The U.S. restaurant sector continues to struggle and more permanent or long-term closures are expected, according to a recent survey conducted by the National Restaurant Association. The trade group said nearly one in six restaurants is closed – temporarily or permanently – and the industry will lose $240 billion in sales by year-end.
The report also estimates around three million restaurant employees out of work.
“For an industry built on service and hospitality, the last six months have challenged the core understanding of our business,” said Tom Bené, president & CEO of the National Restaurant Association. “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 found most restaurants are still struggling to survive and don’t expect their position to improve over the next six months. The trade group said consumer spending in restaurants remained well below normal levels in August. Overall, sales were down 34% on average. The association’s industry analysis estimates a loss of $165 billion in revenue between March and July. They expect losses will rise above $200 billion in the next few months.
“Our 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,” the group noted in the release.
The survey also found 60% of operators said their restaurant’s total operational costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak. On average, restaurant operators say their staffing levels are only 71% of what they would typically be in the absence of COVID-19.
Just 40% of the operators in the large survey said it is unlikely their restaurant will still be in business six months from now without additional relief packages from the federal government. The trade group has been vocal about the impact COVID-19 has on the industry. On Monday, Sept. 14, the association sent a letter to Congress and the Trump Administration asking them to use bipartisan support to render more aid in a timely fashion.
“This survey reminds us that independent owners and small franchisees don’t have time on their side,” said Sean Kennedy, executive vice president of public affairs for the trade group. “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.’”
Kennedy said the foodservice industry prior to COVID was the nation’s second-largest private-sector employer and pumped more than $2 trillion into the economy. The group said the colder weather means outdoor dining will soon be impractical for many owners. The plea was for quick action as thousands of restaurants could close before Congress reconvenes after the November elections.
The Arkansas CARES Act Steering Committee recently approved a $50 million grant program for restaurants and bars in the state. Stacy Hurst, director of the Arkansas Department of Parks Heritage and Tourism, told committee members the state’s tourism industry has been hurt the most as reflected by a 35% year-to-date decline in revenue from the state’s 2% tourism tax.
“The travel and hospitality sectors are the hardest hit in the economy and are predicted to be the slowest to recover,” Hurst said, adding later in her presentation: “This will not make anyone whole, but it will hopefully provide relief that will get them through.”
The $50 million program awaits action by the Arkansas Legislative Council.