Restaurants lost $120 billion in sales during the first three months of the COVID-19 pandemic, with 75% of the operators expecting the downturn to keep them unprofitable until at least the year-end holidays, according to a new statistical snapshot of the industry’s attempt at a comeback.
But the research from the National Restaurant Association (NRA) also suggests that the industry may have hit bottom since dine-in service was halted virtually nationwide in mid-March. Restaurants missed $30 billion in sales for that month, $50 billion in April and $40 billion in May, when a number of states okayed the partial reopening of dining rooms.
The data indicate that operators are stepping back cautiously into dine-in service rather than dashing to snap on the Open sign in their seating areas. The research is based on a survey of 3,800 restaurateurs in mid-May. At that time, 66% of the respondents in areas permitting on-premise eating said they hadn’t reopened their dining rooms because the health risks were still too great.
But 40% of places offering takeout and delivery said they weren’t ready to resume on-premise service even where it’s permitted because they had yet to reconfigure with the recommended or mandated social distancing measures in place. Most reopening states set a dine-in capacity limit of 25% to 50% of their total seating, with parties required to be kept six or 10 feet apart.
About a third (34%) of the places offering meals for off-premise consumption said they didn’t reopen after states gave the OK because there wouldn’t be enough customers to justify the costs. And 27% said they didn’t have enough staff to resume dine-in service, though it was unclear if the issue was insufficient time to rehire or difficulties in generating enough applicants.
Still, 80% of the establishments that have yet to push beyond takeout and delivery say they will restart dine-in service within 30 days. About 28% of the respondents were located in areas were dine-in service had been allowed to resume.
The NRA noted that 8 million restaurant jobs had been at least temporarily discontinued at the height of the pandemic, but the survey found that rehiring is resuming at a controlled but steady clip. About 76% of the places that offered takeout and delivery throughout the pandemic have now rehired some staff, and 25% of the restaurants that closed altogether have started rehiring in anticipation of reopening.
Preliminary analysis shows that 3% of restaurants have already closed permanently because of the pandemic, according to the association, though it cautioned that a complete casualty count won’t be available until government statistics are released in several months. It repeated its projection that tens of thousands of places will stay dark.
The NRA noted that 84% of respondents had been granted a relief loan under the Paycheck Protection Program (PPP), the federal government’s major aid program for small businesses. But 78% said their loans weren’t sufficient to keep employees on the payroll until sales had grown sufficiently to cover labor costs.
Seventy-five percent of respondents said their restaurants are unlikely to turn a profit during the next six months, though their projection was predicated on no further aid being extended by government.
The NRA repeated its forecast that the industry is likely to lose $240 billion in 2020 because of the pandemic.