Almost six months after the start of the COVID-19 pandemic in the U.S. restaurants continue to face numerous challenges, including determining how to keep their doors open.
Yelp says 15,000 restaurants on its platform have closed permanently due to the pandemic, per a story in the Wall Street Journal. Stephens Financial Services believes as many as 10% of independent operators could close by the end of this year. The Michigan Restaurant Association said 1,000 of the state’s 17,000 restaurants have permanently closed.
California’s 81,500 locations make it the state with the most restaurants, but Yelp says 2,200 have closed so far this year. The Arizona Restaurant Association says the state had roughly 10,000 restaurants before the start of the pandemic but now 9.0% have closed.
Several states that allowed restaurants to reopen for indoor dining have now halted that practice again. Particularly hard hit are restaurants located in commercial areas where office workers have been furloughed or sent home to work.
Some restaurants had success with outdoor dining. Some customers who were unwilling to dine indoors at a restaurant were more comfortable dining al fresco. With colder weather just a few months off, though, restaurant operators don’t see eating outside as a long-term solution.
Restaurants that had depended on revenue via business catering found that dried up, too. PPP loans helped some restaurants stay afloat in the short-term but that’s also not a long-term solution. Many restaurants were able to get their rents deferred but now landlords are insisting on payment.
Perhaps the biggest single problem is many people are too afraid to eat indoors.
Economic News This Week
- Initial-jobless claims totaled 1.42 million, an increase of 109,000 for the week ending July 18. This marks the first time in four months that week-over-week claims have increased. In the last few months claims have been running at about 1.3 million each week. The 4-week moving average edged down by 16,580 claims for a total of 1.36 million.
- The market for existing homes “… is hot, red hot,” according to the National Realtors Association. Existing home sales increased 20.7% in June from May to a seasonally adjusted annual rate of 4.72 million. Driving the sales increase were record-low interest rates but other positive factors continue to influence the market, too. They include apartment dwellers desiring more space, city dwellers looking to move to the suburbs and pent up demand as some buyers who delayed buying at the start of the pandemic deciding to move ahead with the purchase. But the news is not all good, as the association pointed out June 2020 sales declined 11.3% from June 2019.
- Sales of new single-family homes were at a seasonally adjusted rate of 776,000. This marks a 13.8% increase compared to May and 6.9% growth compared to June 2019.
- The Conference Board’s Leading Economic Index increased in June, rising 2.0 points for a final reading of 102.0. This comes after a 3.2-point increase in May and a 6.3-point decline in April. The Conference Board believes the level of consumer confidence, the weak economic outlook as well as the resurgence in COVID-19 cases will contribute to the U.S. economy remaining in recession territory in the near term.
Foodservice News This Week
- Some restaurants are not rushing to reopen their dining rooms. One reason is many restaurants don’t have the financial resources to pay for the cleaning products, safety barriers and staff the current environment requires. Another challenge is the numbers won’t work for many restaurants if they cannot operate their dining rooms at full or near-full capacity. Some areas limit restaurants to as little as 25% capacity. Even if the state or local government does not mandate any capacity limitations, the requirement to maintain social distances means the restaurant will only be able to serve a limited number of guests at a time.
- White Castle plans to test a robot named Flippy. The Ohio-based burger chain is partnering with a California-based manufacturer to develop a robot that will flip burgers and make fries. The trial is expected to begin this fall, per a published report. If the name Flippy sounds familiar, it should. A few years ago, a robot named Flippy worked the back of the house at a tech-driven concept called Cali Burger.
- McDonald’s will require customers to wear face masks starting August 1. McDonald’s employees will offer free masks to customers who refuse to put on their own masks. If the customers still refuse to wear masks, a McDonald’s employee will guide them to a designated pick up spot that’s a safe distance from other customers. The hamburger giant is also installing protective panels that will allow its restaurants to increase order taking, seating capacity and staffing levels.
- Taco Bell will reduce its menu next month. The quick-serve chain will chop 12 items to simplify operations and to make room for new offerings like plant-based products. Last year Taco Bell cut nine items from its menu.
- Buffalo Wild Wings tries to make the best of a bad situation. As Major League Baseball begins a compressed season without any fans in the stands, BWW will attempt to recreate the sounds and atmosphere of a ballpark. The sports bar will sell wings in small plastic baseball helmets. The chain will also hire well-known beer vendors to hawk beer in their restaurants.
- American Blue Ribbon Holdings, parent company of Village Inn and Bakers Square, will sell 34 restaurants to franchisees. This is about half of the company’s 75 corporate restaurants. American Blue Ribbon, which filed for bankruptcy in January, will sell 31 locations to Walker-DSC Capq for $1.24 million and 3 locations to LDL Holdings for $300,000.
- Growth Chains: Famous Toastery’s franchise program has two locations set to open by the end of this year.
- Comparable Store Sales Reports: Chipotle Mexican Grill down 9.8%.
For details and same store sales of other chains, Please Click Here for the latest Green Sheet.