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Cramer Says Up To 1 Out Of 3 Restaurants, Bars Will Close

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Cramer Says Up To 1 Out Of 3 Restaurants, Bars Will Close

Running a business, especially a restaurant, during the COVID-19 pandemic is a "nightmare," as the health-related restrictions make it pretty much "illegal" to earn a profit, CNBC's Jim Cramer said Tuesday evening on "Mad Money."

Cramer Says Big Groups Are Where Restaurants Profit

According to Tennessee's new laws, a restaurant staff member needs to first ask a client if they are ill or have been in contact with someone who is sick. Then they will need to check the customer's temperature and seat them at tables that are 6 feet apart, Cramer said. 

Tennessee's rules for restaurant re-opening will be a nightmare for the industry, said the CNBC host, who is the owner of Bar San Miguel and co-owner of The Longshoreman in Brooklyn. 

The math behind Tennessee's laws translates to a restaurant being able to operate just four out of every 11 tables, he said. 

Groups of more than six people are banned and this is where restaurants make the most money, Cramer said.

Bars, the biggest profit generator for a restaurant, also must be closed, he said. 

All told, 20% to 30% of all bars and restaurants in the U.S. could shut down, Cramer said.

Cramer Sees Grim Picture For Smaller Restaurants

These restrictions are the "right thing to do" from a health and safety point of view, Cramer said. But from a small business owner's perspective, it makes more sense to repay the government's payroll protection money and close the doors for good, he said. 

Unless the restaurant in question is a national chain like Chipotle Mexican Grill, Inc. (NYSE: CMG), they can forget about making up the difference in drive-thru and takeout, the CNBC host said. 

Cramer Says Darden, Starbucks Will Benefit

The new health rules are necessary to keep people safe, and there might not be "a solution to this," Cramer said. The rules will prove to be "fantastic" for large chains like Darden Restaurants, Inc. (NYSE: DRI), and Starbucks Corporation (NASDAQ: SBUX) that have deep pockets and can survive this difficult time, he said. 

Related Links:

What To Make Of McDonald's Social Distancing-Themed Concept

Will Consumers Return To Restaurants After Learning How To Cook At Home?

 

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