Restaurant Industry In Economic Free Fall — Here Are Brutal The Numbers
The restaurant industry is in an economic free fall due to months of closings and dining limitations. For those who don’t know, restaurants are the nation’s second-largest private sector employer — with employees at independent eateries, regional and national chains, and franchisees.
The National Restaurant Association (NRA) has now published the results of a new survey that shows how big the problems are, „and the results should galvanize Republicans and Democrats alike to finally reach agreement on a compromise coronavirus relief package for our industry and employees, our suppliers, and the communities that rely on the strength of the industry ”, as they write here.
These are the brutal findings of the survey:
– 87% of fullservice restaurants (independent, chain, and franchise) report an average 36% drop in sales revenue. For an industry with an average profit margin of 5%-6%, this is simply unsustainable.
– 83% of fullservice operators expect sales to be even worse over the next three months.
– Although sales are significantly lower for most independent and franchise owners, their costs have not fallen by a proportional level. 59% of operators say their total labor costs (as a percentage of sales) are higher than they were pre-pandemic.
– The future remains bleak. 58% of chain and independent fullservice operators expect continued furloughs and layoffs for at least the next three months.
In the letter the NRA also notes that the tide of restaurant closures and bankruptcies continues to rise — „sweeping away jobs in some of the most venerated independent and chain restaurants.“
– We predict that as of today, 17% of restaurants — more than 110,000 establishments — are completely closed.
– The vast majority of permanently closed restaurants were well-established businesses, and fixtures in their communities. On average these restaurants had been in business for 16 years, and 16% had been open for at least 30 years.
– Only 48% of these former restaurant owners say it is likely they will remain in the industry in any form in the months or years ahead. Our nation is losing a generation of of industry talent, knowledge and entrepreneurial spirit.
It goes on: „What these findings make clear is that more than 500,000 restaurants of every business type — franchise, chain, and independent — are in an unprecedented economic decline. And for every month that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good.“
The Association hopes that the Congress will act fast: „In short, the restaurant industry simply cannot wait for relief any longer. Efforts in Washington to find the “perfect” solution are laudable, but the lack of progress in the meantime has led too many operators to give up on the government and close down for good. Since our last update to you, less than three months ago, an additional 10,000 restaurants have closed nationwide.“
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