Restaurant employment plunges as coronavirus shutdown takes hold

New federal data shows the industry accounted for more than half of all job losses last month, though it doesn’t reflect late-month layoffs.

New federal data hints at a remarkably bleak month for the restaurant industry in March as mass closures and service reductions led to mounting layoffs and furloughs throughout the country.

Monthly jobs data from the U.S. Department of Labor shows the industry lost 417,000 employees in March, a number that in almost any other time would have been bad enough on its own, wiping out two years’ worth of industry job growth.

Yet that number is also badly undercounted: The survey the department uses to compile the data was done early in the month, before states began shutting restaurants and bars to dine-in traffic and consumers started working from home and not going out to prevent the spread of the coronavirus.

That means they don’t reflect the last two weeks of the month, when 10 million Americans filed new unemployment claims.

Yet the data does suggest that the restaurant industry took the brunt of the hit from these closures. Overall, according to the survey, the economy lost 701,000 jobs and the unemployment rate rose to 4.4%.

That means restaurants represented 60% of the total job losses for the month. No industry came anywhere close to the number of restaurant industry declines during March. In other words, it suggests that the industry lost several million jobs in a matter of two weeks.

Restaurant jobs by month

The number of jobs in the restaurant industry declined considerably in March after years of steady growth.

Source: IRI, total U.S., multioutlet

The coronavirus has sickened more than 240,000 as of Friday morning, with 6,000 people having died from the virus.

To prevent its spread, states deliberately restricted dine-in service at restaurants and in most states ordered residents to shelter in place. Such restrictions are done to slow the virus’s spread, keeping patients from overwhelming hospitals and giving researchers time to develop vaccines and treatments.

The cost of the restrictions, however, has hit restaurants hard, as the vast majority of them can’t make up for lost dine-in sales through takeout and delivery, and as work-at-home requirements keep commuters off the road. Tens of thousands of restaurants are already permanently closed, and more are expected to join them.

If the industry lost 4 million jobs over the past two weeks, for instance, it would take restaurants back to total employment levels not seen in more than 20 years.

Restaurant jobs year over year

The year-over-year change in restaurant jobs also shows a drop last month.

Source: IRI, total U.S., multioutlet

Chili’s owner Brinker International, for instance, more than doubled its takeout sales in the wake of the coronavirus but still generated just 35% of the business it had before the shutdowns took hold in March. Most small and independent restaurants are doing just a fraction of that business.

Before those shutdowns began, many restaurants were starving for employees, raising pay and benefits while searching for efficiencies as many jobs went unfilled. The industry had been increasing the number of jobs at a rate considerably faster than the economy as a whole.

That market has been turned on its head, with employers slashing workers and searching for ways to keep key staff as sales dwindle to almost nothing in many cases.

“There were some tough decisions I had to make as CEO,” said Joseph Tota, CEO of Chicago-area self-service craft beer concepts Red Arrow Tap Room and Tapville Social, who had to furlough 63 workers as Illinois put restrictions on dine-in service. “I’ve never had to do a mass furlough. It was the first decision we made.”

“It’s just one of those decisions you have to make to protect the business,” he added.

The mass layoffs have led to numerous efforts to help restaurant workers suddenly left without jobs. That includes a fund, the Restaurant Employee Relief Fund, set up by the National Restaurant Association Educational Foundation that promises a $500 payment. Numerous groups and organizations are providing assistance.

So many workers applied for the grants that the application system’s server was swamped on Thursday.

“This is decimating so many people and so many people’s lives,” said Kevin Armantrout, who lost his job as CEO of the two-unit Lucy’s Retired Surfers Bar & Restaurant, along with all 300 of the company’s employees, when the owner closed the restaurants last month.

He understands the decision. “Three days before we decided to let everybody go we were saying, ‘Hopefully this thing turns around,’” Armantrout added. “We had no idea what was sitting in front of us.”

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