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.[1]
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.
Industry background[edit]
The US restaurant industry was projected at $899 billion (~$1.04 trillion in 2023) in sales for 2020 by the National Restaurant Association, the main trade association for the industry in the United States.[2][3] An estimated 99 percent of companies in the industry are family-owned small businesses with fewer than 50 employees.[4] The industry as a whole as of February 2020 employed more than 15 million people, representing 10 percent of the workforce directly.[2] It is the nation's second-largest private employer and the third-largest employer overall.[5][6] 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.[2] Ancillary industries such as food purveyors, linen suppliers, florists, farming, fishing, trucking, beverages depend on the restaurant industry for their own financial health.[4][7][8][9]
In Delaware and Massachusetts, one in ten workers is employed in the restaurant industry.[10][11] In North Carolina, 11 percent of workers are employed by the industry.[12] In Texas, 12% of workers were employed by the industry as of 2016.[13]
Notable deaths[edit]
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.[44]
Herman Cain, CEO of Godfather's Pizza from 1986 to 1996 and the National Restaurant Association from 1996 to 1999, died from COVID-19 in July 2020.[45]
Wayne Kent Taylor, the CEO of Texas Roadhouse, died by suicide in March 2021 while struggling with COVID-19 symptoms including severe tinnitus.[46]
Government response[edit]
Federal response[edit]
President Trump met via phone on March 19 with leaders of chain restaurant companies, but no independent restaurateurs were included.[56] 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.[4]
On March 25 the White House and Senate leadership came to an agreement on a $2 trillion stimulus package.[70] 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.[70] 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.[70] 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.[71]
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.[72] Funds were depleted with only 5% of small and independent restaurants receiving assistance, even though 60% of small restaurants had applied for funds.[72] The funding had been run through large banks, which favored large restaurants and national chains.[73] The International Franchise Association "bashed" the IRC's proposal, saying all restaurants needed help.[74] The IRC pushed back, saying that small independents were in a unique spot and in more danger than large chains.[74]
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.[75]