- The restaurant industry has lost $120 billion in sales during the last three months due to stay-at-home orders and dining room closures following the novel coronavirus pandemic, according to research from the National Restaurant Association. The restaurant market experienced the most significant sales and job losses of any industry during Q1.
- Broken down by month, the industry tallied losses of $30 billion in March, $50 billion in April and $40 billion in May.
- NRA also predicts that the restaurant industry stands to lose $240 billion by the end of the year.
To get an idea of just how devastating the pandemic has been for this industry, consider the National Restaurant Association’s State of the Industry report, released less than a month before shelter-in-place orders rolled out across the country. That report projected a record-high $899 billion in sales this year.
And though there are some signs that the worst is behind the industry, the road to recovery is out of reach for most operators, at least for the next six months. Seventy-five percent of operators surveyed by the NRA said it’s unlikely their restaurants will turn a profit within that timeframe — a lifetime for a business that runs on razor-thin margins. The association’s latest survey drew more than 3,800 responses.
Respondents made this prediction assuming there would not be additional relief from the government. However, even if restaurants gain access to more federal aid, it may not be enough. Of the 84% of respondents who have already received federal support through the Paycheck Protection Program, 78% said it is not enough to keep all of their employees on payroll in the weeks and months ahead. That doesn’t even include the rent piece. While some landlords have accommodated operators’ requests for rent abatements or deferrals, such solutions may not be sustainable, especially for six months. This could explain why the Independent Restaurant Association predicts that as many as 85% of independent restaurants could be forced out of business.
There are a few silver linings in the National Restaurant Association’s study, however. Eighty-nine percent of operators have found a boost from takeout and delivery alcohol orders, for example, which represented 10% of all off-premise sales. Thirty-two states and Washington, D.C., have relaxed licensing laws during the pandemic and some are making those laws permanent.
Further, 80% of operators plan to open for on-premises dining within the next 30 days. However, whether or not that will generate the sales and profits necessary to survive is yet to be seen. Recent data from The NPD Group shows that 68% of all restaurants are located in jurisdictions that have since reopened dine-in business.
With regulations loosening, customer transactions at major restaurant chains have improved, but plenty of restaurants remain cautious of reopening. Sixty-six percent of operators told the National Restaurant Association that they aren’t open for on-premises dining because it is too soon from a public health perspective. Notably, coronavirus cases have risen by double-digit percentages in 16 U.S. states that have relaxed restrictions since Memorial Day, a number which has many expecting a second wave to hit.