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As the new and devastating coronavirus spreads across the globe, we are witnessing collateral damage far and wide. But, unfortunately, the American restaurant industry has been hit the hardest. All across the country journalists are offering heartbreaking reports and with each news report we find out that our lives are changing in ways we can’t even imagine.
Point-of-sale systems, reservation apps, and other innovative tech platforms have been able to capture the disruption in their databases. Their reports paint a vivid picture of just how much COVID-19 has warped the US restaurant culture in the last couple of months.
It is quite obvious that the government’s safety measures, which were all justified, had a huge impact on the American food industry. We are witnessing a loss of income for business owners who are forced to lay off workers. The survival of independent restaurants is threatened and we might wake up tomorrow in a world where this type of business is a thing of the past. Just a few weeks after the closures, the representatives of independent restaurants have started asking for measures that would help them survive. They said that over 75% of all independent restaurants would succumb to bankruptcy unless the local, state, and federal governments would do something about it.
The first restaurant closures happened on March 15, when Mike DeWine, the Governor of Ohio, ordered that all restaurants and bars close their doors. Within the following week, a large number of states followed suit. More than half of the workers who operated in the hospitality industry had been laid off by March 23 and many insurers dodged their obligations and refused to cover for the financial losses that restaurant owners were dealing with.
Across the world, restaurants’ daily traffic dropped staggeringly as compared to the same period in 2019. According to the owners of Restaurantfurniture.net, who witnessed the phenomenon, the sudden restaurant and bar closures caused a domino effect among many industries such as liquor and food production, shipping, restaurant furniture, musicians, fishing and farming, florists, and many others.’
In 2019, the National Restaurant Association projected the industry at $899 billion in sales. It is worth mentioning that 99% of establishments are small businesses, family-owned with no more than 50 employees. As of February 2020, the hospitality industry as a whole employed 15 million workers, which represents 10% of the American workforce. Indirectly, this industry employed another 10% if we factor in all of the associated businesses (trucking, food producers, delivery services, etc.). To paint a picture of just how huge this industry is, we just have to mention that in the states of Massachusetts and Delaware, one in ten workers is employed in a hospitality establishment, in Carolina we’re talking about 11 percent, and in Texas, 12%.
The situation that the hospitality industry is going through is unique according to NPR’s Yuki Noguchi. In her article, the journalist argues that all types of restaurants are facing various states of collapse. With 15.6 million workers facing a shaky job market, chances are we will all be affected by the shutdown. To operate, restaurants need certainty, and the COVID-19 sudden lockdown was unexpected and unplanned. A lot of industry experts are warning the authorities that a lot of small businesses will probably never recover from the COVID-19 closure without substantial help from the government.
Over the past few years, studies have shown that US residents spent more money at restaurants than they did in grocery stores. As a result, the impact on the economy will be larger than most of us expect. According to the chief economist of the National Beer Wholesalers Association, Lester Jones, this event is very traumatic for hospitality industry establishments such as bars, restaurants, taverns, etc. On a similar note, Chris Swonger of the US Distilled Spirits Council argues that the United States distillers and many restaurants, small businesses, and bars are facing a real economical challenge. A restaurant investor of New York City even went as far as to say that for the restaurant business, the situation is apocalyptic. He finds it extremely depressing that this pandemics might be survived just by chains. But, surprisingly enough, restaurant chains are suffering as well. McDonald’s had to close 50 restaurants on March 20, and on March 21st, the famous coffee chain Starbucks made an official announcement that all of their establishments in Canada and the US will be limited to delivery orders and drive-thru.
On March 19, President Trump met via phone with several leaders of chain restaurant companies. This might sound like good news, but, unfortunately, no independent restaurant owners were included in the conversation. Among the participants were McDonald’s, Domino’s Pizza, Darden Restaurants, Wendy’s, the National Retail Federation, and the International Franchise Association. On March 25th the Senate leadership and the White House decided to offer a package of $2 trillion meant to save the industry. This made business owners feel partially optimistic. But, the small and independent businesses were quickly outflanked by the large restaurant chains whose superior resources allowed them to access the funds. As a result, of the 60% of small hospitality establishments that applied for funds just 5% received assistance.
In conclusion, we might not be able to eat in our favorite restaurants in the future, unless our favorites happen to be McDonald’s and Domino’s. But there are things that we can do to prevent this from happening. For instance, we can order food from small independent restaurants. This will help them survive through the pandemics and maybe their workers will still have jobs once things get better.
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This content is sponsored by Miruna Secuianu.
Photo: Shutterstock