The COVID-19 pandemic impacted the US 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.
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.
The US restaurant industry was projected at $899 billion in sales for 2020 by the National Restaurant Association, the main trade association for the industry in the United States. An estimated 99 percent of companies in the industry are family-owned small businesses with fewer than 50 employees. The industry as a whole as of February 2020 employed more than 15 million people, representing 10 percent of the workforce directly. It is the nation’s second-largest private employer and the third-largest employer overall.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.
In a February 28 story about how restaurants could prepare for the possibility of a pandemic, Restaurant Business quoted Roslyn Stone, COO of a firm that provides crisis response for restaurants, who said “The prospect of a global pandemic has already put a spotlight on restaurants and the tendency for employees to come in sick.
On Sunday, March 15, Ohio Governor Mike DeWine and Ohio Health Department director Amy Acton ordered the closure of all bars and restaurants to help slow the spread of the virus, saying the government “encouraged restaurants to offer carryout or delivery service, but they would not be allowed to have people congregating in the businesses. The city of Los Angeles closed all restaurants and bars later that evening and New York City announced all restaurants and bars would close by the following Tuesday, both cities also allowing exceptions for takeout and delivery.
Impact on the greater economy was as of March 17 expected to be large as Americans have in recent years spent more at restaurants than at grocery stores. Lester Jones, chief economist of the National Beer Wholesalers Association, said “This is a very significant and traumatic event for the restaurants, bars, taverns and the industry in general.” Chris Swonger, CED of the Distilled Spirits Council of the United States, said “The impact on our industry is going to be really, really difficult. It’s going to be a real challenge economically for not only the distillers of the United States, but certainly small businesses, restaurants, and bars.
The New York Times on March 20 reported that industry analysts were predicting that two thirds of restaurants would not survive, and as many as 75 percent of independents. Forbes on March 19 estimated the job losses in the restaurant industry to be in the millions. The National Restaurant Association estimated probable job losses to be five to seven million. Industry experts on March 18 forecast that $225 billion in direct losses and a full economic impact of $675 billion because of additional revenues generated elsewhere in the economy when customers patronize restaurants.