move to Santa Monica has already proven fertile for the company, which is planning to announce partnerships with other agtech companies that would allow CropSafe to act more as an operating system—one connecting autonomous tractors, weathers sensors, and other “internet of things” technologies to ensure better, more sustainable crops. With local startups like Future Acres and Abundant Robotics already operating in the space, CropSafe seems poised to benefit from Southern California’s position as a hub for agtech in the U.S.
David Shultz is a freelance writer who lives in Santa Barbara, California. His writing has appeared in The Atlantic, Outside and Nautilus, among other publications.