Restaurant industry begs for help as second wave forces new shutdowns

Published on
December 8, 2020

U.S. restaurant groups are urging Congress to provide immediate financial help for the hard-hit industry, as new dining restrictions are expected to increase financial burdens and cause more restaurants to close.

An estimated 110,000 restaurants have already closed their doors since the start of the COVID-19 pandemic, according to the National Restaurant Association. In November alone, food and beverage establishments lost 17,400 jobs – the first month since April the industry has lost jobs, according to new U.S. Department of Labor data.

Now entering a dangerous second wave where coronavirus caseloads are at all-time highs, many states and municipalities are implementing new indoor dining restrictions. Nearly 85 percent of California residents are under new stay-at-home orders that include a ban on both indoor and outdoor dining (restaurants are open for takeout-only) in many countries, NPR reported. Los Angeles County adopted a stay-at-home order late last month, and now officials in five of the 11 counties that make up the Bay Area have chosen to follow suit. 

The moves threaten to cause more restaurant closures, National Restaurant Association Executive Vice President for Public Affairs Sean Kennedy said in a letter to Congressional leadership

“More than 500,000 restaurants of every business type – franchise, chain, and independent – are in an economic freefall,” Kennedy wrote. “And, for every month that passes without a solution from Congress, thousands more restaurants will close their doors for good.” 

Eighty-seven percent of full-service restaurants report an average 36 percent drop in sales revenue, according to NRA’s survey of 6,000 restaurant operators and 250 supply chain businesses in late November. And 83 percent of full-service operators expect sales to be even worse over the next three months.

“For an industry with an average profit margin of 5 percent to 6 percent, this is simply unsustainable,” Kennedy wrote.

Renewed indoor dining restrictions are particularly worrisome to operators already struggling to survive, he and other groups said. The NYC Hospitality Alliance criticized New York Governor Andrew Cuomo’s comments that he would close all indoor dining in New York City if the COVID-19 hospitalization rate does not subside.

“New York City’s highly-regulated, reduced-occupancy, well-ventilated, and COVID-19 compliant restaurants have gone above and beyond to protect the health and safety of their customers and employees, NYC Hospitality Alliance Executive Director Andrew Rigie said in a press release.

Cuomo said 70 percent of recent cases stemmed from “living room” spread, not restaurants, according to Rigie, and the NYC Department of Health “has zero data demonstrating that increased infection rates are a result of our highly-restricted restaurants.”

“Another forced government closure of New York City restaurants will cause an irreversible harm on even countless more small businesses and the hundreds of thousands of workers they employ, especially if it is not coupled with financial relief,” Rigie said.

NRA supports a new USD 908 billion (EUR 751 billion) COVID-19 relief bill proposed by a group of U.S. legislators. as a "down payment" toward a larger relief package in early 2021, Kennedy wrote.

The congressional proposal, which includes USD 228 billion (EUR 189 billion) for Paycheck Protection Program subsidies focused on small businesses and additional unemployment benefits, is an effort to compromise on an economic stimulus package, which legislators could not agree on before the November election, The Washington Post reported.

“In short, the restaurant industry simply cannot wait for relief any longer,” Kennedy said. “We appreciate the efforts of a group of moderate members of the House and Senate to advance a true compromise between the competing proposals from Democratic and Republican leaders. If this moderate plan represents a ‘down payment’ for a larger relief package in early 2021, it will provide restaurants with immediate relief to hold on through the most dangerous point in our business year.”

However, the Congressional proposal “will not solve anything for the hundreds of thousands of neighborhood restaurants facing permanent closure this winter," said Kevin Boehm, co-founder of the Independent Restaurant Coalition and co-founder of Boka Restaurant Group in Chicago, Illinois, in a press release.

The first round of Paycheck Protection Program loans “did not work as advertised" for restaurants and bars, Boehm said.

“More than one in six restaurants are already permanently closed and two million restaurant workers remain unemployed – more than any other industry,” he said.

“Just like in April, paying for a few weeks of payroll now, when the virus is at its worst and we cannot generate revenue, will not help us keep our doors open until a vaccine is widely available,” IRC wrote in a 7 December letter to Congress. “This is particularly true as city and state officials across the country issue new curfews and dining restrictions that make it impossible to earn enough revenue to maintain full employment.”

Instead, the IRC urged Congress to pass the RESTAURANTS Act, a bipartisan proposal that would establish a USD 120 billion (EUR 99 billion) Restaurant Revitalization Fund. The grant program for independent restaurants and bars would cover costs such as payroll, rent, supplies, and PPE.

During an economic roundtable last week, U.S. President-elect Joe Biden agreed that direct relief for restaurants was needed.

"It should not be a loan, it should be a guarantee,” he said, according to IRC.

Photo courtesy of Drazen Zigic/Shutterstock

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