America’s restaurants remain under threat
For about two months in spring and summer, it looked as though the restaurant industry might be allowed to live. The horrific disruptions of 2020 were at last in the rearview mirror, vaccinations had eased fears, dining rooms were open and the path back to normal operation seemed to be visible at last.
Last, it did not.
In July, the research firm Datassential released a report titled, “Here We Go Again?” The study authors wrote that consumers’ usage of restaurants was changing as concerns about COVID infections increased. “The setback is unfortunate,” the report said, “because people had been venturing out for food and drinks more in the two months between the CDC’s declaration that vaccinated Americans could go without a mask in public and the emergence of the Delta variant.”
The percentage of people who said they would “definitely avoid eating out” rose 10 points in a month to 35%. New mandates requiring indoor-dining customers to show proof of vaccination could even worsen the situation for restaurants. The Datassential survey found that 21% of Americans said they would not be vaccinated and another 12% described themselves as “not sure.” More women than men and more younger people than older people expressed reluctance or refusal to receive a COVID vaccine. For restaurants, that’s especially problematic because people typically go out to eat in pairs or groups. If one in three people won’t go to a restaurant, the other two might also stay home.
Restaurant dining is a social experience, and Americans have had it drilled into their heads for 20 months that social experiences lead to hospitalization and death. Last fall, the California Department of Public Health actually produced TV commercials with actors playing healthy young people who end up in the hospital after gathering for a dinner party in somebody’s backyard. “It was just a get-together,” a young woman’s voice relates mournfully in the ad, “Everybody felt fine. But now, we’re all sick.”
Datassential found that 31% of Americans “have no concerns whatsoever” about dining out at restaurants, but unless they only go out with each other, it’s likely that the restaurant business will suffer from the resurgence of consumer fear.
Datassential also asked how a requirement to show proof of vaccination would affect consumer behavior. That July survey is a blinking warning sign for restaurants in the city of Los Angeles, where that requirement has just gone into effect for indoor dining. The researchers found that only 51% of a restaurant’s regular customers would comply and show their vaccination record, while 19% would get food to go or have it delivered. Thirty percent would just walk out. More than half of those people said they might never come back.
In late August, restaurant industry representatives sent a letter to congressional leaders warning that the trend was ominous. “Nineteen percent of adults have stopped going out to restaurants, while 9% canceled existing plans to go out to a restaurant in recent weeks,” the letter said, attempting to explain to the lawmakers that restaurants need to fill the seats every night or they won’t be profitable.
Lawmakers have responded by not doing much for restaurants. The Biden administration’s “American Rescue Plan” in March included $28.6 billion in aid that the Small Business Administration was tasked with handing out, but the “Restaurant Revitalization Fund” was quickly overwhelmed with 278,000 applicants requesting a total of $72.2 billion. Only about 101,000 applicants received grants, which averaged $283,000. In California, 36,379 eligible applicants asked for grants, but only 43.9% received any money.
The president’s team unveiled his latest spending package last week. It contained no further assistance for restaurants.
At the start of 2020, before the pandemic shutdowns began, the restaurant industry employed about 10 million people. Four months later, nearly half of those jobs had been lost. While some came back, there were 1.5 million fewer restaurant jobs in October 2020 than there had been in January.
Bars and restaurants are uniquely vulnerable to government actions, with little or no recourse even when those actions are wrongful. These businesses can’t legally operate without government permission in the form of health permits and liquor licenses, which can be easily revoked for any number of reasons. So with very few exceptions, they have cooperated, and cooperated, and cooperated. They closed down their dining rooms. They invested in plastic dividers, personal protective equipment, social-distancing signage, employee training and retraining, new carry-out and delivery implementations, outdoor dining facilities and everything else government officials demanded of them, or allowed them, as a condition of operating their businesses. Now many are dealing with new orders to enforce vaccine mandates on both staff and customers.
Faced with this turmoil and instability, a lot of restaurant workers have decided that they’d rather do something else. According to a recent study by Technomic, 30% of former restaurant workers went to work in offices, 17% are now in teaching or education, and still others have found jobs in the warehouse/logistics industry.
So the restaurant industry is dealing with a labor crisis that may never go back to normal, a customer base that has been severely cut back by endemic fear of social gatherings, and rising costs as inflation drives up the price of food. The Independent Restaurant Coalition warned lawmakers that without more federal assistance, nearly 200,000 restaurants are at risk of permanent closure.
“Right now, only about a quarter of the restaurant owners expect to return to normal operations in the next six months,” President Biden said back in May, “We can do much better than that.”
If he can do better, this would be a good time to start.