Coronavirus: 2.2 Million Restaurants Worldwide Teeter on Brink of Collapse

Can restaurants reopening cope with new Covid-19 guidelines? With each week, more data emerges to show how the coronavirus pandemic is permanently reshaping the restaurant industry. The world is currently on track for a radical overhaul of its food-service landscape: Hundreds have filed for bankruptcy over the last three months, according to consulting firm Aaron Allen & Associates, and the situation is poised to keep worsening.

“Based on our estimates, we believe up to 10% of all restaurants globally will disappear, with 20% or more also going through a restructuring process,” said founder Aaron Allen. “This is a conservative case, in our view.”

Allen estimates there are about 22 million restaurants worldwide, so the projection implies that 2.2 million of them will close. In the U.S., the industry employs 15.6 million workers, according to the National Restaurant Association.

OpenTable, which tracks restaurant activity via reservations, estimates the failure rate could be even higher. Even before the global pandemic caused a dramatic and unprecedented shift in consumer behavior, the restaurant industry was suffering from rising debt and too much competition.

So far, the list of bankruptcies includes Le Pain Quotidien and Garden Fresh Restaurants, the owner of Souplantation and Sweet Tomatoes. Larger chains such as TGI Fridays and Cousins Subs won’t reopen a number of shuttered locations, and franchisees of big chains are also increasingly feeling pressure.

“Weaker businesses are searching for pre-Chapter 11 solutions,” said John Gordon, principal at Pacific Management Consulting Group, a restaurant consultancy. “There will be many closings, particularly independents.”

Many states’ move to reopen their economies offer some relief, but mandatory reductions in seating capacity limit the potential for recovery. At the same time, a second surge in Covid-19 cases in states like Texas, Florida, Arizona and California is raising alarms and threatening to undo the small gains the industry has seen in recent weeks.

“Another wave of the pandemic will take the numbers higher without further bailouts,” Allen said. Restaurateurs and their lobbying groups have complained that U.S. relief programs don’t address restaurants’ real needs as they face financial shortfalls from reopening under occupancy caps and social distancing measures, in addition to their need to cover expenses beyond payroll.

For now, restaurants are trying to find new ways to survive, from discounts and curbside pickup to selling groceries. Many have cut staff and trimmed menu items to reduce costs.

Restaurants’ level of operations vary across the U.S., depending on local virus trends and regulations. Chicago, for example, is currently in phase three of a five-step reopening process, which includes outdoor dining for cafes and restaurants.

North Carolina since May 22 has allowed restaurants to operate at 50% of seating capacity. But a spike in coronavirus cases around the state in June is forcing establishments to rethink their reopening plans.

Big chains and local businesses alike have upended their business model—with some now offering meat by the pound, milk, veggies and even toilet paper. Panera Bread and Tijuana Flats, for example, are selling groceries for the foreseeable future.

So is New York-based chain Just Salad. The chain’s CEO, Nick Kenner, says the company began delivering groceries in Lower Manhattan in April, and has since expanded the service to parts of Brooklyn, upper Manhattan and the Hamptons. He plans to keep the service around even post-pandemic.

Traditional groceries like raw chicken or black beans are lower margin, but the plan is to focus on so-called value-added things like prepared pesto sauce, or even easy-to-prep meal kits delivered in an hour or less.

Pacific Management’s Gordon sees a recovery over time, “especially into later 2021 and 2022.”

“On the whole, most quick-service restaurant brands are in fair shape, while some fast casual and casual dining brands are still struggling,” he said. “Fine dining brands need business travel to resume before they see traffic recovery.”

In the meantime, restaurant owners are doing what they can to make ends meet.

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[chrislangton]

It's sad really, our Country has all this money to spend on military and major corporations but when it comes to local businesses and people who helped bring this country to where it is, well we are out of luck

[johnqpublic]

Have you seen what’s happening to meat prices? A hamburger is going to cost you $20 soon. This is death by a thousand cuts and one of those administering the cuts is Bloomberg. Thanks Mike. Hope it was all worth it for you and the one you serve. You know who your master is. I don’t need to name it. You know.

[SeniorSuiki]

I don’t see why people absolutely NEED to go to restaurants right now.

[ctbt]

For the restaurants that are open they need to make sure their staff is covering their mouth and nose at all times and not touching their face mask I’ve noticed a lot of restaurants have staff members not covering their mouth and nose. And Some would have their mouth covered but their nose is uncovered that is wrong and they need to correct it and the states need to check in on that if they cannot correct it then close the restaurants down

[mememo]

Let them open!! The staff will wear masks. You can wear a mask if you like. But let them open.

[AtsircEcarg]

The saddest part is that the chains and franchises will survive but the independent restaurants won’t.

[thehonorablejiveturkey]

I remember we use to get the flu and follow the same protocol. Stay home for about 2 weeks then you get your azz back to work

[Gonboo]

All of this to stop Drumpf in an election year, so disgusting.

[hundredlux]

Boss: “is the video ready to be uploaded to YouTube?”
Bloomberg rat journalist: “it is, I had the editor add this sweet chime music to the video, people will love it.”

People:

[littlemac]

I am saving money & eating much healthier now cooking at home (especially with the garden). The last few meals I've got from a restaurant didn't taste good to me anymore. I would rather see more farmers markets & less restaurants. Though I hate to see any business fail. No business is ever guaranteed to survive. Good luck all.

[rustedbiscuits]

You can thank the media for this. Thank you media!!

[JOEL]

This is my question why's the media focused on small restaurants going bankrupt but nothing corporate like McDonald's and why are they attacking the food source so much?

[algoodie]

Let’s see, shut down all McDonald food restaurants, and stores containing gmo foods. I wonder what stores we would have left ? I mean like trump say the economy is the best it’s ever been, the best. 😑

[alansmlth]

Now is not the time to open a restaurant.

[JDayFitness]

“So let’s keep everything still closed, ” these people are cowards

[alwaysspun]

Ona positive note people will learn how to cook and prepare their own meals

[jasonfreitas]

Fake news. 50% of restaurants don’t make the first year in business.

[labellent]

More like 60% of these places are gonna have shut down in the next year regardless restaurants aren't successful business. Most barely scrape by before covid

[weareorigin]

What about an alternative for the next pandemic ....keep all businesses open as normal? And give world-wide daily announcements about going out at your own risk.

[iwatchsomevideos]

Opening chime musical sequence wrecks my early morning ears