Business

National Restaurant Association Says Industry Struggling To Survive With Nearly 1 In 6 Restaurants Closed, Sends Letter To Congress

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The National Restaurant Association issued a bleak warning in a letter to congressional leaders Monday, saying that with nearly 1 in 6 restaurants closed, the restaurant industry will crumble if it doesn’t receive any relief.

“For nearly nine months, restaurants – our nation’s second-largest private sector employer – have been in an economic free fall as a result of mandated closures and capacity limits due to the coronavirus pandemic,” wrote Sean Kennedy, the association’s executive vice president for public affairs.

The association conducted a survey among 6,000 restaurant operations and 250 supply chain businesses between Nov. 17 and Nov. 30.

The group predicted that 17% of restaurants – more than 110,000 establishments – are completely closed. Among the closed establishments, a vast majority had been in the business for 16 years, while 16% had been open for at least 30 years, the association said.

Slightly less than half of these former restaurant owners said they would remain in the industry in any capacity in the coming months and years.

“Our nation is losing a generation of industry talent, knowledge and entrepreneurial spirit,” Kennedy said.

The association also found that 87% of full-service restaurants reported an average 36% drop in sales revenue.

“For an industry with an average profit margin of 5%-6%, this is simply unsustainable,” the letter said. The group also estimated that 56% of chain and independent full service restaurants expect more layoffs these next three months.

“What these findings make clear is that more than 500,000 restaurants of every business type– franchise, chain, and independent – are in unprecedented economic decline,” Kennedy said. “And for every month that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good.”

The group highlighted on Dec. 4 the Labor Department estimates showing that in November employment in the industry stalled, and eating and drinking establishments lost 17,400 jobs. (RELATED: ‘Let The People Govern Themselves’: New York City Restaurant Owner Describes Mass Business Closures Amid Coronavirus Pandemic)

Bipartisan lawmakers introduced a $908 billion framework, which included $228 billion for small business aid, including through the Paycheck Protection Program, which would extend to restaurants.

The association described the proposal as a “starting point” but said the industry will need far more help. The association has endorsed the bipartisan legislation called the Restaurants Act, which proposes to give $120 billion to directly help restaurants.

Restaurants across the nation are struggling to keep their doors open, with half of all New York City bars and restaurants expected to be closing up shop for good within six months, New York State Comptroller Thomas DiNapoli said in October after a new audit came out.

“New York City’s bars and restaurants are the lifeblood of our neighborhoods. The industry is challenging under the best of circumstances and many eateries operate on tight margins,” DiNapoli said, according to an official statement. “Now they face an unprecedented upheaval that may cause many establishments to close forever.”