Impact of the COVID-19 pandemic on the restaurant industry in the United States
The COVID-19 pandemic impacted the United States restaurant industry via government closures, resulting in layoffs of workers and loss of income for restaurants and owners and threatening the survival of independent restaurants as a category. Within a week after the first closures, industry groups representing independent restaurateurs were asking for immediate relief measures from local, state, and federal governments, saying that as many as 75 percent of independent restaurants could not survive closures of more than a few weeks. By late July nearly 16,000 restaurants had permanently closed.
Restaurant closures started March 15 when Ohio Governor Mike DeWine ordered all bars and restaurants in the state to close their dining rooms and bars; within a week most other states followed suit. By March 23, industry experts were estimating nearly half of the industry's 15 million workers had been laid off. Insurers refused to cover the restaurants' financial losses via business interruption policies.
Across the world, restaurants' daily traffic dropped precipitously as compared to the same period in 2019 as the coronavirus impacted the overall industry. Closures of restaurants caused a ripple effect among dependent industries such as food production, liquor, wine, and beer production, shipping, linen suppliers, fishing and farming and among musicians, florists, and delivery services.
The US restaurant industry was projected at $899 billion in sales for 2020 by the National Restaurant Association, the main trade association for the industry in the United States. An estimated 99 percent of companies in the industry are family-owned small businesses with fewer than 50 employees. The industry as a whole as of February 2020 employed more than 15 million people, representing 10 percent of the workforce directly. It is the nation's second-largest private employer and the third-largest employer overall. It indirectly employed close to another 10 percent when dependent businesses such as food producers, trucking, and delivery services were factored in, according to Ohio restaurateur Britney Ruby Miller. Ancillary industries such as food purveyors, linen suppliers, florists, farming, fishing, trucking, beverages depend on the restaurant industry for their own financial health.
In Delaware and Massachusetts, one in ten workers is employed in the restaurant industry. In North Carolina, 11 percent of workers are employed by the industry. In Texas, 12% of workers were employed by the industry as of 2016.
Parts of this article (those related to Timeline) need to be updated. The reason given is: This apparently has not been updated in 1 year. The material is from March 2020 but it is now March 2021..March 2021)(
Across the world, restaurants' daily traffic dropped precipitously as the virus spread, compared to the same period in 2019.
In a February 28 story about how restaurants could prepare for the possibility of a pandemic, Restaurant Business quoted Roslyn Stone, COO of a firm that provides crisis response for restaurants, who said "The prospect of a global pandemic has already put a spotlight on restaurants and the tendency for employees to come in sick. Though more chains have started giving employees sick time as the supply of labor has tightened, it's increasingly important for companies to change their culture to ensure employees aren't working while sick."
A March 3 story in Nation's Restaurant News characterized the industry as being braced for impact from the virus.
On Sunday, March 15, Ohio Governor Mike DeWine and Ohio Health Department director Amy Acton ordered the closure of all bars and restaurants to help slow the spread of the virus, saying the government "encouraged restaurants to offer carryout or delivery service, but they would not be allowed to have people congregating in the businesses." DeWine said he'd made the decision "after being contacted by citizens around the state sharing photos and stories of crowded bars Saturday night, despite warnings of social distancing and the governor's edict limiting crowds to no larger than 100 people." The city of Los Angeles closed all restaurants and bars later that evening and New York City announced all restaurants and bars would close by the following Tuesday, both cities also allowing exceptions for takeout and delivery.
The next day, Illinois, New Jersey, New York state, Connecticut, Kentucky, Pennsylvania, Maryland and Washington, D.C. followed suit. By March 21, at least 25 states had closed restaurants and bars. By March 22 the number had risen to 38. In other states, major cities had closed bars and restaurants to sit-down diners and limited to takeout orders and delivery.
Impact of closures
According to NPR's Yuki Noguchi, "Just about every restaurant nationwide has been hit hard at once, making this disaster unique." Industry experts warned that many small businesses would not be able to recover from closures without help from the government. Impact on the greater economy was as of March 17 expected to be large as Americans have in recent years spent more at restaurants than at grocery stores. Lester Jones, chief economist of the National Beer Wholesalers Association, said “This is a very significant and traumatic event for the restaurants, bars, taverns and the industry in general." Chris Swonger, CED of the Distilled Spirits Council of the United States, said "The impact on our industry is going to be really, really difficult. It's going to be a real challenge economically for not only the distillers of the United States, but certainly small businesses, restaurants, and bars." Sean Kennedy of the National Restaurant Association on March 19 called the closures a "perfect storm" for the industry, saying the three primary challenges for restaurateurs are short-term access to cash, medium and long-term access to credit, and tax relief when the closures are ended. An investor in two New York City restaurants told the New York Post:
This situation is apocalyptic for the restaurant business. How sad would the city be if the only places that survived were chains? It makes me depressed to even think about it.”— Mark Amadei
Industry experts on March 18 forecast that $225 billion in direct losses and a full economic impact of $675 billion because of additional revenues generated elsewhere in the economy when customers patronize restaurants. Tom Colicchio, speaking with Yahoo Finance on March 23, and other industry experts said the US restaurant industry had seen as many 7 million layoffs. Colicchio, Camilla Marcus, and other prominent chefs and restaurateurs established a trade and lobbying group, the Independent Restaurant Coalition, to lobby for the needs of small and independent restaurants.
Directory and review site Yelp in July announced that 60% of restaurants that closed down completely during the pandemic had marked those closures as permanent for a total of nearly 16,000 restaurants by July 24.
Widespread restaurant closures affected certain food brands. For example, during the third quarter of 2020, Coca-Cola's net revenues decreased by 9%.
On March 20, McDonald's closed 50 restaurants. On March 21, Starbucks announced company-operated stores in the US and Canada would be limited to drive-thru and delivery orders. Union Square Hospitality Group, which the New York Post described as "largely seen as the gold standard for employment practices in the industry," laid off 2000 employees March 13.
Souplantation, a soup and salad buffet chain, closed all restaurants and laid of all staff permanently as a result of the COVID pandemic, including all Arizona and California stores. The management team noted they did not see how their buffet concept could survive.
Industry journal Restaurant Business in late July listed some of the oldest independent restaurants in the country that had permanently closed, including Louis' Restaurant in San Francisco, which opened in 1937, John's Famous Stew (Indianapolis, 1911), Jules Maes Saloon (Seattle, 1888), and Santa Fe Basque (Reno, 1949).
By June 2020, the United Food and Commercial Workers International Union reported that 238 of its 1.3 million member workers had died of COVID-19.
Industry fallout and reactions
The partial rather than full closings of restaurants meant that the closings failed to trigger business interruption insurance for many restaurants; other policies had clauses excluding coverage in the case of epidemics, action by civil authority, or requiring restaurants to have physical damage to property. One industry representative said forcing insurers to cover business interruption claims would bankrupt the insurance industry.
As many as 7 million workers were estimated to have been laid off by March 23, and more employees lacked sick leave in the sector compared to similar sectors. The New York Times characterized the closures as affecting "all strata of the industry, from the owners and their celebrity chefs to the waiters and waitresses, bar-backs and busboys, who effectively are facing layoffs and may be unable to pay their rent."
Some restaurants whose business already relied heavily on takeout, such as pizza parlors, saw their takeout business decrease due to the cancellation of all sporting events, which "drive pizza sales" according to one Ohio pizza shop owner. Industry experts have said that takeout and delivery service will also see reduced demand and won't be able to make up the shortfall for restaurants. Some restaurants closed down, some turned to pickup and delivery, and some began doing grocery delivery or meal kit services. On March 23 the New York Post reported that many New York City restaurants were closing down takeout and delivery both due to health concerns for employees and because those businesses were not bringing in enough money.
Groups of restaurateurs in New York City, Cincinnati, Philadelphia and Seattle called on governments to provide help to the nation's small and independent restaurants. On March 19 the New York group called for state governments to issue orders for rent abatements, suspension of sales and payroll taxes, and a full shutdown so that business interruption insurance coverage would be triggered. On March 20, the Cincinnati group called on the federal government to provide a $225 bailout to the restaurant industry. On March 23 the Philadelphia group asked Pennsylvania and the Seattle group asked local, state and federal governments to provide relief for laid off workers and closed restaurant businesses.
Jose Andres, writing in The New York Times on March 22, called on the federal government to fund a food distribution effort that could both feed vulnerable citizens and offer some relief to laid off restaurant workers by employing them to prepare and distribute food where needed. Marcus Samuelsson, writing for CNN.com on March 24, noted that as an owner of businesses in eight countries, he has a unique perspective on how the unemployment insurance program in the US compares to programs in other affected countries. The US system, he said, was designed to "'tide you over' while you quickly find another job", which is not possible during widespread closures. He called on governments to double the benefits, extend them to 200 or more days, and expand them to include health coverage. Gabrielle Hamilton, writing in the New York Times on April 23, described being turned down for an emergency line of credit, having her insurance claim rejected, and learning her laid-off employees hadn't been able to file for unemployment.
With only carry-out and delivery services operating in many states, laid-off servers and bartenders were prompted to create "virtual tip jars" across 23 U.S. cities. In Cincinnati fans of rival basketball teams Xavier and University of Cincinnati competed to leave bigger tips for restaurant workers in a "Crosstown tipoff", a nod to the annual Crosstown Shootout, starting with a tip of $1000 on a $54 carryout order at Zip's Cafe in early January 2021 and accompanied by a note reading "Go Xavier!" UC fans responded with tips of increasing size, and fans of both teams bid up the largest tips; eventually $2000 tips were received at a downtown Skyline Chili and an Oakley pub, both in support of UC.
As a result of a lack of demand from restaurants, schools, businesses and hotels, many farms had to destroy millions of pounds of eggs, onions, milk and other goods which were overproduced. The closures of restaurants and the rest of the food service industry, such as schools and event venues, impacted the distribution for food and beverage. In early April, while grocery stores were experiencing shortages of dairy products, farmers whose main customers were in the food service supply chain were dumping their milk because of lack of demand. According to Cornell dairy industry economist Christopher Wolf, "If you have a factory that was set up to produce sour cream to sell at Mexican restaurants, you can’t just decide that tomorrow you’re gonna produce ice cream and send it to the grocery store."
In mid-April Ohio-based restaurateur Cameron Mitchell told Columbus mayor Andrew Ginther that the business had the ability to reopen a single time but would not survive a second closedown if the economy were reopened too quickly and a second shutdown occurred.
By early May, nearly a fifth of Wendy's locations had no beef to serve. Wendy's uses refrigerated, not frozen, meat products, and thus its supply chain is different than that of other fast food restaurants.
State and local government responses
President Trump met via phone on March 19 with leaders of chain restaurant companies, but no independent restaurateurs were included. Participants included Domino's Pizza, McDonald's, Wendy's, Yum! Brands and Darden Restaurants and representatives from the International Franchise Association and the National Retail Federation.
On March 25 the White House and Senate leadership came to an agreement on a $2 trillion stimulus package. The bill was reported to include $250 billion in direct payments to individuals, $350 billion for small business loans, $250 billion for unemployment benefits, and $500 billion for loans to troubled companies. It contains a provision preventing Trump, his family, other top government officials and members of Congress from benefiting from programs and creates an oversight board and inspector general position. Restaurateur and chef Tom Colicchio, who had been active in asking for a government rescue of the industry, later that day said he was feeling "optimistic" about the package.
After large restaurant chains outflanked small and independent restaurants to access the funds, leaving little for the independents, some faced backlash and returned the funds. Funds were depleted with only 5% of small and independent restaurants receiving assistance, even though 60% of small restaurants had applied for funds. The funding had been run through large banks, which favored large restaurants and national chains. The International Franchise Association "bashed" the IRC's proposal, saying all restaurants needed help. The IRC pushed back, saying that small independents were in a unique spot and in more danger than large chains.
In early May legislation was proposed in Congress to allow Americans to use SNAP benefits at restaurants. Currently, food assistance benefits can only be used at restaurants of the state participates in the "Restaurant Meals Program". The proposed SNAP CARRY Act includes provisions to expand access to the restaurant program during emergencies like the pandemic.
- Brownfield, Andy (20 March 2020). "Cincinnati restaurants ask feds for coronavirus bailout". login.research.cincinnatilibrary.org. Retrieved 2020-03-22.
- Ramirez, Elva. "The Restaurant Industry Needs A Coronavirus Bailout. Will They Get It?". Forbes. Retrieved 2020-03-22.
- Mali, Meghashyam (2020-03-17). "Restaurant industry reeling under coronavirus". TheHill. Retrieved 2020-03-22.
- Noguchi, Yuki (22 March 2020). "Closed All At Once: Restaurant Industry Faces Collapse". NPR.org. Retrieved 2020-03-22.
- "Restaurant industry reeling from coronavirus". MSNBC.com. Retrieved 2020-03-22.
- Somvichian-Clausen, Austa (2020-03-20). "How NYC's restaurant industry is surviving amid coronavirus closures". TheHill. Retrieved 2020-03-22.
- Davidowitz, Esther. "'We are in survival mode': Coronavirus devastates New Jersey restaurants". North Jersey. Retrieved 2020-03-23.
- Cole, Katherine. "'The Four Top': Coronavirus Hits The Food Industry". opb.org. Retrieved 2020-03-24.
- Ciolino, Nick. "Coronavirus in Delaware: Fallout from closing restaurants and bars". delawarepublic.org. Retrieved 2020-03-22.
- "The Massachusetts Restaurant Industry at a Glance" (PDF). Massachusetts Restaurant Association.
- "NC restaurant association launches health plan aiming to help hundreds of thousands of workers". bizjournals.com. Retrieved 2020-03-22.
- "Restaurant Industry In Texas". txresto.com. Retrieved 2020-03-22.
- "See how much business U.S. restaurants are losing because of the coronavirus". cbsnews.com. Retrieved 2020-03-22.
- Maze, Jonathan; Feb. 28, Heather Lalley on; 2020. "How restaurants can prepare for a coronavirus pandemic". Restaurant Business. Retrieved 2020-03-22.CS1 maint: numeric names: authors list (link)
- "Restaurant industry braces for coronavirus impact". Nation's Restaurant News. 2020-03-03. Retrieved 2020-03-22.
- Conradis, Brandon (March 15, 2020). "Illinois, Ohio closing all bars, restaurants in response to coronavirus". thehill.com.
- "37 confirmed cases of coronavirus in Ohio; 361 under investigation". WBNS-10TV Columbus, Ohio | Columbus News, Weather & Sports. 15 March 2020. Archived from the original on 18 March 2020. Retrieved 16 March 2020.
- "Coronavirus: Governor orders Ohio bars, restaurants to shut down". The Columbus Dispatch. 15 March 2020. Archived from the original on 16 March 2020. Retrieved 15 March 2020.
- "LIST: States that have closed restaurants and bars to dine-in customers". KFOR.com. 2020-03-16. Retrieved 2020-03-22.
- Kang, Matthew (2020-03-15). "LA Mayor Eric Garcetti orders closure of restaurants and bars, allowing only takeout and delivery". Eater LA. Retrieved 2020-03-22.
- Witte, Griff; Zezima, Katie (16 March 2020). "Ohio Gov. Mike DeWine's coronavirus response has become a national guide to the crisis". Washington Post. Retrieved 22 March 2020.
- Taylor, Luke (2020-03-21). "When coronavirus is behind us, will you still think of restaurant and bar workers?". Vox. Retrieved 2020-03-22.
- "Assoc-State-Covid19-Resources" (PDF). National Restaurant Association. Retrieved 22 March 2020.
- "Chart: How coronavirus is devastating the restaurant business". 16 March 2020. Archived from the original on 19 March 2020. Retrieved 19 March 2020.
- "Food And Beverage Industry Hit Hard By Coronavirus Outbreak". NPR.org. Retrieved 2020-03-22.
- Keil, Jennifer Gould (2020-03-23). "NYC restaurants stop offering takeout due to coronavirus crisis". New York Post. Retrieved 2020-03-23.
- Severson, Kim; Yaffe-Bellany, David (2020-03-20). "Independent Restaurants Brace for the Unknown". The New York Times. ISSN 0362-4331. Retrieved 2020-03-23.
- Marcus, Camilla (2020-03-23). "Restaurants to Congress: We are terrified about our future and desperate for your help". FOXBusiness. Retrieved 2020-04-12.
- Gangitano, Alex (2020-03-18). "Restaurant industry estimates $225B in losses from coronavirus". TheHill. Retrieved 2020-03-22.
- "Restaurateur and Chef Tom Colicchio on how coronavirus is impacting the restaurant industry". finance.yahoo.com. Retrieved 2020-03-24.
- "Seattle's best restaurants asking for help from Congress — and from you". The Seattle Times. 2020-03-23. Retrieved 2020-03-24.
- Greenwald, Kitty (2020-03-25). "To Save Their Industry, Restaurant Owners Get Organized". Grub Street. Retrieved 2020-04-09.
- Croft, Jay (25 July 2020). "Yikes! Yelp says 60% of restaurant Covid-19 closures are permanent". CNN. Retrieved 2020-08-02.
- McCarthy, Kelly (24 July 2020). "Nearly 16,000 restaurants have closed permanently due to the pandemic, Yelp data shows". ABC News. Retrieved 2020-08-02.
- Wiener-Bronner, Danielle (22 October 2020). "Coke is canceling 200 drink brands". CNN. Retrieved 22 October 2020.
- "Coronavirus pandemic prompts McDonald's to temporarily close 50 restaurants". Nation's Restaurant News. 2020-03-20. Retrieved 2020-03-22.
- "Starbucks closes cafes, limits orders to delivery and drive-thru". Nation's Restaurant News. 2020-03-21. Retrieved 2020-03-22.
- Fickenscher, Lisa; Keil, Jennifer Gould (2020-03-23). "Laid-off eatery workers face health-insurance crisis amid coronavirus". New York Post. Retrieved 2020-03-23.
- "San Diego's Iconic Souplantation Buffets Closing Permanently, CEO Says". May 8, 2020. Retrieved Oct 26, 2020.
- Morona, Joey (2020-07-30). "Dunkin' to close up to 800 stores in the U.S. by the end of the year". cleveland. Retrieved 2020-07-31.
- Lalley, Heather (20 July 2020). "Some of the country's oldest restaurants are closing permanently". Restaurant Business. Retrieved 2020-08-02.
- "America's Largest Food & Retail Union Confirms Growing COVID-19 Impact on Frontline Workers". The United Food & Commercial Workers International Union. Retrieved 2021-03-21.
- Edelman, Adam (July 30, 2020). "Former GOP presidential candidate Herman Cain dies of COVID-19". NBC News. Retrieved August 9, 2020.
- AP (2021-03-21). "Texas Roadhouse CEO Kent Taylor Dies Amid COVID-19 Struggle". HuffPost. Retrieved 2021-03-21.
- Sedacca, Matthew (2020-03-20). "Why Are Insurance Companies Denying Restaurant Claims in Wake of Pandemic?". Eater. Retrieved 2020-03-24.
- Sullivan, Max (23 March 2020). "Denied: Restaurant owners find insurance won't cover coronavirus losses". fosters.com. Retrieved 2020-03-24.
- "Coronavirus exposes sick leave gap for retail, restaurant workers". Press Enterprise. 17 March 2020. Archived from the original on 18 March 2020. Retrieved 20 March 2020.
- Sick leave National Bureau of Economic Research
- Wilson, Michael; Nierenberg, Amelia (2020-03-16). "'We're Completely Lost': Coronavirus Hits N.Y. Restaurants". The New York Times. ISSN 0362-4331. Retrieved 2020-03-22.
- "Ohio Restaurant Owner Reacts To Closing Due To Coronavirus". NPR.org. Retrieved 2020-03-22.
- "Restaurants pivot to groceries and meal kits to save business during the COVID-19 pandemic". Restaurant Hospitality. 2020-03-20. Retrieved 2020-03-22.
- "Natl Rest. Association COVID Response Ltr". National Restaurant Association. 18 March 2020. Retrieved 22 March 2020.
- Reklaitis, Victor. "Here's everything lobbyists wanted in the coronavirus stimulus package". MarketWatch. Retrieved 2020-03-25.
- Adams, Erika (2020-03-19). "NYC's Top Restaurant Groups Band Together to Petition for Government Relief". Eater NY. Retrieved 2020-03-22.
- "Philly's Biggest Chefs and Restaurateurs Demand Immediate Relief From Government". Philadelphia Magazine. 2020-03-23. Retrieved 2020-03-23.
- Andrés, José (2020-03-22). "Opinion | José Andrés: We Have a Food Crisis Unfolding Out of Sight". The New York Times. ISSN 0362-4331. Retrieved 2020-03-23.
- Samuelsson, Opinion by Marcus. "Chef: We need seismic change, right now". CNN. Retrieved 2020-03-24.
- Hamilton, Gabrielle (2020-04-23). "My Restaurant Was My Life for 20 Years. Does the World Need It Anymore?". The New York Times. ISSN 0362-4331. Retrieved 2020-04-25.
- WKRC, Brad Underwood (23 March 2020). "Virtual Tip Jar: Website creates way to help bartenders, servers". WKRC.
- Staff, WLWT Digital (2021-01-11). "Customer leaves $1,000 tip for pandemic-stricken employees at Zip's Cafe". WLWT. Retrieved 2021-02-06.
- Bentley, Quinlan. "Crosstown tip-off: Which team is in the lead now?". The Enquirer. Retrieved 2021-02-06.
- "'Tip-off' challenge continues: UC fan leaves $2K tip at R.P. McMurphy's". fox19. Retrieved 2021-02-06.
- "Downtown Skyline Chili gets $2000 tip as "Crosstown Tipoff Challenge" continues". local12.com. Retrieved 2021-02-06.
- Yaffe-Bellany, David; Corkery, Michael (11 April 2020). "Dumped Milk, Smashed Eggs, Plowed Vegetables: Food Waste of the Pandemic". The New York Times. Retrieved 12 April 2020.
- Fu, Jessica (2020-04-08). "Why farmers are dumping milk while grocery stores report dairy shortages". The Counter. Retrieved 2020-04-24.
- "Ohio Channel April 14 DeWine Press Conference". Ohio Channel. Retrieved 2020-04-14.
- Boboltz, Sara (2020-05-05). "Analysts Say Nearly 1 In 5 Wendy's Locations Out Of Beef". HuffPost. Retrieved 2020-05-05.
- Raju, Manu; Barrett, Ted; Foran, Clare; Wilson, Kristin (25 March 2020). "White House, Senate reach historic $2 trillion stimulus deal amid growing coronavirus fears". CNN. Retrieved 2020-03-25.
- Kaplan, Talia (2020-03-25). "'Top Chef' star Tom Colicchio on crisis facing restaurant industry: 'Our workers are really hurting'". Fox News. Retrieved 2020-03-26.
- Peterson, Hayley. "Ruth's Chris is returning $20 million in federal loans after facing a backlash". Business Insider. Retrieved 2020-04-30.
- Nurin, Tara. "Independent Restaurant Owners Call On Congress For Dedicated COVID-19 Aid". Forbes. Retrieved 2020-04-30.
- Gangitano, Alex (2020-04-29). "Restaurant industry divided over who should get aid". TheHill. Retrieved 2020-04-30.
- "More restaurants could start taking SNAP benefits". FOX Business. May 1, 2020.