Cold weather could further chill restaurants’ recovery

Sunny summer weather helped restaurant owners and workers recover after they were broadsided by the coronavirus pandemic in March.

However, as fall morphs into winter and diners are forced back inside, the big question will be: Are there enough customers to keep what’s left of the restaurant sector financially viable?

The worst fears of many American businesses are coming true. With no recovery in sight from the COVID-19 pandemic, 72,842 businesses across the U.S. have permanently closed, according to the latest study by Yelp, as reported by Forbes in late July.

Yelp’s research counts 15,770 U.S. restaurants as going out of business forever due to the pandemic. Out of every 10 restaurants that closed temporarily, six eventually shuttered permanently — alarming 23 percent increase in the last month.

When Washington Governor Jay Inslee ordered indoor dining closed in mid-March, unemployment claims jumped sevenfold in one week. Since then, there have been greater opportunities for traditional restaurant service, with many restaurants reopening with limited indoor seating and ramping up patio dining. Now, owners again face difficult limitations as the seasons change. Unfortunately, takeout and delivery service are not feasible alternatives for some restaurants.

Particularly hard hit are small family owned businesses. According to the National Restaurant Association, “99 percent of companies in the industry are family owned small businesses with fewer than 50 employees.”

However, even some of the large franchise restaurants shutdown stores. For example, McDonalds closed 50 locations in March and Dunkin’ announced in July it will permanently close 800 donut and coffee shops by the end of the year.

The National Restaurant Association reported in February, before COVID-19 took over our country, restaurants employed more than 15 million people, representing 10 percent of America’s workforce. Now, seven million are jobless. At its peak, the industry indirectly employed another 10 percent of the economy. Restaurants are the nation’s second-largest private employer and the third-largest employer overall.

The economic impact is stark. The restaurant association estimated $145 billion in revenue was lost between March and June in an industry that was expected to do more than $850 billion in revenue for the year. That loss could grow to $250 billion by year’s end.

The drastic economic and employment plunge prompted the White House and Congress to swiftly enact the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act in late March. Expanded unemployment benefits and payroll protection provisions helped, but additional governmental support is needed.

Restaurant leaders across the country worked with Oregon Rep. Earl Blumenauer, a Democrat, and Mississippi Sen. Roger Wicker, a Republican, to push a $120 billion relief package, called the Restaurants Act. However, that effort lost steam.

Now association leaders are more focused on extending the Payroll Protection Program incorporated in CARES. The PPP provision provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits. Funds also can be used to pay interest on mortgages, rent and utilities.

Even with additional government assistance, survival is an uphill battle. According to Black Box Intelligence, Inc., a firm that represents about 290 restaurant companies and about 50,000 restaurant units, restaurant operators have been riding a rollercoaster from the “complete shock and awe” of the coronavirus pandemic in early to late March to the current state of: “How can I survive?”

One of the obstacles for restaurant owners is pessimism. In July, Black Box Intelligence polled its members and webinar participants on their optimism, and 68 percent of operators said they expected things to get worse in the next 90 days.

“We’re in for a long ride,” Black Box CEO Kelli Valade concluded.

Hopefully, with a COVID-19 vaccine, necessary precautions, well-reasoned gubernatorial orders, and wise and timely assistance, we can stem losses and rebuild a vital part of our economy.

Don C. Brunell, retired as president of the Association of Washington Business, is a business analyst, writer and columnist. He lives in Vancouver and can be contacted at TheBrunells@ msn.com.

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