The National Restaurant Association this week released some rather gloomy statistics around COVID-19’s impact on restaurants so far. A survey of more than 4,000 U.S. restaurant owners and operators found that 3 percent have already permanently closed their restaurants, while another 11 percent say they anticipate doing so within the next 30 days.
Those that have remained open (at least for off-premises orders) have also had to make adjustments. Besides the switch to delivery and takeout orders, restaurants have also had to reduce staff as well as cut back their operating hours.
On that note, even mega-chains have not been immune. This week alone, The Cheesecake Factory furloughed 41,000 employees and is in talks about possibly deferring and/or adjusting its rent. Yum Brands, which owns Pizza Hut, Taco Bell, and KFC, has outright closed 7,000 restaurants around the world, which affects hundreds of jobs. McDonald’s completely shuttered operations in the U.K., and has reduced hours (and menu items) in the U.S.
According to The Association, roughly half of restaurant owners/operators “anticipate more layoffs and hourly reductions over the next 30 days.”
This infographic, also from The Association, breaks down the situation and its unsettling numbers pretty clearly. Notably, it states that “Restaurants can’t just switch their operations over to takeout and delivery and be fine. This is not an option for everyone in our industry.” And indeed, only 54 percent of operators/owners surveyed by The Association have changed their business model to off-premises for the time being.
Unlike QSRs, which typically offer food that travels well and was designed to eat quickly, many restaurants specialize in meals meant to be eaten in the dining room. It’s not a matter of simply throwing existing dishes in a box, and part of developing an off-premises-only model involves adjusting the menu. More items that travel well and family-style options are popular recommendations for restaurants.
Even so, doing delivery is expensive. Industry figures are telling businesses to join as many third-party platforms as they can right now — no small feat when you consider the exorbitant commission fees. Some companies, which are essentially third-party aggregators for third-party delivery platforms, can speed that process up by handling the bulk of the work. They do not necessarily guarantee better commission rates for restaurants, though.
All of which is to say, unfortunately, we can expect the number of employee layoffs and furloughs, shuttered operations, and reduced hours to keep going up, at least in the very near future. The $2 trillion stimulus package that was passed this week will offer some relief for restaurants. The bleak reality is that it probably won’t entirely stop the bleeding.