Dive Brief:
- Three percent of restaurants have already permanently closed due to the coronavirus crisis, according to research from the National Restaurant Association. Forty-four percent of operators have temporarily closed their restaurants, and 11% anticipate they will permanently close within 30 days.
- Restaurant sales dropped 47% across the U.S. from March 1 to March 22, and 54% of operators now offer off-premise services only, according to an NRA survey of more than 4,000 restaurant operators.
- Seventy percent of restaurants surveyed have had to lay off employees and reduce workers' hours, and about half of restaurants expect further layoffs and hourly reductions in the next 30 days. More than 60% of restaurants have had to reduce their operating hours.
Dive Insight:
The association's research spotlights just how gutting the coronavirus crisis has been for the restaurant industry — and many market experts worry the damage done so far is just the tip of the iceberg.
"This is uncharted territory," Hudson Riehle, NRA SVP of research, said in a statement. "The industry has never experienced anything like this before."
Eighty-eight percent of restaurant operators also reported that total sales volumes between March 1 and March 22 this year was lower than it was during the year-ago period, per NRA research.
The NRA requested more than $400 billion in financial relief, loans and insurance options for the industry from the government. On Wednesday, the Senate passed a $2 trillion stimulus package that included $350 billion in small business loans, $500 billion in loans for distressed companies and $250 billion in unemployment insurance benefits. This safety net could help some restaurant operators keep their heads above water, but the question is, for how long?
And even though these loans will also offer forgivable debt if small- and medium-sized businesses continue to pay their employees, the stimulus package doesn't address the NRA's request of $100 billion in business interruption insurance.
Major restaurant chains have already suffered fatal blows to their businesses in just a few weeks time. Punch Bowl Social, the growing eatertainment chain looking to expand into hotels and cruises, now faces foreclosure. The Cheesecake Factory has furloughed 41,000 employees, CraftWorks has closed all of its restaurants and Union Square Hospitality Group has laid of 80% of its employees. If deep-pocketed brands with strong operations and decades of experience are folding under coronavirus pressure, the future is especially grim for independent restaurants — especially with Moody's predicting restaurant sales could slip 20% over the next 12 months.
