New research from the Washington, DC-based National Restaurant Association (NRA) indicates that the US restaurant industry has lost $120 billion in sales during the last three months due to the impact of government-imposed dining room closures and lockdowns intended to curb the spread of the novel coronavirus (SARS-CoV-2).
As of June 16, the official number of confirmed Covid-19 cases globally was 8,061,689 and the death toll was 438,221. In the USA, according to the Centers for Disease Control, there were 2,104,346 cases reported and over 116,140 deaths attributed to the contagion that has spread from Wuhan, China to virtually the entire world.
State mandated stay-at-home policies in the United States and forced closures of restaurant dining rooms resulted in losses of $30 billion in March, $50 billion in April, and another $40 billion in May.
The NRA’s latest operator survey drew more than 3,800 responses, illustrating the extensive damage to restaurant businesses since the outbreak began. It found that the restaurant industry, which experienced the most significant sales and job losses of any industry in the country during the first quarter of 2020, expects to lose $240 billion by the year-end.
The trade association conducted the survey May 15-25. Here are some top takeaways.
- More than 8 million restaurant employees were unemployed at the height of the pandemic.
- 76% of restaurants that remained open in some capacity have rehired some staff.
- 25% of restaurants that are temporarily closed have rehired some staff and plan to reopen.
- 84% said they received a loan through the Paycheck Protection Program, however…
- 78% said the funding would not be enough to keep all their employees on the payroll until sales are enough to cover labor costs in the weeks or months ahead.
- 75% said it’s unlikely their restaurants would be profitable within the next six months, under the assumption that there will be no additional relief packages from the federal government.
Several operators said the ability to serve alcohol with off-premises orders has been helpful. According to the survey, 89% said they are offering the option with takeout and delivery orders and that those beverages represent 10% of off-premises sales. They also said they would continue to offer them if their jurisdictions allow the continuation of alcohol sales.
Among the restaurants that are currently open for off-premises traffic only, 28% are located in a jurisdiction that is now allowing on-premises dining again. However…
- 66% of these operators say they aren’t open for on-premises dining because it is too soon from a public health perspective.
- 40% percent say they aren’t open because safety and social distancing measures are not yet in place at the restaurant.
- 34% of these operators say they don’t have enough customers to justify reopening.
- 27% don’t have enough employees to staff the restaurant.
- 5% are delaying opening because of the 8-week PPP loan period (extended to 24 weeks in June).
- 80% of these operators say they do plan to open for on-premises dining within the next 30 days.
The NRA’s past two surveys identified that 3% of restaurants have already closed permanently, but the full scope of closures won’t be known until government statistics are released several months from now. The trade association projects the final number will be in the tens of thousands.
US Census Bureau Reports May Uptick
Meanwhile, eating and drinking places in the USA registered sales of $38.6 billion on a seasonally-adjusted basis in May, according to preliminary data from the U.S. Census Bureau. While that was up nearly $9 billion from April, it remained nearly $27 billion down from the pre-coronavirus sales levels posted in January and February.
April’s eating and drinking place sales volume of $29.9 billion was revised down from the Census Bureau’s preliminary estimate of $32.4 billion. In inflation-adjusted terms, that represented the lowest sales at eating and drinking places since February of 1983.
While the seasonally-adjusted figures offer a month-to-month look at spending trends, they don’t provide a complete picture of the sales losses that have been experienced by restaurants during the coronavirus pandemic. For this, the Census Bureau’s unadjusted data set is a better measure, because it represents the actual dollars coming in the door.
In recent years, May was typically the top sales month for restaurants, based on the unadjusted data. On average during the last five years, May sales at eating and drinking places were more than five percent higher than the average monthly sales volume for the entire year. This year, May sales were more than 40 percent lower than what would have been expected in the absence of the pandemic.
