Covid’s devastating toll on eating places: 2.5 million jobs misplaced
Plastic house tents will be erected outside a restaurant on the Upper West Side as the city continues reopening efforts after restrictions were imposed in New York City on November 1, 2020 to slow the spread of the coronavirus.
Noam Galai | Getty Images
More than 110,000 food and drink establishments were temporarily or permanently closed last year, and 2.5 million restaurant jobs have disappeared, according to a new report offing the devastating toll of the pandemic.
“If you look at the industry in terms of actual sales volume at the end of 2020, it was down to 2014 levels. In other words, the industry has set back six years of sales growth,” said Hudson Riehle, senior vice president of research at the National Restaurant Association while the trade group publishes its annual industry state-of-the-art review.
The report, which polled 6,000 operators and 1,000 adults, found restaurant and restaurant sales last year were $ 659 billion – that’s $ 240 billion less than the pre-pandemic year with one Total sales of $ 899 billion.
“2020 was certainly the worst year for the catering industry in its history,” said Riehle.
However, he noted that the Covid crisis caused operators to get creative with new forays into technology and delivery, and many hope that the second half of 2021 will provide an opportunity for recovery as consumers feel the Have pent up demand.
“It is important to think of 2021 as the year of transition,” he said. “The industry will definitely take some time to recover.”
The group predicts food and beverage sales will rebound to $ 731.5 billion in 2021, still well below pre-Covid levels in the industry.
The report comes as states like California begin lifting restrictions on restaurants that allow takeaway and delivery only. However, with the number of new Covid cases still unacceptably high, there is a risk of new restrictions even if vaccinations are introduced.
Industry veterans folded
Decades of restaurant experience did not guarantee success, according to the report, as consumers as well as state and local authorities reacted to the virus. Most of the restaurants that were permanently closed in 2020 were older operators in their communities, according to the survey. On average, these restaurants had been in business for 16 years and 72% of those who had their shutters closed said they were unlikely to open another restaurant in the coming months or years.
“I think we have all become masters of the emotional elasticity that vacillates between hope and despair,” said Philippe Massoud, owner and chef of ilili and ilili Box in New York City. “This roller coaster ride of emotions has really bothered many of us.”
Massoud has been in business for 14 years and has weathered other economic downturns like the Great Recession. But his Lebanese-Mediterranean restaurant has been hit by the pandemic. Revenue fell 80% last year.
Massoud has grown from 165 employees to under 20 and has spent around $ 70,000 building a secure outdoor dining area at his Fifth Avenue location, which he hopes will be opening soon. At best, he said, it would take two years to make up for his lost sales. In the worst case, it projects five because it is dependent on take-away and delivery.
He has received a loan for the Paycheck Protection Program and is waiting for news on his application for a second draw loan. He also hopes the government will do more for restaurants. He said he would not have made it without the help he had received so far. He is most concerned about his workers and eager to see if pent-up demand will bring tourism back to the city.
“We hope that our Washington, DC executives will either convert the PPP for the restaurant industry into grants like the Restaurants Act so that we don’t carry this big ball of liability for the next few years,” he said. “That will [need to] March hand in hand to revive and save our cities, our neighborhoods. … Not to do that would be a disaster. “
Tech and takeaway alcohol save the day
The most successful restaurants could quickly adapt and innovate to offset the blow of limited operations. By moving into off-premise selling and using technology for delivery, restaurants have gained a lifeline. Selling take-away alcohol was another way to increase sales under the restrictions of eating.
Big operators, including Starbucks and Chipotle, have continued to rely on on-the-go and off-site deals, accelerating new store formats like drive-thru and pick-up as the pandemic changed consumer preferences.
The shift is likely forever as its adoption has taken place across all age groups, Riehle said. He added that the prepandemic of off-premise traffic was around 60% and has increased to around 80% today.
“The convenience market remains a very, very important engine for industry growth,” he said.
– CNBC’s Betsy Spring contributed to this report.