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09/24/2020

Nearly One in Six Restaurants Shuttered Due to Pandemic Impact

WASHINGTON, D.C. — Six months after the first restaurant shutdown due to the coronavirus pandemic, nearly one in six restaurants is either closed permanently or closed long-term, according to a new survey by the National Restaurant Association (NRA). This represents nearly 100,000 U.S. restaurants.

Additionally, nearly 3 million employees remain out of work, and the restaurant industry is on track to lose $240 billion in sales by the end of 2020.

The survey asked restaurant operators about the six-month impact of the pandemic on their businesses and found overwhelmingly that a majority of restaurants are still struggling to survive and do not expect their position to improve over the next six months.

Key findings include:

  • Consumer spending in restaurants remained well below usual levels in August, with sales down 34 percent on average.
  • Analysis from the NRA shows the foodservice industry lost $165 billion in revenue from March through July and is on track to lose $240 billion in total this year.
  • NRA research estimates that at least 100,000 restaurants will close in 2020, but the initial scope of closures will not be known until government statistics are released in the months to come.
  • Sixty percent of operators report that their restaurant's total operational costs (as a percent of sales) are higher than they were prior to the COVID-19 outbreak.
  • On average, restaurant operators say their current staffing levels are just 71 percent of what they would typically be without COVID-19.
  • In a recent consumer survey, 56 percent of adults say they are aware of a restaurant in their community that permanently closed during the pandemic.

"For an industry built on service and hospitality, the last six months have challenged the core understanding of our business," said Tom Bené, NRA president and CEO. "Our survival for this comes down to the creativity and entrepreneurship of owners, operators, and employees. Across the board, from independent owners to multi-unit franchise operators, restaurants are losing money every month, and they continue to struggle to serve their communities and support their employees."

The survey also found that 40 percent of operators consider it unlikely their restaurant will still be in business six months from now if there are no additional relief packages from the federal government. The NRA highlighted this for Congress and the Trump Administration in a letter sent Sept. 14, asking them to use bipartisan support to pass small business programs in stand-alone bills.

"This survey reminds us that independent owners and small franchisees don't have time on their side," said Sean Kennedy, executive vice president of public affairs for the NRA. "The ongoing disruptions and uncertainty make it impossible for these owners to plan for next week, much less next year. Congress is about to leave Washington for the elections — we need them to focus on the short-term, basic solutions that have secured bipartisan support and passed one or both chambers. We urge immediate passage of these while we work with lawmakers on the comprehensive elements of our 'Blueprint for Restaurant Revival.'

"The foodservice industry was the nation's second largest private sector employer and pumped more than $2 trillion into the economy right up until our sudden shutdown," Kennedy continued. "Making an investment in an industry that consumers love and that powers the economy is a good business and economic move for Congress as they search for the biggest bang for their recovery buck."