BLOODBATH: Coronavirus Panic Expected to Wipe Out 110,000+ Restaurants, Devastate U.S. Food Service Industry
The coronavirus pandemic and mass hysteria that has followed it will have a long-lasting negative impact on the food service industry, according to a recent study.
A survey from the National Restaurant Association (NRA) of over 4,000 restaurant owners has indicated that 11 percent of restaurant owners believe they will have to close up shop permanently with three percent saying they have already closed their doors for good. These calculations extrapolated across the entire industry mean that over 110,000 restaurants will be forced to close forever within a month.
In the first 22 days of March, restaurants lost an estimated $25 billion in sales and over three million jobs because of coronavirus-related economic peril. The consumption-based economy has evaporated immediately, and the ramifications could be dire.
Roger Lipton, a restaurant industry investor and commentator, is calling this the “restaurant apocalypse” and sees the business heading into uncharted territory where the damages could be unlike anything that has happened in the industry before.
“Any pundit who thinks that they’re going to use a recent history — and by recent history, I mean the last 100 years, including the Depression — as a template for what is going to go on here? They’re kidding themselves,” Lipton said to Business Insider on Monday.
Cowen analyst Andrew Charles is predicting that the pain is just getting started for the restaurant industry. Charles is forecasting “a steady, double-digit decline in same-store sales that began on March 16th and persists through the end of July.” Jordan Thaeler, founder of the foot traffic tracking company WhatsBusy, told Cowen that fine dining sales have dropped over 90 percent, casual dining has dropped 75 percent, and fast food has dropped by approximately 50 percent due to the coronavirus pandemic.
Lipton believes that the turmoil in the restaurant industry will likely last for years. He thinks that many franchises, many of which are already flush with debt, will ultimately go under after losing steady revenue streams from franchisees. Small mom-and-pop restaurants with no major cash reserves will also be squeezed tremendously during this crisis.
“The good news is people have to eat,” Lipton said. “Some companies are going to figure it out. And others, for one reason or another, won’t be able to.”
Big League Politics reported on the effects that the coronavirus pandemic has had on GDP yesterday, showing that the economic carnage is not just impacting the food service sector:
Americans across the country are feeling the pain regardless of what industry they are in. A study from Candor has indicated that 267 companies have instituted a hiring freeze due to coronavirus while 44 have laid off employees and 36 others have been forced to rescind offers because of the pandemic.
“The travel, hospitality, and transportation segment was particularly hard hit, with 95% of companies freezing hiring. Only two companies, Bolt and Cruise, report they are still hiring. All booking platforms — like Kayak, Expedia, and Booking.com — have suspended hiring. Uber and Lyft have a headcount freeze but continue to backfill already open positions. And 12 companies — like Bird, Expedia, Sonder, Mondee, and Knotel — have confirmed layoffs,” VentureBeat wrote in their analysis of the data.
They noted that the companies that are still hiring are doing so at a reduced pace because of the economic carnage caused by coronavirus.
“The good news: 111 companies are hiring. But 10% of those still hiring have implemented some kind of hiring freeze, laid off people, or had offers rescinded. That’s likely because hiring only continues for essential roles,” they wrote.
Forbes has published a run-down of all the companies that downsizing due to the economic calamity. They have compiled information from hundreds of employers showing the number of American workers displaced because of the pandemic.
Unemployment filings are at an all-time high, with 6.6 million beleaguered Americans filing for benefits last week.
The economy, which President Donald Trump once touted as the best in the history of the country, is at risk of falling into a serious recession or depression because of the coronavirus pandemic.