BEIJING, May 9 (TMTPost) “The first shots of the craft beer revolution of Wuhan were fired here, “ Wang Fan, the co-owner of the pub chain Pub No. 18, had wrote proudly on the wall of its first outlet, hinting at an analogy to the Revolution of 1911, whose first shots were fired in Wuhan to end the last dynasty in China. Again a trigger was pulled, but this time the pub chain itself was shot. Wang’s pubs remained shuttered for over 70 days and lost RMB1.5 million (US$211,600).

Wang was born and raised in Wuhan, home to 11 million people and the epicenter of the coronavirus outbreak in China. He volunteered to support local hospitals and communities after the city was shut down on January 23. With the lessening of the outbreak, the pub chain resumed takeout operations on April 1. He renegotiated employment contracts with his workers and started a hard journey of self-salvation.  

Over 300 Gallons of Beer Poured Down Drain

The pub chain, a household name in Wuhan, has three outlets employing over 70 workers, and one craft beer brewery employing over 30 workers. In the reviews at the Meituan Dianping app, the pub chain tops the rankings in both “Wuhan pub guidebook” and “Popular western food restaurants in Wuhan” categories.  

A cook passed by the counter in the pub.

Wang, 36, known as one of “the first beer craftsmen in Wuhan”, entered the bar and nightclub industry in 2010 and started the craft beer business in 2013.

As a result of the lockdown in Wuhan, about 10 tons (about 318 gallons) of craft beer at Wang’s brewery, which was worth RMB200,000, went to waste. The beer had already been brewed and was waiting in cellars to be poured when the crisis hit, but its short shelf life meant it had to be poured down the drain. All the three pubs stayed shut throughout the covid-19 outbreak, leading to a direct economic loss of about RMB1.5 million, which included costs of beer and food, rent, living expenses of employees, insurances and maintenance fees for idle equipment.  

In early January, Wang first saw news reports on an unknown pneumonia. In mid-January, the number of the pedestrians in the streets dwindled and many young people started to wear face masks.

By January 19, there were no visitors to any of his pubs. He decided to shut them down. He also feared the prospect of employee infections. From January 20 to January 22, the outlets were closed one by one.    

At 10 am on January 23, Wuhan was abruptly shut down. Wang did not panic. He felt the outbreak would be contained and the city would be reopened soon. “It is not just my problem. Therefore I was not particularly worried,” Wang told TMTPost.

Wang’s pub chain funded the boarding for the employees who failed to leave the city due to the sudden lockdown. He received warm greetings from his friends in other cities and was asked about the situation in Wuhan. But Wang did not know because he was in self-isolation.  

He wanted to go out to see what was going on. He bought an electricity car and recorded “an empty Wuhan” with a photographer stranded in the city.

After Wang saw hardworking volunteers and cleaners as well as migrant workers and homeless people living in underground parking lots, he realized what the city was going through and decided to do something for the city.

He bought personal protective equipment (PPE) supplies for local hospitals. Some friends outside of Wuhan also acquired masks and gloves and hoped that he would help deliver them to doctors and nurses. He volunteered to transport and hand out the supplies.

Wang had procured a large amount of food materials originally for the busy catering business during the Chinese New Year holiday, including RMB450,000 worth of perishable vegetables, fruits, meat and eggs. He handed them out to his employees, the healthcare workers and the disadvantaged people in his community.

On February 10, all gated compounds in Wuhan were completely shuttered. Wang contacted the management of a few compounds and decided to deliver food to the elderly or people with disabilities.

He ran into some closed doors as the residents were vigilant and refused to open their door. Some opened the door and said they were outraged because they felt being abandoned. Other households showed their profound gratitude.

Wang recalled that one elderly man cried upon seeing him and his fellow volunteers. He said: “No one cared for me. I have been eating pickles for five days. Thanks for visiting me.”

The elderly did not have a mask and thus was afraid of going outside. Furthermore, he could not use a smartphone or participate in collective online buying.

Inspired by many volunteers who combed through apartments for the vulnerable elderly， Wang formed a car fleet to transport goods and healthcare workers for free.

As an inhabitant in Wuhan, to extend a helping hand to the needy was “a natural response” during the Covid-19 pandemic, said Wang.

As the communities stepped up their responses, the demand for groceries and other supplies shrank. With travel restrictions on the cities surrounding Wuhan in Hubei province being eased in late March, Wang began thinking about his own issues: what his pubs should do.

Two options for survival in hard times

After discussing with his partners, Wang decided to resume food delivery services on April 1, with cooks back to work first in all the pubs. cook passed by the counter.

The major stream of revenues was from in-pub services prior to the pandemic. Although the lockdown ended on April 8, Wang felt that in-pub catering would not be allowed by July at the earliest and consumer confidence would only rebound slowly in the second half of the year.

In the view of Wang, even if in-pub services are allowed in July, the post-lockdown sales could be only 70% to 80% of the pre-lockdown turnover.

Wang and his partners decided to shift their focus to online business. “We put emphasis on offline business prior to the outbreak. Now the survival hinges on online services,” said Wang, admitting that it seemed there were no alternatives.

With in-pub services on pause, waiters and waitresses were on leave. They worried about their income.

Wang and his partners came up with two options: a reduced monthly salary or a new compensation regime with a set hourly rate to replace the existing monthly salary. On April 3, he called a meeting with all workers. 

Pub owners and employees sat down to renegotiate employment contracts.

Wang announced that cooks would receive RMB1,225 monthly, 70% of the minimum monthly salary required by the Wuhan municipal government. Their annual bonus for 2019 would also be paid by April 8 even if shareholders have to raise money for it.

For the cooks back to work, he offered the aforementioned two choices plus 5% of their sales as commissions. Wang added that existing salaried waiters and waitresses would be converted to salespeople without a base salary, who would receive 25% of their sales revenues only.

Of all his pubs, the one at Lvdi, which opened in November 2019, was hit hardest. Wang urged the employees in that pub to understand his difficulties and weather the stormy times together.

“Revenues are increasing day by day. However, they are not enough for workers’ compensation,” said Wang.

Allen, a chef in the pub at Lvdi and a native of Wuhan who worked in Beijing and Shanghai as western cuisine chef for a decade, preferred the salary cut option to the hourly pay regime because he believed he would get less income if paid by hour.

Allen, who returned to Wuhan from Shanghai in 2019, said some employees may quit to work as a deliveryman as the income for a deliveryman was much higher than the minimum wage in Wuhan.

He said that he could “live on his savings” for half a year even his reduced salary does not cover his mortgage and living expense. He did not want to leave as he set up the pub from scratch with his coworkers, he added.

Allen spent over two months of self-isolation with his parents, which marked the first time he had lived a long time with them. He felt fortunate that he had moved back to Wuhan. Otherwise, he would have been in Shanghai, worrying about his parents for months.

Of the total 20 employees at the K11 outlet, only seven received an offer for work resumption. With seven employees at work, the monthly fixed overhead costs, including salaries, rents and utilities, amounted to RMB120,000.

Prior to the resumption of in-pub services, monthly sales revenues must reach RMB210,000 to break even, taking into consideration food materials, which account for at least 25% of sales revenues, as well as fees paid to food delivery apps, which withheld about 17% to 22% of sales revenues, according to Wang.

That means a daily revenue of RMB7,000-RMB8,000 would be enough to cover all the expenses. However, the daily turnover was only RMB4,000 on April 4.

Prior to the virus outbreak, the K11 outlet, with the capacity to receive about 40 guests at a time, generated a monthly revenue of RMB800,000 to RMB900,000. Wang was confident that they would survive the fallout of the pandemic with the support from his partners and workers. He is also seeking a rent reduction.

“If we were out of business, it means 90% of the restaurants would have been bankrupt,” Wang said. “If property owners and partners support us, we will surely survive the tough times.”

The four cooks at the K11 outlet recalled their difficulties as the building where they resided was literally locked down.

“The good thing is that we all got through this safe and healthy and back to work,” said one worker. “The most memorable thing was that there were too many online grocery shoppers and it took many days for us to place an order and receive our goods.”

“We experienced the inability to purchase with money,” he said.

Commemorate Lockdown With a New Brew

The second day after the meeting, Wang received the responses from the workers. They all chose the salary reduction option with varying percentage cuts acceptable to them.

Wang and his partners decided to scrap the hourly pay plan and adjust the salary cut range depending on future revenues.

“Our overall final salary cuts are smaller than what the workers could accept,” Wang told TMTPost. For example, only one employee at Lvdi got a cut greater than his expectation, he added.  

On April 20, nearly three weeks after business resumption, Wang posted a photo of a poster for a new product named “Wuhan, Go! Cheery Blossom-flavored Beer”. Meanwhile, the production of the new brew kicked off.

The pub chain just launched a new product to commemorate the lockdown.

On the beer can, many memorable events in Wuhan’s 76-day lockdown were on display: the shutdown of the railway station, the arrival of medical teams from across China, the building of Fangcang hospitals, the guardians of Wuhan and the blooming of cherry blossoms.

Wang remarked: “May you guys fear no more. May Wuhan get strong. May the beer bring more hope and may the stories not be forgotten.”