In this video, we discuss how the recent mandatory restrains are fueling the U.S. restaurant apocalypse, and profoundly damaging the labor market. Bars and restaurants are having to face yet another obstacle with the new wave of operational restrictions. Those that haven’t closed have been doing curbside service only, or have drastically altered their layout to make their spaces safer.
The restaurant sector, which is the second-largest private-sector employer in the U.S., is experiencing losses estimated at $240 billion by the end of the year. It was the first industry to close and we will be the last to recover from the current economic collapse.
More than 25,000 restaurant closures were already registered, which over 15,000 restaurants were permanently gone. Projections point that an additional 60,000 permanent closures in the independent restaurant sector alone could be seen by the end of the year, and by 2021 over 10% of restaurants might be erased from the industry.
A survey found that 40 percent of operators aren’t sure they’ll make it six more months. That means one in six restaurants, which represents nearly 100,000 locations, will be closed either permanently or long-term, while almost 3 million restaurant employees are still out of work.
The sector recorded the highest rates of closures, even surpassing retail shutdowns. Restaurants are losing money every month, and they continue to struggle to serve their communities and support their employees. Nearly 64 percent of urban residents revealed to have witnessed permanent closures in their hometowns, in suburban areas 56 percent of the respondents noted local restaurant closings. Even in rural areas, the number of interviewees who have seen a change in the local restaurant landscape was high, marking 44 percent.
As fall and winter approach, restaurants that are still open will face even greater challenges as customer traffic declines. The foodservice industry has pumped more than $2 trillion into the economy right up until its sudden shutdown, but ever since the government-mandated shutdowns took place, the foodservice industry forfeited $165 billion in revenue.
Meanwhile, another surge in cases has led some states to reinforce tighter restrictions on dining. Indoor dining is once again banned at Chicago restaurants. According to the new rules, all bar service should end at 11:00 p.m, all bar patrons should be seated at tables outside; ordering, seating, or congregating at a bar is no longer allowed and bar stools should be removed; all tables should be 6 feet apart and people cannot stand together indoors or outdoors while waiting for a table or exiting. Customers are prohibited to even dance or stand indoors.
While loans given to restaurant owners through the PPP have run out, their laid-off employees have been left waiting for further federal assistance, and September’s unemployment rate of 7.9% shows that many consumers don’t have a dime to spare for dining out.
Many restaurants that have relied on patio dining are about to face extra hardships as the cold weather season is right at the corner. But even in states known for their cozy temperatures, due to the lack of enhanced stimulus relief, many restaurants are still expected to go down.
Considering the hospitality industry is not only one of the foundations of the American economy, as it has a major impact on the global economic scenery, such a substantial spike in restaurant closures will be felt for years in our economy.