Restaurants Closures And Bankruptcies Continue To Rise
There has been continued business deterioration across the restaurant industry, with restaurant closures and bankruptcies continuing to rise across the U.S. and job losses growing at some of the prominent restaurants, according to a new survey by the National Restaurant Association or NRA.
The survey details were shared by the NRA in a letter to the Congressional leadership. It calls for supporting more than 500,000 franchise, chain, and independent restaurants that are in “an economic free fall.”
The survey among 6,000 restaurant operators and 250 supply chain businesses showed that eighty seven percent of these full-service restaurants reported an average 36 percent drop in sales revenue. Eighty three percent of restaurants expect sales to be even worse over the next three months.
With the sales falling and costs not falling proportionately, restaurants have not been able to achieve a sustainable industry average profit margin of 5 to 6 percent.
59% percent of restaurant operators say their total labor costs, as a percentage of sales, are higher now than they were during pre-pandemic. Therefore, fifty-eight percent of operators expect continued furloughs and layoffs for at least the next three months.
As of today, 17 percent of restaurants or more than 110,000 establishments, are closed permanently or long-term. The majority of these include well-established businesses, and fixtures in their communities, most of them being in business for an average of 16 years and about 16 percent for at least 30 years.
The letter to the Congress states that thousands more restaurants will close their doors for good with every passing month if there is no solution from the Congress.
The restaurant industry, the second-largest private-sector employer in the U.S., is among the worst hit by the coronavirus pandemic. Restaurant operators nationwide reported sharp declines in sales and employment levels in recent months following the coronavirus-induced lockdowns.
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