Covid-19 lockdowns have devastated the restaurant industry. From Tyler Durden at zerohedge.com:
The National Restaurant Association (NRA) sent a damning letter to Congress today (Dec. 7) addressing the collapse of more than one hundred thousand restaurants across the country this year because of the virus pandemic. In just the last three months, the letter said more than 10,000 eateries have closed, and thousands of others are in “economic freefall.”
The letter goes into detail about the association’s most recent nationwide survey, which determines that most restaurants are still experiencing a plunge in sales revenue. Many operators believe more furloughs or layoffs are imminent. As we noted last week, the layoffs have already begun.
“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 of more restaurants across the country will close their doors for good,” Sean Kennedy, executive vice president of public affairs at the association, said in a letter to Congress.
According to the association’s survey,
- 87% of full-service 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 full-service 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 full-service operators expect continued furloughs and layoffs for at least the next three months.