10,000 Restaurants Around The US Have Closed Since September

Restaurants in the U.S. are in an "economic free fall" amid the ongoing spike in coronavirus cases, with 10,000 establishments around the country having closed temporarily or permanently since the start of September, according to a trade group that is urging Congress to provide immediate financial relief for the beleaguered industry. 

Restaurant advocates are calling on lawmakers to approve $120 billion in assistance for eateries, highlighting the need among the nation's 500,000 independent restaurants. Congressional leaders are currently negotiating another stimulus package that among other measures would revive the Paycheck Protection Program (PPP), which is aimed at helping small businesses but which doesn't specifically set aside funds for restaurants.

Restaurants regained some of their footing this summer as states eased restrictions on in-person dining. But the resurgence of cases across the nation has prompted some cities and states to reinstate stricter rules. Los Angeles, for instance, last month restricted dining at restaurants, breweries, wineries and bars. At the same time, customers have shied away over renewed concerns about the risks of eating out.

"More than 500,000 restaurants of every business type — franchise, chain and independent — are in an unprecedented economic decline," wrote Sean Kennedy, executive vice president for Public Affairs at the National Restaurant Association (NRA) in a December 7 letter sent to Congressional leadership.

He added, "And for every month that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good."

A recent NRA survey of the group's membership found that almost 6 in 10 chain and independent restaurant operators expect to lay off or furlough workers for at least the next three months. 

Already, there are signs of job cuts hitting the industry this fall. The number of workers at restaurants and bars declined by about 18,000 in November after rising every month since April, when the nationwide shutdowns caused sharp job losses in the industry, according to economic data from the Federal Reserve Bank of St. Louis.

"Demand destruction"

Restaurants are struggling with high levels of uncertainty, ranging from a decline in customer demand to local COVID-19 restrictions, said Ashwin Deshmukh, the owner of Short Stories, an all-day cafe and bar in New York City's Bowery district.

Owners are "really worrying about not being able to cover fixed costs" amid what he calls the "demand destruction" caused by the pandemic," Deshmukh told CBS MoneyWatch. His restaurant got funding through the PPP and the federal Economic Injury Disaster Loan program, which helped cover losses from the initial shutdown this spring. 

"But it doesn't cover 50% demand destruction and no predictability this summer," he said. At the same time, Deshmukh's costs are higher due to spending about $100 per week on personal protective equipment, as well as investing in building an outdoor dining area. 

Usually, December at his restaurant is filled with private events booked by corporate clients — another revenue stream that has vanished, he noted. But New York Governor Andrew Cuomo on December 7 warned that indoor dining could be halted once again in New York City starting next week.

Getting through the winter isn't only essential for the restaurant industry, but for the economic and social fabric of many local communities, Deshmukh said. 

"Having that demand in a place creates this entire class of people who have the flexibility to pursue what they want or hours that allow them to go on audition and be creative," he said. 

As for what's next for Short Stories, Deshmukh said he's weighing his options: "We might turn the front into curry-to-go and soup- and drinks-to-go, and go into the absolute lowest-burn-rate-possible mode and hope there are enough vaccines for a 50% reopening in June."

First published on December 8, 2020 / 3:27 PM

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