The green paint. The walls of television sets. The large and low-priced menu that could satisfy nearly any diner, from picky children to business clients to friends gathering to watch a game.
Duffy’s Sports Grill, the Lake Worth-based chain, for years has worked to be the neighborhood eatery and bar for countless communities across the state.
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When the coronavirus pandemic hit in March, the comfortable gathering spot closed its indoor dining areas, as did other restaurants. But unlike other restaurants, Duffy’s only briefly offered takeout. Then it shuttered all restaurants, not even offering curbside pick-up or delivery as many other eateries did.
During Duffy’s closure, it remained mum about reopening, staying silent to its loyal customers as well as 2,500 furloughed employees.
Finally, after months of silence, Duffy’s announced in June it would slowly reopen locations throughout July, which it did.
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But the all-American sports grill has not reopened unscathed. Landlords have filed lawsuits, and some diners and now-former employees have soured on the company that once prided itself on creating a tight-knit culture.
And the future of Duffy’s, which depends on groups of sports fans and family diners of all ages, appears uncertain. Can the much-loved, value-oriented chain adjust to the new normal and find their mojo again?
Landlords file suits against the company
In July, five eviction lawsuits were filed by landlords against Duffy’s alleging unpaid rent, according to Palm Beach County Circuit Court records.
The lawsuits were launched about the same time public records showed that Duffy’s was approved for between $5 million to $10 million for federal Paycheck Protection Program (PPP) loans, money intended to pay furloughed workers, plus rent.
Four lawsuits seek back rent of more than $480,000 at locations in North Palm Beach, Boynton Beach on Congress Avenue, Delray Beach and Boca Raton, near the Town Center mall, court records show.
A fifth lawsuit, an eviction action filed by the owner of the Clematis Street location in West Palm Beach, has been resolved, court records show.
In an emailed response to questions, Duffy’s president, Joe Webb, said Duffy’s slowly is rebounding from the shutdown caused by the pandemic.
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“This pandemic has disrupted the entire restaurant industry, causing a ripple effect throughout the economic chain of business,” Webb said.
Webb praised employees who have returned to work, as well as diners who have returned to the restaurants, saying their support and encouragement throughout the pandemic “has been tremendous.”
Webb said lawsuits filed against locations in Boynton Beach and North Palm Beach were settled the week of Aug. 3. He said other disputes “are actively under negotiation.”
Webb said PPP money will be used to pay back rent that accumulated during the shutdown, after employees have been paid, per federal requirements. Webb did not indicate how much Duffy’s received in PPP funds, but he said Duffy’s eventually will draw down on all the PPP loan money.
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According to Palm Beach County Circuit Court records, the lawsuits against the Boynton Beach and North Palm Beach locations remain ongoing. Jonathan Brody, the lawyer for landlords Regency Centers and Equity One, who own locations in Boca Raton, Boynton Beach and North Palm Beach, declined to comment.
Webb said most landlords have been willing to work with the 35-year-old company as it operates at only 50 percent capacity per county restrictions. Due to the pandemic, “almost all restaurants (find) themselves having to renegotiate their lease terms,” Webb said.
Even before the pandemic, industry sources says Duffy’s was facing challenges
In addition to paying landlords back rent, Webb said Duffy’s is paying out PPP money to employees that were furloughed.
About 1,300 employees are back to work at 32 stores, and more are expected to return with the opening of two remaining locations. A store in Estero is momentarily closed for renovation, and a Kendall location remains shut down due to restrictions on restaurants imposed by Miami-Dade County, Webb said.
While the pandemic has hurt restaurants of all sizes and types, industry sources say Duffy’s already was facing challenges in the highly competitive restaurant world.
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Duffy’s is profitable, but its profits have been on the decline for more than a year prior to the pandemic, according to knowledgeable real estate and restaurant industry experts.
Webb said he would not comment on Duffy’s finances. The company is privately owned by two families.
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But industry experts said it’s no secret that Duffy’s has needed a fresh boost for some time.
“There’s an old expression: ‘When the tide goes out, you get to see who is swimming naked.’ They are one of the ones who was swimming naked,’ “ said Jeff Sussman, a restaurant broker in Boca Raton.
Although Duffy’s still bustled with business before the pandemic, restaurants have notoriously slim profit margins, and Duffy’s was no exception, Sussman said.
As labor, food costs and now cleaning expenses have increased, profit margins remained tight. But Duffy’s is locked into leases at its eateries, and its niche as a value-oriented chain limits its ability to raise prices, Sussman said.
Sources said other factors affecting Duffy’s bottom line prior to the pandemic were increased competition in the restaurant industry, and the fading appeal of sports grill chains by diners drawn to unique dining destinations.
Prior to the coronavirus pandemic, change already was afoot at Duffy’s to boost profits, sources said.
Ex-employees says changes recently implemented upended the work culture
Former employees say the company last year brought in a consultant who took a firmer stance on costs. Workers said the move changed the work culture of a company that prided itself on a high standard for workers and a high standard for its treatment of workers, too.
“The Duffy’s culture used to mean taking care of employees and having employees’ backs. Not penny pinching,” one former worker said.
As a result of the changes, a number of experienced, longtime employees left. “It used to be almost a family place,” one former worker said. “I wouldn’t say it’s like that anymore. It’s a shame.”
Webb said there have been no changes to Duffy’s mission, ethics or work environment “as we strive every day to uphold the vision that Duffy’s was built on.”
Former employees say the chain faced other pressures, too: Sysco, the company’s food supplier, was demanding payment for unpaid goods. Webb said the company has a contractual agreement with Sysco that is “up to date.”
Webb called Sysco “incredibly supportive and a great partner,” helping with the reopening of its stores. Furthermore, he said no PPP money was used to pay off any debts, including to Sysco, because that is against PPP rules.
Duffy’s carved out a niche as a value-dining destination
Despite the challenges, observers said Duffy’s still had advantages going into the pandemic. It offered good food at good prices. And it was skilled at keeping in contact with customers through emails and social media.
Stan Klett, a Jupiter resident and Palm Beach County attorney, said he’s fond of Duffy’s because the menu is varied, so there’s always something for everyone.
“It’s family oriented. You can go there no matter what age you are,” Klett said. “I used to go there with my mom and my stepfather, with my buddies my age, and my nephews in college. I can take my kids there.”
The service and food quality also are consistently good. “Are you going to get a gourmet meal? No,” Klett said. “Are you going to get a consistent, quality meal? Yes. And the beer is cold.”
Orin Rosenfeld, a retail broker and longtime Duffy’s customer, said Duffy’s successfully carved out a niche as a value-dining destination. “They really appeal to the middle class and the working class,” Rosenfeld said.
Therefore Klett and other customers said they were surprised when they heard nothing from Duffy’s for weeks about reopening plans. “It was strange,” Klett said.
During its shutdown, Duffy’s did post frequent trivia games on its Facebook page, but it remained resolutely silent about reopening, even as other restaurants heralded their reopening plans in May. Observers were critical: “You don’t ignore your customers for three months,” one industry expert said.
A clunky response to closing because of the pandemic
Irritated diners even peppered Duffy’s Facebook page with frequent comments about the lack of communication to customers. “Your loyal customers want to know when you are re-opening … period. Or at least what is going on,” Cheryl Chilson wrote on the company’s Facebook page. “It is very bad business practice and frankly plain rude for you not to keep everyone informed of what is going on.”
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Furloughed workers said they also were kept in the dark about Duffy’s plans to reopen.
“Their response was dreadful,” one ex-worker said. “For three months there was zero communication, and no one had any idea what was going on … You’re not sure if you had a job.”
Employees, like customers, kept hearing rumors of a bankruptcy filing or a sale. But they couldn’t get information from company leaders no matter how hard they tried. “It was very vague,” a former employee said of communication with managers.
Webb said Duffy’s did communicate to its furloughed employees through an internal messaging system and email. Unlike some eateries that still offered food delivery or curb-side pickup, Webb said the company decided to shut down all restaurant operations “out of an abundance of caution for our team players and guests.”
Webb also praised employees, some of whom have been with the company for 10 or 20 years, with reopening 32 restaurants in only 30 days. “Our team players are the heartbeat of this company,” he said.
But Webb acknowledged that “there is always room for improvement.” He said that with management furloughed longer than expected, “our communication bandwidth did drop below its regular cadence in June. We have since implemented changes to avoid this happening in the future.”
Another challenge facing Duffy’s: The popular frequent diners’ program, called the MVP program.
The late Paul Emmett, who took Duffy’s from its origins as a four-location eatery that started in Lake Park into a statewide chain, rolled out the MVP card years ago to build loyalty among diners.
It worked, but maybe too well.
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The card gives discounts, dining deals and freebies when a diner racks up enough points. While the MVP card became a popular way to build loyalty among diners, the discount program also risked cutting into profits as people learned to rely on freebies and discounts when they bought food or drink, said Rosenfeld of Rosenfeld Realty Advisors in Boca Raton.
Rosenfeld should know: He’s a longtime MVP member who always looks for specials in the frequent emails he receives. Some days Duffy’s offers extra points, other days it offers free items to members. There also are daily specials too.
“They can’t change the business model, though,” Sussman said. “They created a monster with all these points. If you get rid of the cards, people aren’t going to go there anymore.”
And some frequent diners, such as Rosenfeld, said they’re still wary about dining in restaurants such as Duffy’s as the pandemic rages on.
Webb pushed back on the notion that the MVP program is an issue. While he acknowledged expenses with the program, “the added value it gives our guests far outweighs those costs,” he said.
The program also provides relief for customers on a tight budget due to the pandemic, Webb said. To prove his point, Webb said Duffy’s reimbursed all expired dollars and honored birthdays for customers who didn’t get a chance to celebrate because of COVID-19.
Are big sports bars a thing of the past because of the pandemic?
Finally, there’s the issue of sports. A major draw for Duffy’s and other sports grill patrons, sports has taken a hit because of the pandemic, with leagues canceling, postponing or shortening seasons, which means less to watch on TV.
And even before the pandemic, the version of the old sports bar where everyone used to go to watch the game with friends was being replaced with more at-home viewing options because of the growth of streaming sports channels and the use of social media.
Webb said streaming sports to watch at home is nothing new, but he said watching a game at Duffy’s with friends remains a unique experience.
“No one comes to Duffy’s to just watch a game,” Webb said. “It is much more than that.”
As the pandemic continues and the future remains uncertain, Webb said Duffy’s plan is to stay the course.
While rumors have circulated for months on social media about the chain being courted for sale, or even filing Chapter 11, Webb said Duffy’s is not considering a sale or a bankruptcy filing.
“That would violate Duffy’s commitment to the community,” Webb said.
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Category: WHY
