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New data from restaurant groups and organizations shows a stark future for the hospitality industry
As governments start planning ways to re-open the COVID-19-stricken economy, in some cases as soon as next week, several surveys show that independent restaurants probably won’t be ready to open with the rest of the country — at least not without a profound increase in aid and more realistic goals. Despite a $2 trillion-plus federal stimulus program, known as the Paycheck Protection Program (PPP), nationwide fundraising efforts, and an additional injection of capital for small-business loans, an increasing number of restaurant owners say that even in two months they won’t have the staff, customers, or finances needed to stay open long term.
Recent surveys conducted by the National Restaurant Association, a partnership between the James Beard Foundation and the Independent Restaurant Coalition, and the Brewers Association show that COVID-19 has not only been bad for business the past month, but despite federal aid, will continue to eat away at restaurant operators’ bottom line for months and months to come. Here are some of the highlights:
Job losses in the industry:
• 8 million restaurant industry employees have been laid off or furloughed since the beginning of the outbreak. (National Restaurant Association)
• Restaurants laid off, on average, 91 percent of their staff (this includes restaurants that have completely closed). (James Beard and Independent Restaurant Coalition)
• 61 percent of restaurant operators don’t think existing federal relief will prevent more layoffs. (National Restaurant Association)
• Most brewers have laid off at least 80 to 90 percent of staff. (Brewers Association)
• At least 16 percent of operators said that rehiring would be one of the biggest challenges when they open again, especially if unemployment benefits seem more secure than coming back to work at doomed businesses. (James Beard and Independent Restaurant Coalition)
Sales losses:
• Breweries have lost more than 70 percent of sales. (Brewers Association)
• Businesses in the coffee and snack segment reported losing 73 percent in sales during the first 10 days of April. (National Restaurant Association)
• Only 20 percent of restaurants in cities affected by mandatory restaurant closures are certain that delivery and takeout can sustain business until normal operation resumes. (James Beard and Independent Restaurant Coalition)
Loans woes and debt:
• 80 percent of restaurant owners applied for small business loans through the PPP. At least 57 percent have applied for small business grants and 44 percent have applied for small business loans. (James Beard and Independent Restaurant Coalition)
• However, recent data from the Small Business Administration revealed that 44 percent of the $349 billion PPP loans went to only 2 percent of applicants. Meanwhile, many large restaurant chains have borrowed multi-million-dollar funds up to a maximum of $10 million, taking advantage of a loophole that allows larger businesses with fewer than 500 employees per location to apply for the stimulus loans. In some cases the loans were more than twice as large as payrolls.
• 56 percent of independent restaurants have at least $50,000 in new debt as a result of COVID-19. (James Beard and Independent Restaurant Coalition)
• Sixty-five percent of respondents to the Beard survey were women and 67 percent were people of color. However, federal efforts to rebuild the restaurant industry appear unwilling to acknowledge to the industry’s diversity. Not only have loopholes allowed large chains to take up most of the funds, the fact that President Trump’s Economic Support Council (a group chosen to advise on ways to reopen businesses) is notably almost exclusively white men who lead large chains and fine dining establishments — is particularly disconcerting to operators.
The nation is (perhaps too) optimistically pushing forward with plans to restore life and business back to normalcy. Some experts are uncertain about whether the country is ready to re-open; California health officials warned residents that dining out at restaurants won’t feel the same for a long time. Many restaurants will remain closed, even as others open up. The ones that manage to open will have strict protocols, like mandating mask-wearing when inside or taking diner temperatures before seating. And until a vaccine is developed, there remains the risk of new outbreaks, and lockdowns to follow. If the surveys are any indication, it’s hard to say which restaurants, if any, will be capable of surviving that again.
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