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What Data From Yelp And OpenTable Tells Us About The State Of Restaurants

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What Data From Yelp And OpenTable Tells Us About The State Of Restaurants

Data from the restaurant reservation platform OpenTable and Yelp Inc (NYSE: YELP) offers a first-hand account of the state of the restaurant industry.

OpenTable CEO Says It's 'Pretty Terrible' State For Restaurants: The restaurant industry is still in a "pretty terrible" state based on first-hand data of 60,000 restaurants on the OpenTable platform, CEO Steve Hafner said on CNBC. Approximately one-quarter of those restaurants are expected to "close and never reopen" because of the COVID-19 pandemic.

On the other hand, the Booking Holdings Inc (NASDAQ: BKNG) unit is seeing a "pretty good rebound" in terms of people who want to dine out, he said. For example, reservations at open restaurants last week were down "only" 78% year-over-year versus 100% down just two weeks prior.

"It's actually a pretty good leading indicator for consumer interest in dining out again," Hafner said.

Yelp Data Scientist Says Many Restaurants Ran Out Of Cash: Data provided by Yelp to CNBC shows the hardest hit business segments since March 1. Currently, 23% of retailers are closed right now, followed by 17% of restaurants and 13% of beauty stores.

In total, more than 143,000 businesses on Yelp's platform are currently closed, Yelp Vice President of Data Science Justin Norman said on "Squawk Box." As of June 11, 35% are indicated to be permanently closed.

Among those that are currently closed, 27% of retailers are permanently closed, followed by 48% of restaurants and 18% of beauty stores.

Restaurants were particularly hard hit as many businesses had minimal cash reserves ahead of the pandemic and were forced to shut down immediately, Norman said. Some restaurants that were able to "find a way" to survive for a few weeks either ran out of cash reserves or realized the little revenue they were able to collect wasn't enough to sustain the business.

Restaurant Exec Doubts 85% Independent Closure Report: A recent report from the Independent Restaurant Coalition says 85% of independent restaurants could go out of business. It's important to keep in mind the coalition is currently lobbying Congress for stimulus funds, former CKE Restaurants CEO Andy Puzder said on Fox Business.

As such, the 85% number may be inflated but there's no doubt "a lot" of independent restaurants that depend on dining room revenue will have trouble getting through the challenging times ahead, Puzder said. The industry faces an uphill battle in pushing the government to provide financial support for six months or longer.

"It would take a lot of government resources to keep these restaurants open in the interim," he said. "Hopefully they will find a solution but I'm not optimistic about a solution."

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While there are still funds available for small restaurants to access through the payroll protection program (PPP), the owners may feel that new cash can only sustain their business through the summer. After the summer months, owners may feel they won't be able to last through the end of the year so they aren't bothering with short-term solutions to long-term problems.

Separately, the White House is floating the idea of replacing a $600 weekly benefit for unemployed workers with a smaller bonus for anyone that returns to their old jobs. Puzder said this is not necessary but a "really great idea" as it rewards people to work and not incentivizing people to stay home.

"We need to do things to encourage people, to support people that are going to work," he said.

 

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