March 23, 2020 9:12AM

Coronavirus and Market Resilience

The spread of COVID-19 is starting to clobber the U.S. economy as businesses close and unemployment rises. Just about every country is feeling the pain, including China which was hit first by the virus.

A Wall Street Journal news article by Lingling Wei plays up the supposed advantage the communist Chinese have in handling the crisis. “To deal with the country’s economic ills, state firms pared electricity bills and lowered rents. State banks initiated hundreds of billions of dollars of low‐​cost loans,” she notes. “State power saved China” one expert said, while another said that this is “the advantage of the Chinese system.”

However, a Wall Street Journal news article by Ruth Simon illustrates the advantages of the market system in responding to the crisis, as I’ve excerpted below. Simon focuses on a restaurant in Georgia and its relationships with employees, suppliers, customers, and creditors.

The story illustrates the entrepreneurialism, flexibility, and goodwill embedded in the American system. Business owners are trying to find new ways to generate revenues and retain workers if they can. Creditors and suppliers are renegotiating contracts with business owners. People know that we are all in this together and are trying to be accommodating in their market relationships with others.

Allie and Chris Lyons, the owners of a popular farm‐​to‐​table restaurant called Table 20 in Cartersville, Ga., have done the math. In two weeks, they expect to have just $6,000 in cash, after covering payroll, insurance and rent.

The first coronavirus infections in the Cartersville area were confirmed on March 11. Amid calls for social distancing and with sales plummeting, the couple on Monday laid off all but two of their dozen employees. They have asked their landlord and lenders for relief. They have canceled orders on everything from linens to liquor.

… Cartersville‐​based Century Bank of Georgia, which has $210 million in assets, is modifying the couple’s $113,000 Small Business Administration loan to allow for interest‐​only payments, a move that should cut monthly loan payments to about $500 from roughly $1,800.

… The bank is helping customers affected by the pandemic by deferring principal payments and waiving late fees and charges for insufficient funds.

… Coosa Valley Credit Union, which holds a $15,600 loan on a food truck the Lyonses purchased last year, called the restaurant last week. It offered to defer the $314 loan payment for a month, maybe more.

Saunders Jones, the credit union’s chief lending officer, said it is working on a hardship‐​assistance plan that will be presented to board members next week. It includes the ability to offer a 50% reduction in loan payments for up to six months in addition to standard options, such as payment deferral.

… The new, slimmed‐​down menu [at Table 20] means less revenue for Mama J’s Produce, a small hydroponic and field‐​grown vegetable farm in Cartersville. John Jerauld, who has run the farm with his mother for a decade, typically makes deliveries to 20 restaurants once or twice a week…. Mr. Jerauld plans, in the next few days, to unveil a new website that will allow for online ordering.

… Liquor sales, the most profitable part of the restaurant business and 15% of Table 20’s revenue, are another casualty. … Krista Duncan, a wine and spirits specialist with Eagle Rock Distributing Co., is one of eight sales representatives who work with Table 20. … Eagle Rock, based in Norcross, Ga., about 50 miles from Cartersville, has shifted Ms. Duncan to servicing grocery stores, which are seeing a boom in sales.

…The Lyonses have canceled their $500‐​a‐​month order with Jackson Mat & Towel Service Inc., a family‐​run business that provided the tablecloths and napkins. … Mr. Jackson said he would do whatever he can to keep paying his seven employees. One worker is pregnant; another takes online classes at night. “We are treating them as our kids,” he said.

… To save about $500 a month, Table 20 has paused its contract with online‐​reservation service OpenTable Inc. In response to the coronavirus, OpenTable is waiving gift‐​card listing fees for all participating restaurants and subscription fees for restaurants that temporarily close.

Business is also down at MiCamp Solutions, a Scottsdale, Ariz., provider of credit‐​card processing services and software that works with Table 20 and roughly 16,000 other merchants. … MiCamp has temporarily suspended minimum monthly fees of $35 or more for the roughly 3,500 restaurants, bars, casinos and hotels that have told MiCamp they have temporarily closed. It is offering mobile payment devices at no charge to customers that have shifted to takeout.

… On Wednesday, Mr. Farrar, Table 20’s cook, was checking out Depression‐​era recipes when he came across Water Pie, a custard made of flour, water, sugar and a little butter. Because the restaurant was out of vanilla extract, he substituted vanilla whiskey.

The staff of the restaurant ate the pie, but Table 20 is likely to add the dish to the menu, said Ms. Lyons, who hopes it will draw attention on social media.