Economic Freefall
The National Restaurant Association reports 110,000 Restaurants Have Closed Permanently during the COVID-19 pandemic.
Since the COVID-19 pandemic began in March, 17% of restaurants (or about 110,000 establishments) have closed either permanently or long-term, and 10,000 restaurants have closed over the last three months alone, according to the National Restaurant Association’s December data released on Monday.
Letter to Congress
The National Restaurant Association sent a Letter to Congress, including House Speaker Leaders Nancy Pelosi, Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer, and House Minority Leader Kevin McCarthy.
Letter Details
- 87% of full service restaurants (independent, chain, and franchise) report an average 36%
drop in sales revenue. For an industry with an average profit margin of 5%-6%, this is simply unsustainable. - 59% of operators say their total labor costs (as
a percentage of sales) are higher than they were pre-pandemic. - We predict that as of today, 17% of restaurants—more than 110,000 establishments—are
completely closed. - The vast majority of permanently closed restaurants were well-established businesses, and
fixtures 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 restaurant owners say it is likely they will remain in the industry in
any form in the months or years ahead. - What these findings make clear is that more than 500,000 restaurants of every business type—
franchise, chain, and independent—are in an unprecedented economic decline.
Congressional Bickering Since September
The letter includes a wish list of priorities for the next pandemic package.
This plea was sent to Congress at the same time that restaurants are speaking out in various areas around the country where restrictions on restaurants have gotten more stringent as cases continue to rise, including in California, where Gov. Gavin Newsom passed a three-week stay-at-home order (including shutting down outdoor dining) for parts of the state.
On October 2, the House Passed a $2.2 Trillion Heroes Act that included $120 billion in relief for independent restaurants.
In September, the Democrats demanded over $3 trillion.
The bickering goes on an on.
Latest Package Details
Politico reports Bipartisan Coalition Releases Details of $908B Coronavirus Package.
- Unemployment: Expand federal unemployment benefits to $300 a week for 16 weeks.
- Paycheck Protection: $300 billion to the Small Business Administration to fund the Paycheck Protection Program
- Rental Assistance: $25 billion in rental assistance to states and local governments and extend an eviction moratorium until the end of January 2021.
- Child Care: $10 billion to support child care providers
- Education: $82 billion for education providers
- Vaccines: More money for testing and vaccines.
Missing in Action
- Relief for restaurant and other business owners whose businesses were closed by state orders.
- The plan does not include direct stimulus checks to Americans, which Sens. Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) are both endorsing and has the backing of President Donald Trump.
What About Restaurants, Hotels, Salons?
None of the above details nor Trump’s proposed $600 checks will do anything for the restaurant industry nor any other business harmed by forced closures.
Is this a responsibility of states since they forced the shutdowns?
If so, the same can be said for the entire bailout package.
Mish
Melinda Gates: “What did surprise us is we hadn’t really thought through the economic impacts.”
Massively over-building restaurants and retail was pure mal-investment, enabled by decades of Central Bank policy error.
The wipe-out was inevitable.
Here is the solution: http://www.flccc.net Check out Dr. Pierre Korey’s emotional testimony about Ivermectin before a Senate committee on December 8, 2020.
It was very interesting.
Still with the crazy snake oil …
“Still with the crazy snake oil …”
Karl Denninger: “As early as June we had reason to believe that Ivermectin was not only a useful treatment it was also a prophylaxis.”
“You also have this study out of Egypt.
100% reduction in mortality (from 4% to zero) when used early in the infection.
90% reduction in mortality (from 20% to 2%) when used late.
80% reduction in infection when used as a prophylaxis.
Indeed there aren’t just two studies that have reported out….. there are a whole bunch of studies.
How many studies at this point?
About 22.”
Don’t be a science denier, Zardoz.
Adjusting for population the U.S. has had four times the number of Covid deaths of Germany. That’s simply failed leadership
More than 20x the deaths per million as Australia
The US also just happens to have an out-of-control obesity crisis and a dysfunctional, for-profit health care system.
Adult life expectancy in the US has been dropping steadily since 2015.
US deaths per million from COVID are bound to be much higher than most other countries.
People aren’t THAT much healthier elsewhere. Life expectancy is dropping because it’s hard to guess the right amount of fentanyl to cop a buzz without it resulting in respiratory arrest.
Its not fair or equitable to force businesses to close without providing financial relief. However, even if the resturaunts were kept open very few people would be patronizing them over the next few months. Smarter folks know that’s playing Covid roulette.
There are more than enough morons to keep the infection numbers up.
I still frequent my favorite restaurants, which are going to great lengths to achieve safety through social distancing, mask requirements, and providing convenient hand sanitizer and even washing stations.
I do eat out less than I once did….COVID got me used to eating at home more….I tend to pick up sushi or some other decent ready-to-eat food from the supermarket…..sheer laziness, and it’s cheaper than a restaurant.
The Republican in me says I shouldn’t have to pay (more) taxes
He also tipped over the trash can and had sex with your cat
Closing of an otherwise profitable business due to short term long tail events like a pandemic is clearly an economic loss. Keeping all business afloat is not a good outcome, but nor is letting plenty of good businesses fail.
There is no easy solution. Many countries have found half-good solutions. The US doesn’t seem to have any solution to the sufferings of these businesses.
Well whats the answer. Leave every thing open. What is the cost to the economy has anyone looked into that. Would you go out to eat when you know the hospitals are full. Or when people you know start dying humm how bout the cost of social unrest. Its an ugly situation all around. If you can separate all the agendas/ politics and money out of the equation. It boils down to people trying to do what they think is best i an ugly situation. Even if you dont agree with them.
Ps i caught it at work this summer. Mild case and i am a relatively healthy and active person. Two weeks later on my first day back to work i about dropped over. Im no long hauler but i still have issues. My recommendation is to try to avoid it as long as you can.
If we really expect restaurants or bars to stay closed for an extended period of time the government is going to have to subsidize them. This is the approach other countries or municipalities take. When the bars and restaurants had to close in Girona funds were made available. That’s really the fair choice. If the restaurants pose a health risk and need to shut compensation is in order.
The shutting down of the global economy will/has caused many more deaths than by the virus alone. They should be looking into why ALL our leaders have committed these atrocities… most of the virus deaths were nosocomial, mostly the elderly. What they have done to the economies will be with us years to come.
I always thought the restaurant business was going to decline at some point. Most illnesses even before Covid could be traced to poorly prepared restaurant food. It isn’t surprising that Covid continues to thrive every time restaurants open. Eating out cratered after the great recession. It simply isn’t necessary in the middle of a pandemic. My ancestors actually thought eating outside the home was not hygienic.
I guess the real metric we need to figure out here is how many deaths per restaurant saved is acceptable.
On the flip side, once this is over there is going to be a LOT of opportunity in the restaurant business.
The Republicants keep trying to use the pandemic to force states into reorganization and bankruptcy but why don’t they do the same when it comes to the federal budget and pork barrel federal spending to specific states ?
How many were forced to close….and how many just went broke due to lost business due to fear of dining out? Do we have any idea?
There were forced closings here, but only for a couple of months…..and some were able to shift to a take-out service to keep some income coming in.
But all restaurants had to deal with social distancing…..hard to make a living when you can only seat half your capacity or less.
The well capitalized old established places mostly weathered the storm. Recent start-ups and places with super high rent folded up pretty fast. The restaurant biz is brutal anyway….tastes change…a place is popular for a while ….and then it isn’t.
This has also been our problem in dentistry…….we just can’t get back to full production. Our plight is not as dire as the restaurants, so far…but it looks to be a long tie before we can get back to our old normal….if ever.
Bars are really screwed……they’ve been locked down here for months, and no end in sight. College town…there were lots of very successful people in the bar business here. Family dynasties…..
Do we have any idea? This is pretty much unknowable, but judging by the traffic when the rules were lifted, I’d say about 2/3 is from forced closing.
Many old established places have gone out of business — as the article makes clear, and is evident everywhere. It is not just marginal places.
Only fast food and certain types of joints can switch to take-out (and make some money). Restaurants are rarely well capitalized (no much capital involved) unless they are part of a franchise/conglomerate — and these are weathering things best. Just not my type of dining.
“Restaurants are rarely well capitalized.”
Well….I know of a few groups of restauranteurs here who are VERY well capitalized….the guys who own Chuy’s for instance….and the same group owns a number of other restaurants.
The County Line on the Lake sits on dirt on Bull Creek that’s probably worth upwards of 20 million bucks….it belongs to the owners,,,,and they’ve been packing the place for more than 40 years.
The Oasis on Lake Travis. AKA “The Sunset Capitol of Texas”……Seating for 2500.
Also sitting on some very expensive property owned outright.
The concern is not over restaurants. The concern is actions that forced then to close.
That’s the discussion.
So, if I am seeing this right, the question is should government, federal, state or local, be held liable for any action they take which does economic damage to an individual or business. Would this be accurate?
Seems like a good question. If the government wants you to do something that is not governed by existing laws, they should be paying for it. Otherwise they are simply destroying people and shifting the consequences of their own decisions on to other people. That’s pretty much the definition of tyranny.
In ancient societies there were 3 things they considered to be the hall marks of tyranny:
Mish and all,
Congress (House at least) has no trouble voting for approval of $740 billion NDAA and increasing military spending with Afghan amendment to stay in forever war.
How about that for your representative .gov? No bickering over that issue.
Oh, and the comment about root cause…no, pandemic is not the root cause. It’s the inept .gov mentioned above.
Which actions? The actions of the government, or the actions of the idjits that spread covid everywhere to the point the hospitals are overwhelmed.
For those that argue ‘nothing could be done’ I will refer you to Australia, New Zealand, and Taiwan. Apparently people there aren’t such pussies about wearing masks.
Why should we be so worried about restaurants? Do they contribute to the balance of world trade somehow? Restaurants used to be where we spent our disposable income.
My favorite restaurant runs out of my kitchen. Dit bonjour a chef moi. Never been healthier! That doesn’t bode well for sit downs in the future. I imagine lots of other people cook better food than they eat at restaurants.
It is a huge part of the vaunted services economy (the part left over after manufacturing goods and administration went to China and India), and means tens of millions of relatively low paid people trying to hold their head above water will be drowned instead.
Wow, I have been saying this since 2008. A very large part of the US economic activity (over 50%) is generated by business with less than 20 employees.
And who make $15/hr or less.
Small Businesses Generate 44 Percent of U.S. Economic Activity link to advocacy.sba.gov
Mostly because McMommy is tired of cooking, and McDaddy is tired of eating her bad cooking.