The National Restaurant Association sent a letter to Congressional leadership this week sharing new survey findings on the state of the restaurant industry as it continues to navigate the pandemic. The Association’s letter didn’t mince words: “What these findings make clear is that more than 500,000 restaurants of every business type—franchise, chain, and independent—are in an economic free fall.”
The Association conducted a survey of 6,000 restaurant operators and 250 supply chain businesses from Nov. 17-30 of this year. Among its findings are:
- Eighty-seven percent of full-service restaurants, including chains and independents, reported an average drop of 36 percent in sales revenue. Equally disconcerting is that 83 percent of full-service operators expect sales over the next three months to be worse.
- Costs have not fallen, despite declining sales. Over half, or 59 percent, of operators said their total labor costs (as a percentage of sales) are higher now than before the pandemic.
- At the same time, 58 percent of chain and independent full-service restaurants expect more furloughs and layoffs “at least the next three months.”
The letter topped off this bleak serving of news with some numbers on the state of closures around the restaurant industry. As of right now, more than 110,000 restaurants in the U.S. have closed permanently or are closed for the long term. The majority of those were established businesses that, on average, had been open at least 16 years. Others had been open at least 30 years.
“For nearly nine months, restaurants—our nation’s second-largest private sector employer—have been in an economic free fall as a result of mandated closures and capacity limits due to the coronavirus pandemic,” states the letter, which was written by Sean Kennedy, the Executive Vice President of Public Affairs for The Association.
Further down in the letter he adds that, “for every month that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good.”
As The Association’s letter suggests, the restaurant industry faces a bleak few months as more cities face restrictions and outright bans around indoor dining and cold weather makes patio seating unfeasible. The letter urges lawmakers to “reach agreement on a compromise coronavirus relief package for our industry and employees, our suppliers, and the communities that rely on the strength of the industry.”
Congress is trying to pass a stimulus compromise before the end of the year that would pump an additional $300 billion into the Paycheck Protection Program for small businesses. The bipartisan $908 billion proposal is something of a last-ditch effort to get more aid and unemployment benefits to restaurants and other small businesses.
Moving away from the dining room and to more off-premises channels, such as takeout, has added incremental revenue for restaurants (with varying levels of success). However, The Association’s letter more or less states that without a large-scale measure like a relief package from Congress, the situation will get worse, not better, in coming months, with more restaurants will closing their doors forever.
