The Devastating Effects of Covid-19 on the Restaurant Industry

The restrictions which have been placed on non-essential businesses in areas dealing with the COVID-19 pandemic have impacted few enterprises as much as they have the restaurant industry. Restaurants worldwide are struggling to survive, and many owners have determined that they will never recover. What we are witnessing today could change the course of the restaurant industry and culture forever. 

Restaurants have been required to close their doors to customers for months, and the result has been dramatic. According to the National Restaurant Association, eating and drinking businesses in the United States went from $65.4 billion in sales in February 2020 to $32.4 billion in April, the lowest in 35 years. Without a consistent source of revenue, restaurants are unable to pay their bills, which continue to come due despite their reduced operations. Numerous employees have been laid off or furloughed, leading to 5.5 million restaurant jobs lost, leaving the fewest remaining employees on record in the last 30 years.

Government Aid

Government assistance has been provided to restaurants as well as other businesses impacted by the pandemic, allowing them to sustain themselves during the period of reduced operations. Loans provided to small businesses can help them remain intact for long enough to ride out the situation or adapt to a new form of business.

However, restaurant owners have found that this aid does not always fit their needs. The funds are required to be used in a two-month timeframe or be lost, which limits the ability of business owners to use them to pay recurring costs like payroll and rent after the period ends.

Many businesses have used the U.S. government’s Paycheck Protection Program, which requires 75% of aid to be used on employee payroll, but restaurants have found that this does not accurately cover their costs. The restaurant industry has proposed that this limitation be removed, but the government has not complied at this time.

Read More: The Must-Have Essential Features of a Food Ordering App

Steps Toward Reopening

Many establishments have determined that they will be unable to reopen even once the restrictions are lifted due to the losses suffered in the period of closure. Restaurants are closing permanently rather than trying to get back on track in the future, a decision that will have lasting consequences.

In the meantime, food delivery and pickup have been the only source of revenue for struggling restaurants. While out-of-restaurant ordering has increased massively, it has not proved sufficient to keep businesses operating at full capacity, which limits their ability to meet their narrow profit margin. Some restaurant owners have been dissatisfied with the poor performance of food delivery aggregation apps like Grubhub plus high commissions of 30%, leading some to turn away from apps and stay with phone ordering only. Others have turned to food delivery apps with more control and that do not operate on commission models. Restaurants with their own apps are able to better connect to their regular customers and turn new ones into dependable repeat eaters.

The next step many restaurants are looking toward is reopening, and while restrictions are set to be lifted in the next few weeks, nothing will be the same as it was. New techniques are being employed to allow as much social distancing and minimal person-to-person contact. Increased use of outdoor dining spaces as opposed to indoor dining will result in less enclosed spaces. Contactless ordering and food pickup will reduce the amount of contact with restaurant employees. In addition, many restaurants, like other businesses, have begun investing in temperature scanners to be used on all members of the public before they can enter the establishment. Those with a higher temperature may be turned away.

Finally, we may see restaurants and other food sellers raise prices in order to remain stable. A major concern is the disruption of supply chains across the world, as food production sites have also been closed and transportation has been impacted. Many restaurants have been forced to pay more for ingredients, and combined with the uncertainty associated with the number of returning customers, ‘coronavirus surcharges’ may make their way onto restaurant bills. These fees may only be temporary, but they represent another way that the struggles of food sales will be felt by both restaurants and their consumers.

While restaurants are doing their best to reopen and become profitable again as soon as possible, the mark left by months of closures, shifts to online ordering, and new restrictions on indoor dining may change the restaurant experience for a very long time.