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Restaurant industry in limbo

TAGS: Business
ShotShare/iStock/Getty Images person holding restaurant menu out of focus
Nearly 100,000 restaurants closed permanently or long term due to pandemic.

Six months following the first shutdown of restaurants as a result of the coronavirus pandemic, the restaurant industry is in limbo. A new survey released by the National Restaurant Assn. (NRA) found that approximately one in six restaurants (representing nearly 100,000 restaurants) is closed either permanently or long term, leaving nearly 3 million employees out of work. The industry is on track to lose $240 billion in sales by the end of the year, NRA said.

The survey, which asked restaurant operators about the six-month impact of the pandemic on their businesses, found that -- overwhelmingly -- most restaurants are still struggling to survive and don’t expect their position to improve over the next six months. The findings include:

  • Consumer spending in restaurants remained well below normal levels in August. Overall, sales were down 34%, on average.
  • The foodservice industry has lost $165 billion in revenue for March through July and is on track to lose $240 billion this year, according to an NRA analysis.
  • NRA research estimates that for 2020, at least 100,000 restaurants will close, but the initial scope of closures won’t be known until government statistics are released in the months ahead.
  • Sixty percent of operators say their restaurant’s total operational costs (as a percentage of sales) are higher now than they were prior to the COVID-19 outbreak.
  • On average, restaurant operators say their current staffing levels are only 71% of what they would typically be in the absence of COVID-19.
  • In a recent consumer survey, 56% of adults said they are aware of a restaurant in their community that permanently closed during the pandemic.

“For an industry built on service and hospitality, the last six months have challenged the core understanding of our business,” NRA president and chief executive officer Tom Bené said. “Our survival for this comes down to the creativity and entrepreneurship of owners, operators and employees. Across the board, from independent owners to multi-unit franchise operators, restaurants are losing money every month, and they continue to struggle to serve their communities and support their employees.”

The survey also found that 40% of operators think it is unlikely that their restaurant will still be in business six months from now if there are no additional relief packages from the federal government. The association highlighted this for Congress and the Trump Administration in a recent letter, asking them to use bipartisan support to pass small business programs in stand-alone bills.

“This survey reminds us that independent owners and small franchisees don’t have time on their side,” said Sean Kennedy, NRA executive vice president of public affairs. “The ongoing disruptions and uncertainty make it impossible for these owners to plan for next week, much less next year. Congress is about to leave Washington for the elections. We need them to focus on the short-term, basic solutions that have secured bipartisan support and passed one or both chambers. We urge immediate passage of these while we work with lawmakers on the comprehensive elements of our ‘Blueprint for Restaurant Revival.’”

He continued, “The foodservice industry was the nation’s second-largest private-sector employer and pumped more than $2 trillion into the economy right up until our sudden shutdown. Making an investment in an industry that consumers love and that powers the economy is a good business and economic move for Congress as they search for the biggest bang for their recovery buck.”

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