Count the American restaurant industry among those calling on the federal government to rescue their depleted industry in the era of COVID-19.
With life in the U.S. at a virtual standstill due to the proliferation of “social distancing” and “shelter in place” measures, many kitchens across the nation are now closed. For those that have, that means no customers, which means no revenue, which means a downward spiral of economic devastation, including lost jobs and permanently shuttered restaurants. It all represents substantial headwinds for a business that even in good times is defined by small margins and tight cash flow.
According to the National Restaurant Association, the industry is facing sales declines of a whopping $225 billion — or well north of $2 billion per day — over the next three months.
The pain felt by the industry will no doubt affect radio advertising in the months ahead. A number of restaurant industry players — especially in the Fast Casual/QSR space — were among the medium’s top advertisers last year, including McDonald’s (with 1.438 million total spots), Subway (798,000), Wendy’s (720,000), Taco Bell (543,000), Dunkin’ (353,000) and Chili’s (228,000). However, many of these QSR have moved to drive-thru, delivery and walk-in take-out means of serving customers.
The NRA — not to be confused with the gun-rights group that employs identical initials — is asking the U.S. Treasury to create a $145 billion recovery fund for the restaurant and food-service industry. The money would provide relief for restaurants and their employees.
The NRA also wants deferred rents and mortgages, $100 billion in federally backed business interruption insurance, a federal loan program, unemployment assistance, and tax relief.
The trade organization expects 5 million to 7 million lost jobs, and that’s if the industry is shuttered for only 90 days. That range represents more than a third of total restaurant jobs in the U.S.
“Without aggressive and immediate action from the federal government, many restaurants that are a staple of local communities will simply never resume service,” writes Sean Kennedy, the VP of Public Affairs for the NRA.
According to a report by CNBC, at least two dozen states have required restaurants to close their dining rooms. Some national restaurant companies, meanwhile, are transitioning to takeout, drive-thru or delivery service only.
Some of the latest statistics about the industry’s misfortunes border on apocalyptic: A survey by Black Box Intelligence that was conducted through March 14 — prior to the enactment of many shutdown orders — found that 70% of restaurants surveyed noted a decline in traffic.
Data from OpenTable, meanwhile, determined that restaurant traffic is down 48% — and that as of last Wednesday, total reservations across U.S. restaurants were down a whopping 91% versus the same week a year ago. Global reservations were also devastated, down 89% compared with the same time period.
“Many restaurants were already preparing for a potential escalation of the threat the virus poses to the industry,” Black Box said. “By March 13, 60% of restaurant companies that completed the survey said they had already established contingency plans for potential restaurant closures.”
Some help is already on the way. According to Nation’s Restaurant News, the parent companies of some of the nation’s largest brands — including Subway, McDonald’s, Yum Brands, Chick-fil-A and Qdoba — are putting together relief packages to help franchisees affected by the pandemic.
Subway, the largest U.S. restaurant chain by stores, is 100% franchised. The company on Friday shuttered dine-in operations at nearly 28,000 restaurants, making it one of the last big chains to make such a decision.
In the meantime, the industry is doing what it can to ease the blow. MediaPost reports a coalition of national and regional establishments is backing the Great American Takeout, a new campaign set for Tuesday (March 24) that aims to bolster the struggling industry.
The coalition is urging Americans to order at least one delivery or pick-up meal today to show support for the restaurant industry. (According to the Centers for Disease Control and Prevention, there’s scant evidence that the coronavirus can be transmitted via food or packaging.)
“This is no longer about the survival of individual restaurants,” stated Russ Bendel, CEO of The Habit Burger Grill, a member of the coalition. “It’s about the future of our industry. And time has run out. Together, we must act to support each other and our communities in unprecedented ways.”