The restaurant industry has been affected significantly by the COVID-19 pandemic. Restaurant operators nationwide are reporting sharp declines in sales and employment levels, and the National Restaurant Assn.’s (NRA) Restaurant Performance Index plunged to a new record low in March, at 95.0, down 6.7% from the level of 101.9 in February.

NRA conducted a survey of more than 6,500 restaurant operators nationwide April 10-16. From the results, the group estimates that the restaurant and foodservice industry will lose more than $50 billion in sales in April. It also estimates that more than 8 million restaurant employees have been laid off or furloughed since the beginning of the novel coronavirus outbreak in March, representing more than two-thirds of the 12 million employees who were working at the nation’s eating and drinking establishments in February.

Looking ahead, most restaurant operators do not think their business will return to normal during the next several months. In fact, respondents to the association’s April tracking survey expect their sales, employment and capital spending levels to remain dampened through the end of the year.

When asked in April, 74% of restaurant operators said they expect their sales volume in six months to be lower than it was during the same period in the previous year. Only 19% of operators think their sales in six months will be above year-ago levels.

On the segment level, operators in the higher-check table-service and limited-service segments are the most pessimistic about improving business conditions. More than eight in 10 casual dining, fine dining and fast-casual operators expect their sales in six months to still be below previous-year levels.

Although quick-service operators are somewhat more optimistic (38% anticipate higher sales in six months), fully one-half do not think their sales will have recovered by late-2020.

Regarding employment, restaurant job losses were widespread in recent weeks, with most operators anticipating a very slow return to pre-COVID-19 staffing levels, NRA reported. When asked in April, 63% of restaurant operators said they expect their staffing levels in six months to be lower than during the same period in the previous year. Only 14% think their staffing levels in six months will exceed year-ago levels.

More than seven in 10 table-service operators and two-thirds of fast-casual operators expect to employ fewer people in six months than they did in the previous year. The staffing outlook in the quick-service segment is a mixed bag, with roughly one in four operators expecting higher and lower employment levels.

Ripple effect

The negative economic consequences of COVID-19 haven’t stopped at restaurant doors, and these ripple effects will continue throughout the supply chain in the months ahead. In fact, NRA said the early word from restaurant operators is that capital spending will be cut in half during the next six months.

Only 28% of respondents to the association’s April 2020 tracking survey said they plan to make a capital expenditure for equipment during the next six months. This is down sharply from the average of 54% of operators who reported plans for an equipment expenditure in the January through March tracking surveys.

Restaurant operators are also putting expansion and remodeling plans on hold. Only 21% of operators said they plan to make a capital expenditure for expansion or remodeling during the next six months – half of the average 42% who reported similarly in the January through March surveys.