Dive Brief:
- The National Restaurant Association said Monday the industry is in a "free fall," citing its recent survey in which 87% of full-service restaurants reported an average 36% decline in sales, and 83% predict sales to be even worse throughout the next three months.
- More than 110,000 restaurants have closed permanently or long-term because of the COVID-19 pandemic. This represents roughly one in six restaurants. That number is expected to rise sharply as coronavirus cases increase, winter weather undermines the allure of outdoor dining and strict restrictions are revisited across the country.
- These downward trends come despite the industry's lobbying efforts throughout the past few months for a new relief bill, honing its attention on the Heroes Act, which would provide $120 billion to help independents restaurants.
Dive Insight:
The association's survey paints a grim picture across the board. Nearly 40% of Georgia restaurant owners don’t expect their businesses to survive another six months without new stimulus funding, for example, while 60% of restaurant owners in Illinois expect more layoffs to come in the next few months. Things are likely to get worse, with New York City now eyeing a potential indoor dining ban again, and some regions in California already taking that step. The industry as a whole lost over 17,000 jobs in November alone, marking its first net loss since April, and 58% of operators expect continued furloughs and layoffs for at least three months.
The association has called on lawmakers to provide help.
"What these findings make clear is that more than 500,000 restaurants of every business type — franchise, chain and independent — are in an unprecedented economic decline. And for every month that passes without a solution from Congress, thousands more restaurants will close their doors for good," Sean Kennedy, executive vice president of public affairs at the association, said in a letter to Congress. "In short, the restaurant industry simply cannot wait for relief any longer."
But negotiations between the House and the Senate repeatedly fizzled prior to President Trump's decision to halt those talks until after the election. Now, in the 11th hour, Congress is trying to pass a stimulus compromise before the end of the year. A bipartisan group of senators is expected to present a $908 billion proposal this week, which would add $300 billion to the Paycheck Protection Program for small businesses, as well as added unemployment benefits for consumers. Meanwhile, Congress is expected to pass a short-term spending bill to avoid a government shutdown, which would otherwise begin Friday. Senator Mark Warner told CNN that if Congress doesn't decide on an interim package it would be "stupidity on steroids."
Without relief, many restaurants will instead continue to rely on local aid and grant programs to stay afloat, a short-term solution that may not be of much help throughout the next three months as restaurants sustain themselves mostly through off-premise channels. There could be hope on the horizon as President-elect Joe Biden has expressed support for providing restaurants with grants versus loans, and Vice President-elect Kamala Harris has co-sponsored the Restaurants Act to establish $120 billion in grants to support restaurants. Their administration doesn't begin until Jan. 20, however, which is a long time for businesses trying to keep the lights on now.
Despite stalled discussions, a growing number of business economists predict the economy to recover to pre-pandemic levels by the latter part of 2021, pinning big hopes on coronavirus vaccines. In the near term, however, the picture is grim. Cases continue to rise and more restaurant restrictions are returning every day, prompting economists and investors alike to join the industry in championing more support for businesses through the winter.
