What You Need To Know
As Covid-19 wreaks continued havoc across the globe, restaurants are still among the hardest hit industries.
It’s been estimated that 2.2 million restaurants worldwide won’t re-open at all. Theproblem remains especially acute in U.S., where $899 billion in sales projected by the National Restaurant Industry for 2020 are a distant memory. At the height of the pandemic in April, one quarter of the 20.5 million jobs lost were in the restaurant industry, erasing three decades of growth. By early December, 17% of the country’s restaurants—over 110,000—had closed permanently or long-term.
Data released Dec. 4 by the Bureau of Labor Statistics saw employment in food services and drinking places down by 3.4 million since February.
How dining evolves from here depends on rethinking economics and tweaking business models: amplified takeout, mail order, and meal kits, as well as side businesses in wine, liquor, and groceries. There is also the question of rethinking design: plexiglass and planters to divide spaces and airflow, smart-looking hand-washing stations, occupancy restrictions, al fresco seating.
Ultimately, there will always be customers who will want to eat and congregate. But in an industry with historically slim margins, something’s going to give until a vaccine is found. What that is seems to change by the day.
Key Coverage
By The Numbers
- 15.6 million The number of restaurant industry employees in the U.S. pre-pandemic, about 8% of America’s labor force.
- $240 billion Estimated losses to restaurant industry by end of the year.
- 75% Restaurant operators in the U.S. who said they won’t be profitable in 2020.
Why It Matters
Beyond the tens of millions of direct jobs at risk, which accounts for nearly 4% of U.S. gross domestic product, for every kitchen that’s not in operation, purveyors such as farmers, butchers, and wineries are affected. For more ambitious restaurants, there are also florists and linen services that are losing accounts.
Now amplify that across the globe, from international supply chains to the virtuous cycle of tourism, with restaurants dependent on visitors for profits as much as inspiring them to travel. The economic damage of a stunted hospitality industry ripples far out.
There is some provisional good news. Chinese restaurants across the U.S., among the hardest hit at the start of the pandemic, have made a strong rebound. And a version of normalcy has returned to some cities across Europe and Asia (Copenhagen’s Noma, for instance, has gone back to a fine dining model, after existing temporarily as a burger stand). Reservation data for OpenTable, a restaurant booking platform, shows improvements for a fifth straight week in Bloomberg’s Recovery Tracker.
Restaurants Inch Back
After a total shutdown in the U.S., dining rooms reopen into a new normal
Still, it’s hard to be optimistic when restaurant spending predicts the virus’s spread, an unexpected rainstorm can wipe out over 95% of day’s sales, and surveys show that nearly a third of Americans are happier cooking at home than going out, with younger Gen Z respondents skewing even more. As of Aug. 31, those OpenTable bookings are still 48% below year-ago levels.
A proposed $120 billion Restaurants Act, which has bipartisan support in the Senate, could provide specific relief, yet in many ways, the crisis has laid bare how broken parts of the industry are, from supply chain to service fees. Evolutions that would have had to happen over several years have been compressed into a few months.
As Danny Meyer, one of America’s foremost restaurateurs, put it early on in the pandemic: “Places [are] paying more than they can afford, talent is not making the living they need to make, while the restaurant isn’t making margins they need to make. The system needs to change, or this crisis is only accelerating what we were heading for anyway.”
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