With nearly one in six restaurants closed either permanently or long-term, the National Restaurant Association is lobbying Congress for more relief from the devastation to foodservice demand caused by the COVID-19 pandemic.
A new survey from the association reports nearly 100,000 restaurants are closed either permanently or long-term, and close to three million employees are still out of work six months after restrictions to limit the spread of the virus began, according to a news release. The association reported the foodservice industry is on track to lose $240 billion in sales by the end of the year.
The United Fresh Produce Association does not have any current estimates of fruit and vegetable sales lost because of lost foodservice demand, but the group estimates that close to $10 billion in food has been delivered, but not paid for.
The NRA survey findings include:
- 40% of operators believe it is unlikely their restaurant will still be in business in six months if there are no additional federa; relief packages;
- Consumer spending in restaurants in August was down 34% from year-ago levels;
- The foodservice industry lost $165 billion in revenue from March through July and is on track to lose $240 billion this year;
- In 2020, at least 100,000 restaurants will close;
- 60% of operators say their restaurant’s total operational costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak; and
- On average, restaurant operators say their current staffing levels are only 71% of what they would typically be.
A recent survey of consumers revealed that 56% of adults said they are aware of a restaurant in their community that permanently closed during the pandemic, according to the release.
“For an industry built on service and hospitality, the last six months have challenged the core understanding of our business,” Tom Bené, president and CEO of the National Restaurant Association, said in the release.
In what NRA calls A Restaurant Industry Blueprint for Revival, the association is lobbying Congress for:
- A Restaurant Recovery Fund for structured relief to help restaurants adapt, rehire and eventually reopen. This includes passage of the Restaurants Act proposed by the Senate;
- Build on the Paycheck Protection Program with a second round of eligibility to initial eight-week loan recipients and make other changes to help extend and sustain the program;
- Expand the Employee Retention Tax Credit to help restaurants get support after a PPP loan has run out;
- Provide liability protection for American businesses because COVID-19 is a global pandemic and is not caused or spread by any one type of business or employee. Congress should enact temporary and targeted protections to stem frivolous or fraudulent lawsuits, but allow claims based on willful misconduct by bad actors.
“This survey reminds us that independent owners and small franchisees don’t have time on their side,” Sean Kennedy, executive vice president of public affairs for the association, said in the release. “Making an investment in an industry that consumers love and that powers the economy is a good business and economic move for Congress as they search for the biggest bang for their recovery buck.”
Patrick Pilz, San Diego-based food industry consultant, said a lifting of government shutdowns won’t make a difference if diners don’t return.
“Margins are just too small for all restaurants to survive on a significant drop of restaurant eaters, whether it is because they cannot afford it, or whether it is they feel unsafe,” he said. Only restaurants that can survive a 20% drop in business after six months will be in a good position to survive, Pilz said.