NEW ORLEANS — The air smelled tangy and sweet as Tommy Cvitanovich oversaw employees grilling his famous delicacy — charbroiled oysters on the half-shell — to serve customers in their cars in a church parking lot. The pop-up eatery generated some rare profits for Cvitanovich on a recent Thursday evening, nearly two months after social distancing rules closed his Drago's Seafood restaurants for full-service dining.
Beneath his trademark bravado, Cvitanovich knows the 51-year-old business founded by his parents — and its 700 jobs — might not make it through the novel coronavirus pandemic intact.
"I'm struggling," he said later, after serving 100 dozen plump gulf oysters for $20 per dozen. "Right now, I have five Drago's. This time next year is it possible we have less than five Drago's? Absolutely."
Earlier that day, about 130 miles west in Lafayette, Mike Moncla was puzzling over how to save his family's oil business. The crash of oil prices — since hardly anyone drives, flies or fires up a restaurant stove these days — has canceled work for the Moncla well-servicing operation. The company recently cut more than half of its 270 jobs.
"We're doing everything we can to keep our business afloat," said Moncla. Even still, "There's no doubt about it. We might not make it."
Louisiana is heavily reliant on two of the industries hardest hit by the coronavirus pandemic: tourism and energy. With the economic fallout from stay-at-home orders and other restrictions mounting nationwide, this state is perhaps the most vulnerable, economists say.
Though Louisiana began a gradual reopening process last week, few people came out to experience the partial return of nightlife to the French Quarter on Saturday. Economic projections remain grim: One in five of the state's restaurants, a cornerstone of the tourism industry, may not survive until people feel safe traveling again, said Stan Harris, president of the Louisiana Restaurant Association. The number of visitors to New Orleans could plummet 75 percent this year, with the city already losing $200 million a week in tourist spending, said Stephen Perry, president of New Orleans & Co., the convention and visitors bureau.
New Orleans now has more restaurants than it did before Hurricane Katrina in 2005 — 1,400 by some estimates, which is more than a city of 390,000 can support without tourists.
"We expect that certainly by October of this year, we could well lose at least 500 of those restaurants," Perry said.
The oil money that lubricates the region's economy is drying up, too. With crude now scarcely $30 per barrel — break-even for an oil company is at least high $30s — half the companies surveyed this month by the Louisiana Oil & Gas Association said bankruptcy is likely.
"The virus has crushed the broader economy, but nowhere has the damage been more severe than in travel, tourism and energy," said Mark Zandi, chief economist for Moody's Analytics. He called the pandemic "a two-black-swan event" for Louisiana, with New Orleans also being one of the earliest hot spots of coronavirus infections in the United States.
"A lot of infections, on top of a collapse in tourism/travel, and the complete wipeout in the energy sector — that's pretty cataclysmic," Zandi said. "I can't think of another place that's been nailed that hard."
The distress is starting to show up in the state's finances. Louisiana expects to lose about $1 billion in taxes, oil leases and other sources during the fiscal year starting in July — or nearly 10 percent of the general fund budget. Gov. John Bel Edwards (D) has lobbied for a federal bipartisan proposal that would provide $500 billion to help states and cities to stabilize their finances — a plan that President Trump has been hesitant to support, calling it a bailout for "poorly run states."
Beginning Friday — Saturday in New Orleans — most Louisiana businesses are allowed to serve up to 25 percent of their customer capacity at a time. Mainstays of the state's hospitality and energy industries welcome this first spark of renewed economic activity, but they are under no illusions that the comeback will be quick.
"I think it's going to be a full year past a vaccine [being developed] before tourism feels normal again. So, for me, that's the middle of '22," said Perry, head of the convention and visitors bureau.
Cvitanovich reopened three of his Drago's restaurants on Friday, even though operating at 25 percent capacity won't get him anywhere near the 1,000 diners per day he needs at his busiest locations to be successful. Edwards, the governor, and New Orleans Mayor LaToya Cantrell (D) say further loosening could come in early June, if there are no upticks in infections.
"I'm incredibly worried about the financial life of our business," Cvitanovich said. "I'm worried about our employees."
Tourism and energy provide nearly 1 in 5 jobs in the state, according to the Louisiana Workforce Commission. The state was grappling with the highest unemployment rate in the country — 6.9 percent — even before the pandemic began to devastate the nation's workforce. More than 600,000 Louisiana residents have filed for unemployment since then.
The unemployed include about half the people who work in tourism and more than 10 percent of oil workers, said Stephen Barnes, director of the Kathleen Blanco Public Policy Center at the University of Louisiana at Lafayette. Based on those numbers, unemployment in the state could be 30 percent, estimated Gary Wagner, professor of economics at the Lafayette campus.
Louisianans pride themselves on being able to endure disaster — but the pandemic is already proving to be worse than the yardstick by which catastrophes are measured here: Hurricane Katrina in 2005. More lives have been lost statewide to covid-19 — 2,440, compared with an estimated 1,833 to Katrina — and the economic body blow is shaping up to be more severe.
"There's no crisis we've had that even comes close to this," said Greg Albrecht, the state legislature's chief economist.
Most restaurant owners said capacity restrictions during the first phase of the restart — while perhaps prudent for public health — virtually guarantee they'll lose money.
"If you took away 10 percent of my business, I would lose my derriere. Now, at a minimum, we think we'll lose 50 percent" during the state's phased reopening, said Ti Adelaide Martin, who runs New Orleans's fine dining landmark Commander's Palace with her cousin Lally Brennan. The restaurant is staying closed for now.
Setting aside the restrictions, Martin worries about how much demand there will be anyway. When will customers feel comfortable going out again? And "What does hospitality look like behind a mask?" she pondered.
There's an even bigger question for a tourist town built on oil and gas: When will people want to burn all that jet fuel by flying again?
Global demand for oil fell by nearly 30 percent as the pandemic shutdown compounded the effect of a production war between Russia and Saudi Arabia. So much oil is out of the ground at the moment that the planet is running short on places to store it.
On a recent Tuesday afternoon, Arthur Price, president of Badger Oil in Lafayette, and his management team studied the numbers and realized that, because of the way the future price of oil is hedged, Badger would be getting just about $4 per barrel in May. So Price and his colleagues decided they had no choice but to cap some of the company's 20 wells and temporarily cut production by 80 percent. Some of those wells will never operate again.
"It's an absolute killer — it's demoralizing," Price said. "Most crises are not solved, they're merely survived. That's currently our main goal: To survive."
New Orleans ultimately survived the economic slump that followed Katrina, as tourists came rushing to the city out of solidarity and curiosity, helping to make the restaurant scene even bigger and more vibrant than it was before the hurricane. Now, potential tourists will have their own cities to worry about, observed Stella Chase Reese, whose family runs the beloved Dooky Chase's restaurant in the Tremé neighborhood, which has been visited by the Rev. Martin Luther King Jr. and President Barack Obama.
For an indefinite period, businesses like Dooky Chase's that have come to count on visitors will have to appeal more than ever to local customers.
"That's something we'll be doing over these weeks, remarketing ourselves to what got us to where we are now — the local community," said Chase Reese, 72, whose husband, Wayne Reese Sr., 74, a revered high school football coach, died April 2 of covid-19. "We have to go back to our roots."
Restaurant spending ripples through the economy, driving one of the nation's top-producing seafood industries. Commercial fishing has an annual economic impact of $2.4 billion, according to the Louisiana Seafood Promotion and Marketing Board. Shrimp alone accounts for 15,000 jobs and $1.3 billion annually, while oysters provide 4,000 jobs and $317 million.
"I don't care if it was Hurricane Katrina, Hurricane Gustav or the BP oil thing. No matter what, there was business at restaurants," said Al Sunseri, co-owner of P&J Oyster. "This is so much worse. We live to eat and party. That's what we do in New Orleans. Well, it's not here anymore. This pulled the plug on the entire economy."
Sunseri supervised as three workers shucked oysters before dawn on a recent Thursday. It was their first haul in a month, since 95 percent of orders were canceled during what is normally the busiest time of year. The restaurant order for these oysters ended up being canceled, too.
If sales recover to 50 percent of normal through August, and somewhere close to 100 percent after that, the 141-year-old business might survive, Sunseri said.
But that rapid a rebound seems unlikely. Mayor Cantrell has said that the city is facing a $136 million shortfall in its $726 million budget.
About 60 miles south of New Orleans at Ditcharo's La. Wild Caught Shrimp dock in Buras, Hosea Wilson, a fourth-generation fisherman, watched as the load of shrimp he caught on a Friday morning off Grand Isle was weighed for price. Now in his 50s, he has been working as a fisherman since he was 13.
Wilson's catch came to about 3,000 pounds. Dock owner Rocky Ditcharo paid him 35 cents a pound — half of what he could have gotten before the pandemic.
"I think this would have been one of the best years we've had," Wilson said. "The shrimp showed up at the right time, right size — there's just no money. [The virus] just killed the money."
In a typical May and June, Ditcharo buys between 1.5 million and 2 million pounds of shrimp. This year, he might not clear 500,000 pounds because the shrimpers he buys from, people like Wilson, could decide that it's more expensive to fish than to stay home. If that happens, Ditcharo could be forced to close.
He looked out at the 150 boats docked at the business his family has operated since 1984. There should be dozens of people working on their vessels, preparing them for the upcoming start of the inshore shrimping season, he said. But there was nobody in sight.
"I have a friend who's a welder and he said there's no business because nobody is fixing their boats," Ditcharo said. "This is the worst-case scenario. I'll call this 'apocalypse now' — beginning of the end."
