Coronavirus pandemic an ‘apocalypse’ for restaurants in US

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LOS ANGELES – For Mr Gabriel Gordon and his wife Lena, the small restaurant they opened 14 years ago in the coastal California town of Seal Beach was a dream project and the cornerstone of their future success.

But this weekend, Beachwood BBQ, which had become a staple in the community, permanently shut down – yet another casualty of the carnage the has unleashed on across the United States.

“This restaurant launched everything for us and allowed us to have a nice life,” said Mr Gordon, 43, who is now concentrating his efforts on another restaurant and three breweries he owns.

“This is what allowed us to have a nice life and it’s heartbreaking to see it close.”

According to the National Restaurant Association, the restaurant industry – the second-largest private sector employer in the US – is among the hardest hit by the pandemic, with losses projected to reach a staggering US$240 billion (S$330 billion) by the end of the year.

“It’s such an apocalyptic time for this industry,” Mr Sean Kennedy, executive vice-president of public affairs for the association, told AFP.

“We were the first industry to shut down and we will be the last to recover from this pandemic. That’s because we won’t be in place until the airlines are fixed, until the hotels are fixed and until tourism is back.”

As of July 10, according to Yelp, there have been 26,160 total restaurant closures across the US, of which 60 per cent (15,770) have permanently shut down.

That represents the highest total business closures in the country, surpassing retail.

The impact has especially been felt in major cities and regions that rely on tourism during the summer months in order to stay afloat the rest of the year.

‘LIKE LOSING FAMILY MEMBER’

“Cities like Los Angeles… depend on tourism, conventions, vacationers, honeymooners – that’s what drives restaurant traffic,” said Mr Kennedy.

“Until that’s restored, we are not going to see anything approaching normal business markets for the restaurants.”

In California alone, the statistics are sobering. There were some 1.4 million people working in a restaurant before the pandemic, and over the past four months some one million have either been laid off or furloughed, said Ms Sharokina Shams, vice-president of public affairs for the California Restaurant Association.

“We anticipate that 30 per cent of California restaurants will close permanently as a result of the pandemic,” Ms Shams told AFP. “The last couple of economic crises that this industry can talk about would be the last recession in 2008 and the couple of years that followed 9/11.

“This is far, far worse.”

One of the reasons the sector has been hammered is the fact that restaurants often operate on very low profit margins and have very thin cash reserves.

And although the financial rescue handed out by the government helped, restaurant owners say it does not go far enough to allow many to survive.

“The average restaurant is making between 6 and 7 per cent profits… and has about 16 days of cash on hand,” Mr Kennedy said. “And suddenly (with the pandemic) they are expected to find a way to pay their rent, their utilities, to deal with the inventory.

“For a growing number of restaurants, the answer is to shut down permanently.”

That was the case for Ms Madelyn Alfano, 62, owner of Maria’s Italian Kitchen, a restaurant chain in the Los Angeles area, who was forced to close two of her outlets and is fighting to keep the remaining ones open.

“It’s like losing a family member… it’s my life savings, passion and there is a feeling of defeat,” Ms Alfano told AFP, commenting on the two closures.

“I would equate this to someone with an illness and the doctor says, ‘we have to cut off your foot so you can live.’”

She said as the pandemic hit, her business plummeted 50 per cent overnight and, like other restaurateurs, she had to swiftly adapt to a new reality.

“When I tell people what the net profit of a restaurant is, they tell me I’m absolutely crazy to do this,” Ms Alfano said. “Every morning, you don’t know what the day is going to bring… and as the owner of a restaurant you cannot show fear. Stoicism is very important.”

For Mr Gordon, one redeeming side-effect of the pandemic is that it has forced him and others in the industry to reflect on their frantic pace of life and to slow down.

“A lot of us are saying, ‘why do we need to open six or seven days a week,’” he said. “This has made us rethink our whole business model.”

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