40% of restaurants to close within 6 months without more coronavirus aid
The industry is on track to lose $240 billion in sales by the end of the year
At least 40% of restaurant operators struggling to stay afloat during the coronavirus pandemic believe their businesses could go under within the next six months if there is no additional stimulus package from the federal government, according to a new survey by the National Restaurant Association.
With one in every six restaurants closed permanently or for the "long term," the industry is on track to lose $240 billion in sales by the end of the year, according to the National Restaurant Association's findings on the impact COVID-19 has on the restaurant business.
"For an industry built on service and hospitality, the last six months have challenged the core understanding of our business," said National Restaurant Association CEO Tom Bené.
FILE - In this March 25, 2020, file photo, a closed sign hangs in the window of a shop in Portsmouth, N.H. Most of the restaurant and retail businesses in the city have closed, with some offering takeout or pick-up orders, due to the virus outbreak.
The onslaught of closures has also left nearly 3 million industry employees out of work, increasing the number of Americans applying for state unemployment benefits, the findings show. In fact, restaurant operators say staffing levels are only 71% of what it would typically be if the virus wasn't present.
The National Restaurant Association noted that consumer spending in restaurants remained well below normal levels in August as sales dropped 34% on average while 60% of restaurant operators say their operational costs are higher than they were before the pandemic began.
The situation is only expected to get worse as many restaurants who have been able to make outdoor dining available for their patrons are left with limited alternatives as winter quickly approaches. While areas like New York City are planning to open indoor dining at 25% capacity, many restaurant owners worry that it won't be enough to stay afloat.
"Across the board, from independent owners to multi-unit franchise operators, restaurants are losing money every month, and they continue to struggle to serve their communities and support their employees," Bené said.
Their survival, he said, depends on the creativity and entrepreneurship of its owners, operators and employees.
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The National Restaurant Association has penned a letter to Congressional leaders urging them to pass a second round of Paycheck Protection Program funding that offers greater flexibility on operating and payroll expenses and ensures expenses paid with PPP loans are deductible from federal taxes.
The association is also asking for the Employee Retention Tax Credit (ERTC) to be expanded in order to help restaurants get more support after a PPP loan has run out. In addition, they are requesting tax credits to help "allay the significant costs restaurants are incurring for equipment, supplies, and training to mitigate employee and customer exposure to COVID-19."
"The food service industry was the nation's second-largest private-sector employer and pumped more than $2 trillion into the economy right up until our sudden shutdown," said Sean Kennedy, executive vice president of public affairs for the association.
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The message to Congress, Kennedy added, is that the aid would be "making an investment in an industry that consumers love and that powers the economy" and called it a "good business and economic move for Congress."
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The Paycheck Protection Program provides small businesses with eight weeks of assistance aimed at keeping their employees on the payroll. According to the Small Business Administration, more than 5.2 million loans were approved through the relief program as of August, equal to more than $525 billion. The average loan size was $100,729.