Operations

Survey: One-third of independents say they won’t make it through October

Mounting debt and operational uncertainty are creating a bleak future for mom and pops, according to a survey from the James Beard Foundation and the Independent Restaurant Coalition.
Photograph: Shutterstock

The future for independent restaurants continues to be bleak, with a third of all operators saying it’s doubtful they’ll remain open through October, according to a survey released Thursday from the James Beard Foundation and the Independent Restaurant Coalition.

There are many reasons for the dire predictions for independent operators, but chief among them are operational uncertainty coupled with mounting debt loads, the survey found.

Three-quarters of independent operators surveyed said they had taken on new debt of at least $50,000, with more than 12% of those polled saying their new debt load was $500,000.

Already, 11% of mom-and-pop operations have either not reopened since the pandemic began in March or have made the decision to permanently close their doors, James Beard Foundation CEO Clare Reichenbach said.

“The prognosis is pretty bleak,” Reichenbach said during a conference call announcing the survey results. “These results paint an alarming picture of the state of independent restaurants in the U.S.”

In releasing the poll, the Independent Restaurant Coalition is calling on Congress to pass the Restaurants Act, which would establish a $120 billion grant program to help independent restaurants, bars, food trucks, caterers and more. Neither the Senate’s proposed Heals Act, nor the Heroes Act passed by the House in April, provide aid specifically for independent restaurants, the groups said.

“Without the Restaurants Act passing, we are going to see an extinction event for restaurants,” restaurateur and TV host Andrew Zimmern said. “We have closed two restaurants because we don’t see any financial light at the end of the tunnel. We can’t continue to hemorrhage money anymore.”

The James Beard Foundation sends a monthly survey to its members about the impacts of the coronavirus. The latest survey results come from more than 2,000 responses in May and July.

The survey paints a picture of the increasingly difficult space independent restaurants are finding themselves in. Among the responses:

  • 55% of respondents in July said the financial pressures of closing and reopening could lead to their permanent shutter, a 20% increase from the May survey.
  • Independent owners said they needed at least 60% dining room capacity to make reopening work financially.
  • 36% of those surveyed said unpredictable state guidelines for operations ranked among their top concerns.
  • 39% said consumer fears around coronavirus transmission were among their top worries.
  • In May, 69% of those surveyed said rent and payroll were their most immediate financial challenges. In July, 52% of those polled said new PPE expenses, rent, mortgage, payroll, staff benefits and vendor expenses were their top cash priorities.
  • Independent operators are concerned about customer behavior, with 82% worried about diners not wearing masks, 72% concerned about customers refusing to social distance and 65% upset about staff mistreatment.

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