How COVID-19 Will Change Restaurants Forever
As predictions of how and when businesses will reopen begin to surface, analysts predict a significant alteration of the restaurant industry.
Coronavirus impacts caused a loss of an estimated $25 billion in sales and more than 3 million jobs in the restaurant industry in the first 3 weeks of March. According to the National Restaurant Association, approximately 30,000 restaurants have closed for good, and more than 110,000 are expected to do so throughout April. On April 14th, California Governor Gavin Newson announced a regional planning effort between California, Oregon and Washington that would lift restrictions on businesses. Throughout the press conference, Newson acknowledged that restaurants would be seeing a new normal. “You may be having dinner with a waiter wearing gloves, maybe a face mask… Dinner where the menu is disposable… where your temperature is checked before you walk in the establishment.”
Jeff Chandler, CEO of the 35-unit fast-casual Hopdoddy Burger Bar, says curbside delivery “is here to stay” in restaurants. “People aren’t going to want to touch a kiosk,” Chandler said, referencing the contagious nature of the virus. Jose Dueñas, President of Coffee & Bagel Brands, which has 1,100 units of Einstein Bros. Bagels, Bruegger’s Bagels, Caribou Coffee, Noah’s New York Bagels and Manhattan Bagel, says the consumer will come out of the pandemic with a heightened demand for convenience. As the hospitality industry gradually reopens, consumers will come to expect and demand food service that accommodates social-distancing protocols, and restaurants will see a dramatic change in how they do business. .
Fine Dining Faces Long Road to Recovery
Restaurant reopenings in China offer a glimpse into the future of fine dining in America. In March, chef Jean-Georges Vongerichten reopened his restaurants in Shanghai and Guangzhou, following extensive government rules such as regular temperature checks for both staff and customers, no more than four guests per table, mandatory space of six to eight feet between tables, and app-based ordering so that no cash changes hands. As America adjusts to its pandemic restrictions, a similar business model will likely govern the chef’s dine-in restaurants in the U.S. American restaurateurs are planning now for a three-phase approach to resuming business in dining rooms, following the White House “Guidelines for Opening America Again.”
These guidelines urge U.S. restaurateurs to operate at lower capacity with fewer tables and fewer dine-in guests, at least during phases one and two. Within this limited-capacity business model, mobile ordering, takeout, and delivery may be the only way for fine dining restaurants to pay the rent. Restaurateurs may also need to invest in new personal protective equipment for staff and, possibly, health insurance. It remains to be seen whether guests will perceive a decreased public health risk in frequenting restaurants that provide health insurance to staff in the post-COVID-19 era. If so, the expense may be more than most restaurants can bear. Depending on how many months the lockdown continues and how quickly cities proceed through all three phases of reopening, some restaurants simply may not survive. Many public health officials predict waves of rolling, temporary lockdowns that will last until a new coronavirus vaccine is available, which could be at least a year or more. As a result, by some estimates, about 30% of fine-dining restaurants will close permanently.
These are sobering times for the hospitality industry and for the tourism industry in general. It could be years before destination dining fully recovers. When it does, new dining guidelines and restrictions will almost certainly be in place. Be prepared for a new normal that minimizes the public health effects of a single person on a larger group of people, as in a restaurant or public market.
Big and Small Restaurants Battle for Relief Funds
As a result of coronavirus shutdowns, the restaurant industry suffered an estimated $30 billion in losses in March and is expected to lose $50 billion by the end of April. Independent restaurateurs trying to stay afloat amidst the economic turmoil were outraged by Congress’s stimulus package released in March.
The first wave of the Paycheck Protection Program, totaling $250 billion in low-interest government loans, allowed big chains such as Shake Shack, Potbelly and Ruth’s Chris Steak House to receive tens of millions of dollars. Many smaller restaurants received nothing. The National Restaurant Association sent a letter to Congress on March 18th, requesting a recovery fund specifically for the independent restaurant industry.
“We need to get the money into the hands of independent restaurant owners,” said Andrew Rigie, executive director of the New York City Hospitality Alliance. But a restaurant-based relief plan has always been highly unlikely. While many large chains have the resources to last in a longer-term shutdown, most independent restaurants, which make up two thirds of the dining environment in the U.S., will keep struggling to survive. After strong criticism from independents, the Shake Shack chain returned its $10 million government loan, gaining capital elsewhere from an unrelated equity transaction.
Amid COVID-19, Restaurant Workers Find Employment Elsewhere
According to U.S. Department of Labor data, more than 700,000 Americans lost their jobs in March, and 60% of those were in the restaurant industry. As food jobs become scarce, other industries are hiring unemployed restaurant workers wherever they can. Divurgent, a healthcare consulting company in Virginia Beach, VA employed 250 former restaurant workers in a call center the company was tasked with creating to help overburdened hospitals enroll patients in the telehealth system. In Miami, the Hispanic grocery chain Sedano’s needed 400 additional employees to keep up with increased traffic to its 35 stores. Sedano’s turned to local cuban restaurants, Versailles and La Carreta, which recently laid off many of its workers to focus solely on takeout and delivery. Many of the former employees from those restaurants now work at Sedano’s.
In the grocery industry, the Food Marketing Institute (FMI) has teamed up with tech company Eightfold.ai. They developed a nationwide job board that matches former restaurant workers’ experience and skills with open positions in the grocery business. And in New York City, which has the highest number of coronavirus cases in the country, the nonprofit organization Rethink Food has hired former employees of the fine-dining restaurant Eleven Madison Park. The shuttered three-Michelin-star restaurant was turned into a commissary, where former Eleven Madison Park staff now work in teams of three across multiple kitchens to produce produce 2,000 meals a day for healthcare workers and New Yorkers in need.
A similar initiative was undertaken by World Central Kitchen (WCK), the nonprofit disaster relief organization run by celebrity chef Jos Andres. WCK’s “Chefs for America” operation aims to reopen more than 400 restaurants across the U.S. and produce 1 million meals for communities in need. The organization pays restaurants $10 to $20 per meal so restaurateurs can re-hire staff and purchase ingredients.
Restaurant Leaders Named To White House “Economic Revival” Panel
Nearly two dozen restaurant industry executives were chosen to advise the White House on reopening the economy. The leadership panel includes representatives from big chain restaurants, such as McDonald’s CEO Chris Kempsczinski, as well as independent restaurants, such as Thomas Keller of Thomas Keller Restaurants. Marvin Irby, interim CEO of the National Restaurant Association, was also named to the group. The restaurant industry panel is one of 17 different advisory groups representing various facets of the economy from agriculture and business to sports and travel, known as the Great American Economic Revival Industry Groups. Via conference call, these groups will collaborate with White House representatives on reopening the economy in a coordinated “rolling recovery.” Restaurants have been particularly hard-hit by the coronavirus pandemic, laying off millions of workers, and its leaders are are eager to find solutions for the recovery and long-term health of the industry. .
