US restaurant industry seeks relief as outbreak threatens millions of jobs

Published on
March 18, 2020

Restaurants are calling on the U.S. government to provide aid in the wake of closures and limited-capacity requirements for foodservice in most states due to coronavirus.

More than nine million jobs in the leisure and hospitality sector are threatened, while 3,634 jobs have already been cut due to the COVID-19 outbreak, according to Challenger, Gray & Christmas, an executive outplacement firm.

"We are certainly beginning to see the cracks in the foundation. Slowing demand, brought on by the need for Americans to practice social distancing, is going to very likely immediately hurt those who work in at the nation's hotels, restaurants, and bars," Challenger Senior Vice President Andrew Challenger said in a press release.

The firm noted that its monthly job cuts report does not include layoffs from bars and restaurants that were shut down across 13 states and in three U.S. cities.

“Those shutdowns could cost or significantly impact over nine million jobs, based on various labor department employment data in the leisure and hospitality sector,” it said.

On Wednesday, 18 March, U.S. Secretary of Treasury Steven Mnuchin estimated the unemployment rate could hit 20 percent if a proposed U.S. economic stimulus package is not passed.

Catering and foodservice provider Sodexo said that the coronavirus could sink its annual sales by EUR 2 billion (USD 2.2 billion). Sodexho has been impacted by the closures of U.S. schools and colleges, as well as closures and reduced traffic in foodservice establishments globally.

U.S. restaurant industry associations are urging state and federal governments to provide assistance to the sector. The New York City Hospitality Alliance said the government needs to provide immediate help for employees, Restaurant Business reported.

“Due to this mandated closure, restaurants, and bars will no longer be able pay their employees, including paid sick leave for some, during this emergency once they are forced to close,” the group said in a press release.

A group of independent restaurant and bar owners in Illinois had a similar message for Governor JB Pritzker.

“We will not survive this closure without immediate, decisive action from the government. We must call upon you today to announce immediately what you plan to do for our workers and for our small businesses,” it said.

The funding should include emergency unemployment benefits to all workers, rent and loan abatement, and payroll tax elimination, the organization said.

The Canadian restaurant industry is also bracing for a significant decline in revenue, as citizens are urged to stay away from public places. The restaurant industry could see sales drop by 20 percent in the next two months, estimated David Hopkins, president of Toronto, Ontario-based The Fifteen Group, The Globe and Mail reported.

Photo courtesy of Challenger, Gray & Christmas

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