Dive Brief:
- Global restaurateur HMSHost has laid off a significant portion of its associates across the country due to a "slow recovery and challenging business climate," a company spokesperson said in an email. Employees that were furloughed in March face permanent layoffs if not recalled by Oct. 15, Restaurant Business reports, estimating that these job cuts could impact at least 3,000 workers in U.S. airports, according to federal layoff notices.
- HMSHost filed notices in Las Vegas (940 potential layoffs at McCarran International Airport), Boston and Dayton, Ohio (at least 400 potential layoffs at Dayton International Airport and Boston Logan International Airport), as well as Seattle; Denver; Kansas City; Spokane, Washington; Milwaukee; Columbus, Ohio; Raleigh and Greensboro, North Carolina; and New York City, the publication reports.
- "When travel initially collapsed, HMSHost furloughed many corporate and front-line associates. For several months, we continued providing our associates with benefits, and allowed them to use all available paid time off, including vacation, as well as sick and flex time which would not otherwise have been available if they had been laid-off," a company spokesperson said. "We had anticipated being able to return our associates to work as business returned. However, the recent surge in COVID-19 cases nationally has stalled passenger traffic, and there is no short-term end in sight to the economic crisis."
Dive Insight:
Airport restaurant operators have been hit hard by the novel coronavirus pandemic, and face a slow recovery in a market where consumers are particularly scarce. On Wednesday, the Transportation Security Administration reported total traveler throughput of 565,946 compared to 2,247,446 on the same day last year. The Airport Restaurant & Retail Association (ARRA) forecasts that airport shops and restaurants will lose $3.4 billion between Aug. 1 and the end of next year.
HMSHost is a major player in the air travel food service space. In February, it signed a seven-year, $1.5 billion contract with the McCarran International Airport in Las Vegas to open new and refurbished locations. Now, HMSHost is laying off 940 workers at that airport alone. As of last summer, HMSHost ran 4,000 stores in over 120 airports and 80 travel plazas across the world,.
An ARRA report on the industry sounded the alarm that “the current trajectory… will usher in a wave of permanent restaurant and retail closures that will turn bustling airports once pulsing with energy into ‘ghost towns’ even after travel recovers." In an open letter penned by the ARRA and several other trade associations related to the travel sector in June, industry leaders called for financial relief from Congress to the tune of at least $5 billion.
Scott Gerber, CEO of the hospitality company Gerber Group, posited in a piece for Conde Nast Traveler that independent bars and restaurants in airports may not survive the slowdown of traveler traffic brought on by the coronavirus pandemic. Gerber predicted that even in phases of reopening, if consumers don’t have the assurance of viral immunity or of the virus’ eradication, that social habits won’t "snap back that quickly."
This economic uncertainty is a marked break from the industry's outlook before COVID-19, when major fast casual chains were looking toward airports as a potential route for expansion. Panera entered a multi-year, multi-unit development partnership last year with HMSHost to expand its brand at major travel hubs across the country, and Shake Shack had opened locations in a dozen airports. However, in the chain’s Q2 earnings call in late July, Shake Shack CEO Randy Garutti said that just half of their airport locations were open and were operating at “severely reduced sales."