Grandma's in Duluth lays off 350 workers, OMC Smokehouse closes amid coronavirus chaos

DULUTH – While many restaurants and breweries across the state are finding creative ways to offer food and beverages to go, others are deciding such a pivot is not fiscally feasible or safe during a time when Minnesotans are being urged not to come in close contact with one another.

Tom Hanson, the owner of four Duluth joints — including local favorites OMC Smokehouse and Duluth Grill — said he laid off 200 employees Thursday, when he made the decision to shut everything down.

Others — like Grandma's Restaurant Company, which laid off 350 employees this week — are still serving meals with a bare-bones staff. "To-go and delivery are a good option. But they're not a sustainable one," said Brian Daugherty, president of Grandma's.

OMC Smokehouse, known for its smoked meats, has always had a thriving contingent of takeout customers ordering brisket and pulled pork to eat at neighboring breweries or their kitchen tables. But even that popularity wasn't enough to sustain business through a temporary ban on dining in restaurants, Hanson said.

For two days after Gov. Tim Walz's order to bars and restaurants took effect Tuesday evening — an attempt to stop the spread of COVID-19 — Hanson's barbecue joint was still offering carryout service.

His Corktown Deli closed Wednesday, and the Duluth Grill and Noble Pour (a cocktail lounge) shut down earlier in the week.

"It felt like we were eating soup with a fork," he said of trying to operate on only takeout revenue. "We were busy scooping it up, but there was nothing in that fork."

Plus the meals at his restaurants were made from scratch, requiring lots of ingredients and employees. "There was no chance of social distancing," Hanson said.

Grandma's kept on just 30 of its most senior chefs and managers, who are running takeout service from four of the company's restaurants — the Canal Park, Miller Hill and Virginia Grandma's, as well as Little Angie's Cantina and Grill in Duluth. The Sports Garden and Bellisio's Italian Restaurant have closed completely while in-person dining isn't allowed.

"I have never had to do anything this difficult in my life," said Daugherty, who said he's been in the restaurant business for 40 years, through tough times like 9/11 and the 2008 recession. "This is a whole new level of challenge."

Grandma's is offering all laid-off staff — who Daugherty hopes to have the capacity to rehire once normal operations can resume — a free meal each day. They've also launched more promotions in the hopes of bolstering takeout orders.

"I get it. We all have to do what's best for us and our family," Daugherty said. "But boy, if people could work your local restaurant into your weekly meal plan, it would go a long way."

New Scenic Cafe, Mr. D's Bar and Grill and Zeitgeist Arts Cafe were among the other Duluth joints who made the call to close completely for the entirety of the governor's mandate.

On Friday, Hanson canceled all but the necessary insurance for his restaurants and stopped the business' credit cards. The restaurants' kitchens were stocked with eggs and lettuce and milk and all sorts of perishable goods, which he gave in loads to employees.

"We've lost our entire income," he said. "We just froze everything."

Hanson describes his staff as "one big family," and he's worried he won't be able to get all four of his operations back up and running once the coronavirus pandemic runs its course.

Just last week, the restaurant owner said there was talk of expanding the deli's business into neighboring Hermantown.

"Now we're looking at — I don't know," he said. "It's just too hard to get all four of them going, so that might have to sit for a while."

Katie Galioto • 612-673-4478