Business

U.S. Restaurants in Crisis

National Restaurant Association to Congress: The Industry Needs Relief

The National Restaurant Association says the dining industry is in economic free fall as roughly 10,000 restaurants have closed in three months as a result of the coronavirus pandemic.

In a letter to Congress, the association shared the findings of a new survey that illustrates continued business deterioration across the restaurant industry.

The letter also asserted that the entire industry needs a ‘down payment’ relief bill to make it to the new year.

“What these findings make clear is that more than 500,000 restaurants of every business type — franchise, chain, and independent are in an economic free fall,” said Sean Kennedy, executive vice president for public affairs, in the letter. “And for every month that passes without a solution from Congress, thousands more restaurants will close their doors for good.”

The National Restaurant Association Research Group conducted a survey of 6,000 restaurant operators and 250 supply chain businesses from Nov. 17 – 30.

The key findings:

– Eighty-seven percent of full-service restaurants (independent, chain, and franchise) report an average 36 percent drop in sales revenue. For an industry with an average profit margin of 5-6 percent, that is simply unsustainable, says the association.
– Eighty-three percent of full-service operators expect sales to be even worse over the next three months.
– Fifty-nine percent of operators say their total labor costs (as a percentage of sales) are higher than they were pre-pandemic. Although sales are significantly lower for most independent and franchise owners, their costs have not fallen by a proportional level.
– Fifty-eight percent of chain and independent full-service operators expect continued furloughs and layoffs for at least the next three months.

The association says the future remains bleak. As of today, 17 percent of restaurants, more than 110,000 establishments are closed permanently or long-term.

On average these restaurants had been in business for 16 years, and 16 percent had been open for at least 30 years.

Only 48 percent of these former restaurant owners say it is likely they will remain in the industry in any form in the months or years ahead, according to the survey.

The association says the tide of restaurant closures and bankruptcies continues to rise sweeping away jobs in some of the most respected independent and chain restaurants.

In the letter, the association also provided a plan for how a proposed second draw from the Paycheck Protection Program (PPP) could be strengthened.

Major points:

– To be eligible for a second draw at PPP, a small business must demonstrate a gross receipts loss of 25 percent or more in any calendar quarter of 2020 when compared to the same calendar quarter in 2019.
– PPP borrowers must be able to deduct ordinary and necessary expenses; loans under $150,000 should be streamlined for forgiveness and 501(c)(6) nonprofit organizations should be able to participate in PPP among other asks.

In early December, a group of moderate bipartisan U.S. senators and representatives endorsed a compromise plan for a second round of COVID-19 relief after months of failed negotiations between lawmakers.

Kennedy says the plan represents a “down payment” for a larger relief package in early 2021.

“In short, the restaurant industry simply cannot wait for relief any longer,” Kennedy said. “We appreciate the efforts of a group of moderate members of the House and Senate to advance a true compromise between the competing proposals from Democratic and Republican leaders.”

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Sarafina Wright –Washington Informer Staff Writer

Sarafina Wright is a staff writer at the Washington Informer where she covers business, community events, education, health and politics. She also serves as the editor-in-chief of the WI Bridge, the Informer’s millennial publication. A native of Charlotte, North Carolina, she attended Howard University, receiving a Bachelor of Arts in Journalism. A proud southern girl, her lineage can be traced to the Gullah people inhabiting the low-country of South Carolina. The history of the Gullah people and the Geechee Dialect can be found on the top floor of the National Museum of African American History and Culture. In her spare time she enjoys watching either college football or the Food Channel and experimenting with make-up. When she’s not writing professionally she can be found blogging at www.sarafinasaid.com. E-mail: Swright@washingtoninformer.com Social Media Handles: Twitter: @dreamersexpress, Instagram: @Sarafinasaid, Snapchat: @Sarafinasaid

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