Operations

NRA to Congress: 'Restaurants in economic free fall'

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December 7, 2020

In a letter to congressional leadership, the National Restaurant Association said Monday that the restaurant industry is in an "economic free fall" and thousands of more restaurants will close each month if there is no support forthcoming.

The letter also requested a "down payment" relief bill to help the industry survive through the year's end, and the organization is hoping for a bigger monetary relief package come early 2021, according to a press release.

The group's research group conducted a survey of 6,000 restaurant owners and 250 supply chain businesses in last two weeks of November. The findings include:

• 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. Eighty-three percent of full-service operators expect sales to be even worse over the next three months.
• Although sales were significantly lower for most independent and franchise owners, their costs have not fallen by a proportional level, and 59% of operators said their total labor costs (as a percentage of sales) are higher than they were pre-pandemic.
• The future remains bleak as 58% of chain and independent full-service operators expected continued furloughs and layoffs for at least the next three months.
• As of today, 17% of restaurants — more than 110,000 establishments — are closed permanently or long-term.
• The vast majority of permanently closed restaurants were well-established businesses and fixtures in their communities. On average those 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 said it was likely they will remain in the industry in any form in the months or years ahead.

In addition, the restaurant organization is providing a plan for how a proposed second Paycheck Protection Program could be bolstered to reflect the unique business model of the industry. One item calls for enhancing the Employee Retention Tax Credit.