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National Restaurant Association calls for bipartisan support for restaurants as 17 percent to close permanently

Industry on track to lose $240B in sales, 100K restaurants

The National Restaurant Association sent a letter to Congress and the Trump Administration today, making the case for additional support to small businesses, including restaurants. The Association had put together a recovery plan for the restaurant industry that included support from the federal government earlier this year in its Blueprint for Recovery. Now, an analysis suggests that nearly 100,000 restaurants are closed currently, and could close permanently by year’s end.

The situation for restaurants has become quite dire. As we move through September, there’s a growing impetus for restaurants to get relief. Moreover, a new survey by the Association found that sales were down 34 percent on average at restaurants.

In addition, the restaurant industry could lose $240B in sales in 2020 (from 2019 levels). This aligns with an estimate from Technomic, which indicate the overall foodservice industry, including B&I contract foodservice, travel and education, could lose $250B to $300B under its Middle Case scenario. (Note: Technomic’s base of sales is more than $60B higher than the Association’s).

The analysis conducted by the Association shows that restaurants lost about $165B in revenue from March, when lockdowns began, to July. That deficit could increase by another $75B by year’s end. By that time, about 17 percent of restaurants could potentially close. This projection presents a more grim outlook than an estimate from Foodservice Results that 13 percent of restaurants are on track to close during 2020.

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What’s more, the Association notes that restaurants are only staffing to about 71 percent of the levels before the pandemic. Plus, with a strong deficit in sales, operators are finding it harder to manage margins, and 60 percent of them say their total operational costs are higher than before the COVID-19 crisis.

“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 Association. “The ongoing disruptions and uncertainty make it impossible for these owners to plan for next week, much less next year.”

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The Washington-based advocacy group also revealed that 40 percent of restaurant operators consider it unlikely they would be in business six months from now. As legislators leave for the elections season, the National Restaurant Association requested bipartisan support for small business. In order for restaurants to access immediate relief, it asked Congress to consider standalone bills before its recess.

[Related article: National Restaurant Association pushes back against CDC study]

In an effort to spike consumer interest, the Association had recently launched a marketing campaign, Restaurant Revival, to promote dining out at restaurants. This effort was somewhat blunted by a recent study from the CDC, attempting to link a higher risk for contracting COVID-19 to dining out.

Photo credit: Louis Hansel (featured preview image)

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