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Eighty-three percent of full-service restaurant operators expect sales to drop: Impact Survey

As outdoor dining availability shrinks, next three months pose significant challenge to industry

The pandemic has hit the restaurant industry severely and with another wave of coronavirus increasing infection and hospitalizations, a bleak winter appears on the horizon. New restrictions in several states and localities have shut down restaurant businesses. Stricter restrictions are in place in several states, including California, Illinois, Massachusetts, and New York, to name just a few. The cities of Chicago, New York City and Washington, DC have suspended indoor dining completely.

There are significant challenges for restaurant operators as they enter into 2021. First, they will need to survive with mostly outdoor dining (where permitted and possible during the winter) and to-go food business. Second, with sales remaining below last year’s level for nearly 80 percent of operators, according to the National Restaurant Association, operators will also need to shore up capital. The Association has pushed aggressively for restaurant-industry specific assistance from Congress and promoted new funding for small businesses, overall.

Third, as with chain restaurants and multi-unit operations, all restaurant operators that remain open will need to harness the power of digital tools, including online ordering and delivery mechanisms to make it easy for customers to place orders with their business; and they will also need to allocate what little resources and manpower they can afford to marketing activities. For many restaurants, to-go orders may be the only business they get over this coming winter, and technology will play a critical role.

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This month, the Association released new data points, indicating that restaurant operator confidence has been decreasing and they foresee hurdles. According to an Impact Survey it conducted in November, 83 percent of full-service operators and 67 percent of limited-service operators expect sales to decrease over the next three months. Moreover, 58 percent of chain and independent full-service restaurants expect to see continued furloughs and layoffs during at least the next three months.

The upcoming arrival of winter makes things particularly difficult as further restrictions in many markets will limit indoor dining. As the Association reports, colder temperatures will have an impact: In September, 67 percent of operators offered outdoor dining, but in November, that number is down to 49 percent. Many expect that number to further dwindle, particularly in areas that have high coronavirus spread or that traditionally face colder temperatures as they enter the January-February time period.

In an analysis of its Impact Survey, the Association stated, “With business conditions deteriorating, more federal government assistance is critical for the survival of many restaurants. Thirty-seven percent of operators say it is unlikely their restaurant will still be in business six months from now, if there are no additional relief packages from the federal government.”

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Nearly 80 percent of operators reported lower sales in October of this year, compared to last year. Patrons want to order from restaurants, but convenience will be a big factor in their decisions over the winter. Restaurant chains that have performed well in the digital sphere can offer inspiration to other restaurants. In many cases, the implementation of online ordering or ordering integration can be accessible, not requiring a high upfront investment.

Photo credit: Louis Hansel (featured preview image)

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