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.
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. .
