The U.S. restaurant industry is set to lose 7.4 million jobs, according to a report from Challenger, Gray & Christmas Inc.
“We are certainly beginning to see the cracks in the foundation. Slowing demand, brought on by the need for Americans to practice social distancing, is going to very likely immediately hurt those who work in the nation’s hotels, restaurants, and bars,” said Andrew Challenger, senior VP of Challenger, Gray & Christmas, Inc.
The study predicts many restaurant workers may defect to other industries and some restaurant jobs may cease to exist after the coronavirus crisis ends. “With no income, many of these workers will likely seek, and hopefully, find other employment in the interim, which could make them unavailable to come back,” said Challenger.
In Texas alone, the restaurant industry could lose up to 500,000 jobs due to closures and declining traffic, the Texas Restaurant Association (TRA) projected. If conditions persist, 25% to 30% of independent restaurants will close.
Texas restaurant owners also have great concern for their counterparts in other food supply chain industries, in which the TRA estimates that another 500,000 or more jobs could be lost, including with farming, trucking, manufacturing, suppliers, and distributors.
In February, Americans reined in spending on dining out, as sales at bars and restaurants dropped 0.5%, reported The Wall Street Journal (March 17).
“With strict measures restraining social activities now in place to contain the coronavirus outbreak, consumer spending is poised for a severe pullback in coming months,” Gregory Daco of Oxford Economics said in a note to clients, adding “disruptions from the coronavirus will bring the economy’s main engine to a halt.”
Meanwhile, New York City restaurants are selling “dining bonds,” gift certificates at a reduced price for redemption at full value on a later date, reported The Wall Street Journal (March 17). The program, developed by local hospitality publicists and consultants, aims to add another stream of revenue at a time when restaurants are forced by the state to limit their business or close altogether. It also encourages diners to return to the restaurants once the health crisis is declared over.
Under the program, each restaurant can set its own terms. In a possible scenario, a restaurant would sell a $100 certificate for $75, but the certificate couldn’t be redeemed for at least 30 days.
The program is being promoted through a newly launched website, supportrestaurants.org. Customers must contact the individual restaurants to purchase the certificates since different establishments have different platforms or methods for selling them. So far, more than 80 restaurants signed up for the program.