Market Overview

Early Data Shows Restaurants Are In Trouble From Coronavirus Pandemic

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Early Data Shows Restaurants Are In Trouble From Coronavirus Pandemic

The restaurant industry was among the first sectors to be hit hard by the coronavirus and will be among the last to fully recover.

Early projections and data release point to a grim state for the sector. Tens of thousands of people have already lost their jobs, and it is unclear if their former employers will be able to reopen their kitchens.

NYC Hospitality Survey

A survey of 1,870 restaurants, bars and nightclubs found that 67,650 employees were laid off from March 20 through March 25, according to The NYC Hospitality Alliance. 

More recent data shows a net loss of 417,000 restaurant and food service jobs nationwide throughout March, according to the National Restaurant Association. 

Prior to the coronavirus outbreak, data out of New York City pointed to approximately 250,000 people working at 25,000 restaurants, bars and nightlife establishments.

At the best of economic times, when Wall Street bankers are wining and dining clients on corporate cards and tourists from all over the world visit the iconic food destination, restaurants operated on very thin margins.

"Restaurants, bars and clubs and the people who work at them are the fabric of our communities," NYC Hospitality Alliance Executive Director Andrew Rigie said in a press release.

"We need to do everything in our power, as fast as possible, to support these businesses and revive New York City's economy, while protecting public health and safety."

Some of the measures the group is advocating for include rent or mortgage forgiveness for restaurants that are required to close or limit their operations and a state sales tax remittance. 

Other Areas Feeling The Pain

Integrated payment processing solutions provider Shift4 Payments launched a new platform to better track the latest trends impacting restaurants, bars hotels and other businesses across the country.

The latest data update as of April 3 shows South Dakota is best weathering the storm, with total hospitality transaction volumes are down 57%.

The state has had 200 confirmed cases of coronavirus and three deaths, including 74-year old state lawmaker Rep. Bob Glanzer.

Tennessee holds the unfortunate title of being the state most hard hit, based on a 97% decline in hospitality transaction volumes. Total confirmed coronavirus cases have risen to more than 3,300 there and 43 people have died.

Total hospitality transaction volumes are down 96%. Images of an empty iconic Las Vegas Strip are certainly disturbing.

In Canada, the restaurant sector let go of 800,000 workers in March. An industry survey found that one out of every 10 restaurants that temporarily close will not be able to reopen.

Tastewise Survey: Consumers Doing Their Part

The American consumer deserves credit for doing their part in "eating local," according to recent findings from Tastewise, an artificial intelligence-powered food trends predictions company. Consumer interest in local food and beverage establishments rose 56% month-over-month in March, according to the company. 

Prior to the coronavirus outbreak, consumer trends were clearly focused on plant-based, sustainability and wellness options. In reaction to the coronavirus pandemic, interest in delivery soared 582% month-over-month, interest in supporting businesses rose 93% and interest in pick-up rose 86%.

Tastewise's data insight points to the public embracing classic "American staples," including a 93% increase of interest in pepperoni pizza for delivery. Bagel delivery was the second-fastest-growing trend, up 84%, followed by cheeseburgers for delivery at 83%.

An even larger trend is playing out but at home. According to Tastewise's findings, recipes for at-home cooking have risen at a much higher rate. Ranking first is a Bacon Cheeseburger Tater Tot Casserole, up 1,150%, followed by Pepperoni Pizza Queso at 900% and Everything Bagel Tofu at 300%.

Tastewise's advice to the restaurant industry is to embrace the much larger consumer trend and adapt menus accordingly.

"Restaurants should consider updating traditional dishes to gain a competitive edge as the market for delivery booms," according to the company.

"As Americans hunker down for the foreseeable future, delivery will make 'eating in' the new 'eating out.' Agile restaurants must adapt to the challenges and incorporate consumer preferences in their offerings to stay competitive."

A Post-Coronavirus World Won't Fully Save The Industry

It is impossible to guess how the public will act on "day one" of a post-coronavirus world.

First, it is unclear what this "day one" will look like. Some scientists have yet to dismiss the possibility that hot weather will slow the virus spread, and multiple companies and universities are working on vaccines or cures.

Regardless, restaurants and bars are likely to spread out their tables to ease consumer concerns. The end result is an automatic 40% to 60% loss of seating capacity, "Bar Rescue" host Jon Taffer told Fox Business in a March 30 interview.

Regardless of the scope and size of any government rescue package, many restaurants will not be able to reopen their doors.

Pizza delivery restaurants are "set up" for this type of environment, but it will be "really scary" for full-service restaurants with dining rooms, expensive rent, utilities and a new set of food inventory to pay for, Taffer said. 

The same worrisome trend could play out across other industries, like theaters and sports, he said.

Related Links:

Shake Shack CEO: Restaurants Of All Sizes Hurting

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Photo by Ralph Daily via Wikimedia

 

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