WASHINGTON – The National Restaurant Association recently sent a letter to congressional leaders about new survey findings that illustrate that restaurants are continuing to struggle amid the pandemic and offering support for the moderate com-promise proposal as a “down payment” toward a larger relief package in early 2021.
“What these findings make clear is that more than 500,000 restaurants of every business type — franchise, chain, and independent —are in an economic freefall,” Sean Kennedy, executive vice president for public affairs, said in the letter. “And for every month that passes without a solution from Congress, thousands more restaurants will close their doors for good.”
After delaying for several days, President Donald Trump signed into law a $900 billion emergency relief package on Sunday. The package includes funding for a new round of stimulus checks, unemployment aid, and financial assistance for small businesses, among other items.
Trump’s decision to sign the omnibus bill, which includes funding to keep the government up and running through September 2021, averted a government shutdown that would otherwise have started Tuesday.
The National Restaurant Association Research Group surveyed 6,000 restaurant operators and 250 supply chain businesses in November, the organization said in a news release. The findings include:
Eighty-seven percent of full-service restaurants (independent, chain, and franchise) reported an average 36% drop in sales revenue. The industry’s normal average profit margin is 5% to 6%. Eighty-three percent of full-service operators expected sales to be even worse over the next three months.
Although sales were significantly lower for most independent and franchise owners, their costs have not fallen by a proportional level. Fifty-nine percent of operators said their total labor costs (as a percentage of sales) were higher than they were before the pandemic.
The future remains bleak. Fifty-eight percent of chain and independent full-service operators expected continued furloughs and layoffs for at least the next three months.
The tide of restaurant closures and bankruptcies continues to rise, eliminating jobs in some of the best-known independent and chain restaurants, according to the news release.
As of today, 17% of restaurants—more than 110,000 establishments—are closed permanently or long-term.
The majority of permanently closed restaurants were well-established businesses and fixtures in their communities. On average these restaurants had been in business for 16 years, and16% had been open for at least 30 years. Only 48% of former restaurant owners say it is likely they will remain in the industry in the months or years ahead.
“In short, the restaurant industry simply cannot wait for relief any longer,” said Kennedy. “We appreciate the efforts of a group of moderate members of the House and Senate to advance a true compromise between the competing proposals from Democratic and Republican leaders. If this moderate plan represents a ‘down payment’ for a larger relief package in early 2021, it will provide restaurants with immediate relief to hold on through the most dangerous point in our business year.”
In addition to supporting the compromise proposal, the association provided a plan for strengthening a second draw from the Paycheck Protection Program to reflect the unique business model of the restaurant industry. The organization also emphasized other important measures that would support restaurants in the short term