The restaurant industry in free fall; 10,000 closures in three months


WASHINGTON, December 7, 2020 / PRNewswire / – Today, National Association of Restaurateurs sent a letter to leaders in Congress, sharing new survey findings that illustrate continued deterioration of business in the restaurant industry and offering support for the moderate compromise proposal as a “down payment” towards a back-up plan most important at the start of 2021.

“What these results clearly show is that more than 500,000 restaurants of all types of businesses – franchises, chains and independents – are in economic free fall,” said Sean kennedy, Executive Vice President of Public Affairs in the letter. “And for every month that goes by without a solution from Congress, thousands more restaurants will close their doors for good.”

The National Restaurant Association research group conducted the poll 6,000 restaurateurs and 250 companies in the supply chain 17-30 Nov 2020, and the conclusions were striking:

  • Eighty-seven percent of full-service restaurants (independent, chain, and franchise) report an average 36% drop in turnover. For an industry with an average profit margin of 5-6%, this is simply unsustainable. Eighty-three percent of full-service operators expect sales to be even worse in the next three months.
  • While sales are significantly lower for most independent owners and franchisees, their costs have not fallen proportionately. Fifty-nine percent of operators say their total labor costs (as a percentage of sales) are higher than they were before the pandemic.
  • The future remains bleak. Fifty-eight percent of chains and independent full-service operators expect continued leaves and layoffs for at least the next three months.

The wave of restaurant closures and bankruptcies continues to rise, sweeping jobs at some of the most revered independent restaurants and chain restaurants:

  • To date, 17% of restaurants, or more than 110,000 establishments, are closed permanently or for a long time.
  • The vast majority of the permanently closed restaurants were well-established businesses and facilities in their communities. On average, these restaurants had been in business for 16 years, and 16% had been open for at least 30 years.
  • Only 48% of these former restaurateurs say they are likely to stay in the industry in some form in the months or years to come. Our country is losing a generation of talent, knowledge and entrepreneurship in the industry.

“In short, the restaurant industry just can’t wait for relief any longer,” Kennedy said. “We appreciate the efforts of a group of moderate members of the House and Senate to push forward a real compromise between the competing proposals of the Democratic and Republican leaders. If this moderate plan represents a ‘down payment’ for a larger back-up plan in early 2021, this will provide restaurants with immediate relief to weather the most dangerous time of our business year. ”

In addition to supporting the compromise proposal, the Association provided a map on how a proposed second draw of the Paycheque Protection Program (PPP) could be strengthened to reflect the restaurant industry’s unique business model and highlighted other important measures in the proposal that would support restaurants in short term.

Read the full letter here and review the Restaurant Recovery Association’s comprehensive master plan that includes the industry’s long-term recovery needs here.

About the National Association of Restaurateurs

Founded in 1919, the National Restaurant Association is the premier trade association for the restaurant industry, comprising 1 million restaurant and food service outlets and a workforce of 15.6 million employees. We represent the industry in Washington DC, and advocate for it. We sponsor the largest trade show in the industry (Salon of the national association of restaurateurs); Leading Food Safety Training and Certification Program (ServSafe); Unique Secondary Career Development Program (NRAEF ProStart). For more information visit and find us on Twitter @WeRRestaurants, Facebook and Youtube.

SOURCE National Association of Restaurateurs

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