Hollywood Icon Musso & Frank Grill is Back
Image courtesy Musso & Frank's
Musso & Frank's Grill, an iconic Hollywood restaurant known for its star-studded regulars, hearty comfort food and killer martinis, has officially reopened — after more than three-months of closures due to the COVID-19 pandemic.
This pandemic was the first time the restaurant has closed its doors in more than 100 years since its opening amid the Spanish Flu. Musso's had also kept its doors open through Prohibition, the Great Depression, World War II and the challenges of the 2008 financial crisis and recession.
The restaurant will reopen with modified hours: from Tuesday through Saturday, 5 p.m. to 11 p.m. and Sundays 5 p.m. to 10 p.m. Customers are required to make online reservations.
Musso's team will be wearing face shields and masks and will abide by other sanitary guidelines the restaurant has put in place.
Customers will be seated at every other booth and at tables that are six-feet apart. No groups larger than six will be seated or served. The restaurant also said it had retrofitted its air conditioning filters to include "hospital grade filtration."
The restaurant, which prides itself on tradition and the constancy of its offerings amid historical events, has found itself forced to change somewhat to abide by new health requirements. But Mark Echeverria, the chief financial and operating officer of Musso's and fourth generation of the family-owned restaurant, said the restaurant is doing what it can to keep its traditions intact.
In a letter to customers, Echeverria said the restaurant is "committed to continuing the traditions you have all come to expect from us" and will keep the full menu it offered pre-COVID-19. That menu will now be single-use and customers can take it home.
"We are incredibly excited to see and engage with our friends again and to safely serve them after the challenges we have all faced over the past three months," Echeverria said in a statement. "Our managers have been working incredibly hard during this entire period to develop solid safety protocols which will be implemented on our first day back."
Unlike many restaurants and businesses throughout the country that have had to furlough or layoff their staff, Musso's kept its entire 84 person staff on payroll, without any cuts to salary during the closures.
In April, 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.
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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."
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The owner of Musso & Frank Grill, an iconic L.A. restaurant, filed a federal lawsuit Tuesday against its insurance company, alleging breach of contract and bad faith for not covering its loss of income due to the COVID-19 pandemic.
In the 243-page lawsuit filed in the U.S. District Court of the Central District of California, attorneys for Musso & Frank Grill allege that Mitsui Sumitomo Insurance USA, Inc., in New York, failed to handle the restaurant's insurance claim for business interruption losses in a manner consistent with the standards of good faith and fair dealing.
The restaurant, which is represented by Michael J. Bidart, managing partner of Shernoff Bidart Echeverria LLP, said its original claim for lost business income was submitted promptly after having to suspend operations because of L.A. Mayor Eric Garcetti's order on March 15 prohibiting restaurants from serving food on their premises or bars from serving alcohol. They are now demanding a jury trial.
Known for hearty foods, like its chicken pot pies, and martinis, Musso & Frank's has been visited by Charlie Chaplin who was known to enjoy broiled lamb kidney or duck when in season, as well as Bing Crosby, Steve McQueen, Charles Bukowski and Quentin Tarantino, who featured it in his film "Once Upon a Time in Hollywood."
The storied restaurant, which has been a favorite of tourists, celebrities and filmmakers, is an L.A. staple that celebrated 100 years on Hollywood Boulevard in September and received the first-ever Walk of Fame star given to a restaurant. But despite it first opening its doors in 1919 amid the Spanish flu pandemic, which infected roughly 1/3 of the world population, Musso & Frank Grill has found COVID-19 particularly challenging, as it's been forced to temporarily close its doors.
It's one of many L.A. businesses that has faced hard decisions and tough outlooks because of the economic shockwaves wrought by the novel coronavirus. From layoffs at Sweetgreen and Bird, to pivoting to produce masks or run COVID-19 tests, businesses have had to find ways to survive and reinvent themselves. But for old school ventures like restaurants, if that fails amid a natural disaster, insurance is supposed to kick in.
The restaurant accused its insurer of failing to adequately consider or investigate claims, and that it has done so to other policyholders to earn "illicit profits" at their expense. A spokesperson for Mitsui Sumitomo said Wednesday morning that the company does not comment on pending litigation.
Restaurants like Musso & Frank's, which counted on so-called business disruption insurance to offset their losses ended up facing up to a previously esoteric exception that regulators put in place in 2006 after the SARS outbreak, which excludes coverage for "loss or damage" due to "virus, bacterium or other microorganism that induces or is capable of inducing physical distress, illness or disease."
The lawsuit notes that Musso & Frank's insurance policy also includes a specific "exclusion of loss due to virus or bacteria" which matches such language.
"Our position, not withstanding the virus exclusion, is that the government order is the predominate reason for the loss," Bidart said. "It's not solely due to the virus. When you compare the relative weight of the perils, the closing down order is what really caused the shutdown. In California law, the simple point is you cannot properly deny a claim without doing an analysis of whether or not the non-excluded peril of government action is the predominate cause."
Mark Echeverria, the owner and COO of the company said in a statement that there is no evidence that the restaurant's employees or customers were exposed to or had contracted COVID-19 at the time of closure.
"A situation such as this is EXACTLY WHY businesses carry business insurance interruption policies!" he said.
Musso & Frank's is one of a slew of examples of the impact the roughly monthlong lockdown has had. In the U.S., restaurant customer transactions dropped 43% in the first full week of April (the week ending April 12) compared to a year ago, worsening from the 41% seen the week prior, according to the NPD Group's data.
The newly-formed Independent Restaurant Coalition was created by a group of chefs to save local restaurants being hard-hit by COVID-19. The coalition is pushing for multiple tweaks to federal stimulus, including ensuring that business interruption insurance covers the novel coronavirus.
Meanwhile, the National Retail Federation and 16 other business organizations, including the National Restaurant Association, sent a letter to Congress on Tuesday, urging swift passage of legislation that would create a federal program to help businesses get insurance coverage for future pandemics. The program would be modeled on terrorism insurance established after 9/11.
"When businesses couldn't obtain coverage for acts of terrorism after 9/11, Congress stepped in," said David French, the NRF's senior vice president for government relations, in a statement. "It's time for Washington to do the same for pandemics. Retailers and other businesses across the country have seen unprecedented losses related to COVID-19 that weren't covered under most current insurance policies and won't be covered if there's a second wave of the virus next winter."
French said passage of the Pandemic Risk Insurance Act of 2020, would enable businesses to "rebuild confidence" and "provide a mechanism for immediate and predictable economic recovery" if the U.S. faces another pandemic.
In the letter, the organizations endorse the new bill, which Rep. Carolyn Maloney, D-NY, a senior member of the House Finance Services Committee, plans to introduce soon. There is a similar bill planned by Rep. William Lacy Clay, D-Mo., who is chair of the Housing, Community Development and Insurance Subcommittee.
The bill was developed with input from the NRF and is backed by the Rep. Maxine Waters, D-Calif, who chairs the U.S. House Committee on Financial Services. It would require insurance companies offer policies covering pandemics but would create a federal backstop program to reimburse insurers when claims related to a pandemic or epidemic exceed $250 billion nationwide. Coverage would also be required for large gatherings, including sporting events, concerts and conventions that are canceled. The program would not apply to the current pandemic and would be capped at $500 billion.
"Congress must take swift action and begin contemplating a solution to provide all businesses protection against future pandemic risk," the letter states. "This approach would serve as a cornerstone to a proactive and prospective approach to managing the risk of a widespread and catastrophic pandemic or epidemic in the future."
In a statement, David A. Sampson, president and CEO of the American Property Casualty Insurance Association, said "pandemic outbreaks are uninsured because they are uninsurable."
APCIA, the primary national trade association for home, auto, and business insurers, estimates that continuity losses for small businesses are roughly 43 to 72 times the monthly commercial property insurance premiums, which includes coverage for losses resulting from fire, wind, hail and water leaks. It said that closure losses for small businesses with 100 or fewer employees has increased to as much as $431 billion per month, dwarfing annual premiums for all commercial property risks in key insurance lines of $71 billion per year.
Sampson said any effort to retroactively mandate insurance coverage for viruses by voiding such exclusions "would immediately subject insurers to claim payment liability that threatens solvency and the ability to make good on the actual promises made in existing insurance policies."
*Updated at 10:23 a.m. PT to add the insurance company's comment.
**Updated 11:18 a.m. PT to include Musso & Frank Grill owner's comment.