Dive Brief:

• Union Square Hospitality Group let go 2,000 employees on Wednesday, according to Nation's Restaurant News. This represents about 80% of its staff. 
• The layoffs will allow staff to receive unemployment benefits as the company's revenues have been “decimated” and restaurants can’t pay non-working team members, CEO Danny Meyer said in a company statement. 
• Meyer said he would contribute his entire compensation and executives would take a pay cut. These funds and other donations will put toward team members facing financial hardship. On Tuesday, USHG set up an Employee Relief Fund to support staff members. Any gift cards purchased through March 24 will go toward this fund.

Dive Insight:

These layoffs are only be the beginning of the novel coronavirus' tremendous blow to the restaurant industry, which has hit small and independent operators especially hard. Without federal assistance, the National Restaurant Association anticipates $225 billion in losses over three months and the loss of 5 million to 7 million jobs.

Cities and states have mandated that restaurants and bars close entirely or shut down dine-in operations and only offer takeout, drive-thru or delivery. But not all restaurants are equipped to switch to off-premise. Prior to this crisis, to-go sales only represented 14% of casual dining sales, according to Black Box Intelligence data shared with Restaurant Dive.

Many fine-dining and full-service restaurants have just closed down entirely. Tom Douglas closed most of his properties in Seattle earlier in March and expects to keep them closed for about two to three months. His restaurants reportedly had a 90% decline in sales due to coronavirus. Tom Colicchio laid off 300 people from his Crafted Hospitality Group in New York this week as well. One Miami chef and restaurateur, who owns nine restaurants, laid off over 450 employees in one night.

With no other options, restaurants are being forced to layoff employees so these staff members can collect unemployment and receive some kind of income in the interim. But unemployment sites are being overwhelmed and New York's site crashed on Monday. In an industry that was facing labor shortages and struggling with rising labor costs, this sudden shift will likely leave a lasting impact, especially if restaurants are unable to reopen and laid off staff find work elsewhere.