US restaurant, distributor trade groups seek government help as profits plunge

Published on
March 20, 2020

As more U.S. states begin mandating restaurant closures or limited seating, restaurant and hospitality operators are reporting plunging profits and are instituting furloughs.

The United States National Restaurant Association and the International Foodservice Distributors Association are asking for immediate help from the Trump administration and Congress to stave off what they’re calling an imminent crisis for the U.S. foodservice industry.

Early economic forecasts reveal the industry will sustain at least a USD 225 billion (EUR 211 billion) loss and be forced to eliminate between five million and seven million jobs over the next three months, the NRA said in a press release. IFDA projected the industry will lose USD 24 billion (EUR 22 billion) over the next three months as the COVID-19 pandemic shuts down restaurants, schools, and hotels.

“We have heard reports from distributors that business has declined up to 50 percent,” IFDA President and CEO Mark Allen told SeafoodSource. “That’s why we need Congress to act now – and provide the foodservice distribution industry with federally backed loans as part of its relief packages so we can remain viable.”

IFDA is asking for USD 24 billion in federally backed loans, while the NRA said relief for restaurants should a recovery fund established by the Treasury Department to provide at least USD 145 billion (EUR 136 billion) to the restaurant and foodservice industry help cover operations and pay employees.

New York City-based Union Square Hospitality Group, founded by Danny Meyer, is laying off 2,000 workers – around 80 percent of its workforce – due to “near-complete elimination of revenue,” a company spokesperson told Eater New York.

Darden Restaurants, which operates Olive Garden, Longhorn Steakhouse, Capital Grille, and other major full-service chains, pulled its 2020 forecast and said quarterly sales dropped nearly 6 percent in its most recent quarter.

Darden said it will tap a USD 750 million (EUR 702 million) credit line, but has not announced layoffs.

”The health and safety of our team members, their families and our guests remains our top priority. We are committed to supporting our team members during this unprecedented time and are pleased to have an emergency pay program to supplement our permanent paid sick leave policy for all of our hourly team members,” CEO Gene Lee said, TheStreet reported.

“We are revising our business model to provide meals in different ways, takeout, delivery, safety-enhanced dine-in, but the majority of our restaurants do not have this capability today.  As the restrictions continue, we are facing economic headwinds that will lead many restaurants to shut down operations, lay off workers, and end service in our communities,” NRA Executive Vice President of Public Affairs Sean Kennedy said.

Loans and insurance protections for restaurants should include USD 100 billion (EUR 94 billion) in federally backed business interruption insurance to “help sustain businesses and their employees over an anticipated long-term recovery,” NRA said.

Additionally, the NRA is also seeking USD 35 billion (EUR 33 billion) in community development block grants for regions and communities especially hard-hit – similar to a program following the 11 September terrorist attacks.

Photo courtesy of Cryptographer/Shutterstock

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