An Extinction Event for America's Restaurants

[Yo_Mama_Been_Loggin]

The American restaurant as you knew it died on March 19. That’s the day Governor Gavin Newsom issued a stay-in order to the citizens of California, the first in a 50-state cascade that brought to an end one of the most momentous and successful runs in the industry’s history.

Sure, some of the restaurants you know and love will return. But anywhere from 20 to 80 percent will permanently close, according to the latest estimates. The wide range in projections underscores the wild uncertainty for an industry that generates $900 billion a year and employs 15 million people—15 times the labor force of the airline industry. No one expects the Olive Gardens and Chick-fil-As to stop slinging hash, but as the chef and television star Andrew Zimmern says, “We’re looking at an extinction event for independent restaurants.”

Over 10 weeks in the spring, I spoke with dozens of people in and around the industry—chefs, sommeliers, bartenders, writers, politicians, tech executives, architects, and economists. They shared with me their anger (“COVID ripped the blanket off the haves and have-nots”); their fears (“we can control how we behave, but not how the customer does”); their cold calculations (“we should be talking about trillions in relief, not millions or billions”); their wildest ideas (“you turn the saltshaker and a hologram menu pops out”).

What emerged from the nearly 50 hours of conversation was a consistent narrative about how restaurants can salvage their business—and how hard that will be. It will take rapid scientific advancement, strong local support, continued government relief, and industry-wide innovation. All of which is to say that the restaurants that make it will not be the same, and not just because your hostess will wield a thermometer and your server will wear a mask and the chef will struggle to taste and tweak her food while swaddled in PPE.

https://www.msn.com/en-us/money/companies/an-extinction-event-for-americas-restaurants/ar-BB15Ick5?li=BBnbfcN&ocid=DELLDHP

[Phoenix61]

1. The shift in more people working at home

will change urban centers. A lot of downtown restaurants are dependent on the business breakfast/lunch crowd.

[Blue_true]

19. I agree.

Salaried people working from home will result in lots of downtown restaurants closing for ever.

[ProfessorGAC]

2. Agree With The 20% Floor

80% seems high for the ceiling, but 20% is a reasonable minimum.
Many restaurants were already very active in carry-out.
Think about Chinese food places in big cities. Carry-out might exceed eat in. Of the 3 such places in our triangle of 6k towns, one is nothing but carry-out.
I think higher (not the very highest) end eateries are in big trouble though. The business model is nearly 100% dine-in. They're not designed for carry-out.
We have one of those in town. They made zero effort to do carry-out, curbside or outdoor seating. (Really no way to do the 3rd.). I'd be surprised if they reopen.

[Binkie The Clown]

3. A chance to eat at home for a change.

As for me, in the last 3 years I've been to a restaurant twice. I much prefer to eat my own home cooking at 1/10th the price of restaurant food.

[brooklynite]

21. I go out to eat twice a week...

A chance for exotic variety and bettter cooking skill that I can’t achieve.

[louis-t]

4. My insurance company gave us vouchers

to support local restaurants as part of their discounting of premiums. I have been trying to use mine but the ones that are on their list of participating restaurants are so busy. I wish I could support one that is struggling.

[Wellstone ruled]

5. The normal "fallout rate"

for new Restaurant start ups is high under normal economic times. Corporate Chain or Franchise operations have the advantage of corporate Credit Scores were as the Mom and Pops do not have that advantage and are mostly Cash and Carry for the better part of their first year.

Here is a new wrinkle that has been thrown at small businesses. License Fees are increasing as Cities and Counties are loosing Revenue. Cities are now charging a Establishment Food Inspection Fee which used to just come free with the territory.

The loss of 50% of all Restaurants is,as of now,in the cards. If you have a Million dollar bank account,you might survive,but that is not using your Capital very smartly.

[Blue_true]

20. Restaurants, especially in big and fair sized cities

were always an iffy proposition. Greedy landlords charge outrageous rents, an independent has to be able to cover that and a lot of other stuff. Whole milk for an independent may cost 25-50% more than the same quality and quantity for a big chain, McDonalds buys by the millions of pounds, an independent simply can't compete with that scale.

I always tell people, if they really love an independent restaurant, DON'T ask for discounts for their business, that is poison for an independent operator.

If I was going into the food service business with a million in capital, I wouldn't open a restaurant, I instead would buy a small structure and try to establish a made-fresh packaged food line and get contracts to sell through convenience stores or super-markets. The dine-in, and takeout food service business is just too difficult in good times and almost impossible now.

[Codeine]

6. We may see a shift from large restaurants

with dining areas to smaller, more affordable models catering to the delivery service model. I could even see large kitchen facilities being used by multiple companies at the same time to keep overhead reduced.

This was probably going to happen anyway, just on a more manageable scale over a much longer period of time. Every crisis event drives new solutions, hopefully we will see a resurgence in business as innovative ideas take hold.

[Initech]

7. For me this really hurts.

Going out to eat and trying new things is one of my favorite things in life. I do have a lot of friends who work in restaurants and hotels, and seeing what's been happening is just sad beyond belief. And now since this fucking piece of shit virus came along we can't do that anymore.

I hope the vaccine will save us so we can get back to having meals out again.

[NickB79]

8. This could go two ways

More eating at home translating into people eating healthier and addressing our obesity crisis.

OR

More people eating drive throughs and frozen pizzas and worsening our obesity crisis.

[ecstatic]

9. Almost everyone I know has gained weight. Nt

[NickB79]

17. Yet I can't find more weights for my weight set to save my life

Everywhere is sold out of plates and barbells. Finally found a few used plates at the thrift store to bump up my bench press bar.

Are all these people putting on weight hoarding all the weights I want to get in better shape?!?!

[ecstatic]

25. Lol. They're attempting a pivot now

Diets, working out, etc

[lunatica]

18. A lot of that is stress eating

Comfort food. People will adjust and stress eating will stop for the most part.

[roamer65]

10. With CV lasting from 3-6 years, most independent restaurants will be gone.

Even with a vaccine, the virus is going to be around for quite a while.

[MineralMan]

11. Many existing restaurants will be gone, no doubt.

However, once this pandemic is over, and it will be, new ones will appear in the old locations. They are move-in ready, so they will open back up, with new names and new owners. The restaurant business is always marginal, even in the best of times.

[Silent3]

23. I was just about to mention new restaurants replacing old ones...

...but then say how much that doesn't make much economic sense in the long run.

The restaurants that die off will leave lots of unpaid debt and personal financial wreckage in their wake.

My guess is that if anyone was able to look at the big picture, not only the economy as a whole would save money by providing financial support, loan forgiveness, unpaid rent forgiveness, etc., to the existing restaurants, but the banks and investors and landlords would end up better off than they would by foreclosing on and evicting the old restaurants, and then waiting around for new restaurants (many of which will also fail, probably at a higher rate than restaurants which, apart from the pandemic, had stood the test of time) to borrow money and buy or rent the old restaurant spaces.

Sadly, short-term thinking and narrow adherence to standard practices, plus no one being able to agree on who foots the bill for propping up the old restaurants in the near term, won't allow the smart thing to happen.

I remember working for a small company many years ago that went bankrupt. There was about 2 million dollars in assets to divvy up among the creditors. Because no one agreed on how much they should all get, lawyers walked away with the vast majority of that money instead. Everyone but the lawyers lost out on that. So stupid!

[cagefreesoylentgreen]

12. I wonder if automats will make a comeback

The university in my hometown had one way into the 1980s.

[MissB]

13. One restaurant in town opened

A dessert dispensing machine, so smaller scale than an automat.

[tanyev]

22. I just watched That Touch of Mink again because I got sucked in

by one of the automat scenes. I found myself shaking my head at the stereotyped plot developments, but man that automat sure looked awesome.

[abqtommy]

14. The status of the human race here in 2020 is the end result of at least 6 million years of

evolution. We've been there, seen and done that and if we can't handle a little inconvenience to help
stop our extinction at this point then we deserve whatever we get.

[PTWB]

15. I feel bad for the (small) businesses that will be impacted..

but let us be honest. Most Americans should be staying at home and cooking healthy meals anyway, regardless of COVID-19. Our eat-out culture is long past due for some major changes.

[lunatica]

16. There's no new normal yet

and it doesn’t look much like the old normal.

Everyone thinks you can just go back to the good old days. It isn’t going to happen.

[Awsi Dooger]

24. My sister wastes so much money by eating out

She has 4 kids and they don't known anything except a life of eating out at least twice per day.

I hope she uses this to change their lifestyle -- and finances -- but I doubt it.

I cringe at the amount I have to spend during just one meal while visiting them. I keep thinking this could be a full week of food.