Tag Archives: restaurants

Restaurants struggle to bounce back after supply chain issues, Covid lockdowns, inflation and minimum wage increases that kill any profit

Kevin-OLeary

Important Takeaways:

  • Shark Tank star Kevin O’Leary reveals why restaurants are closing down across America and warns MORE closures are on the way
  • The US restaurant industry finds itself on the menu.
  • Seemingly every day, there’s a headline announcing a bankruptcy, layoff or store closure impacting one of the country’s most beloved brands.
  • Last month, Red Lobster filed for Chapter 11 after closing nearly 100 stores. Cracker Barrel – with restaurants in 45 states – has seen its share value plummet over the last year. The once-booming chain Boston Market, which boasted 1,200 locations in the 1990s, is now reportedly down to two do
  • So, what’s behind this fast-casual reckoning?
  • It’s proof the inflation virus is still infecting America’s post-pandemic economy.
  • Supply chains crippled by the COVID pandemic lockdown haven’t recovered. Food costs – especially for proteins like chicken, beef and seafood – are up 30 to 40 percent over the last 36 months. Worst of all for the restaurant industry – customers haven’t returned from the shutdowns.
  • Business closures and social-distancing mandates forced people to change the way they eat. Sixty million Americans – a massive chuck of the population that is aged 60 years and above – were forced to use their smartphones to order a ‘treat’ dinner for the very first time in 2020.
  • In order to survive, many have had to transform themselves into commercial kitchens specializing solely in takeout.
  • Some businesses will have to go bankrupt, reorganize themselves entirely and move to less expensive areas.
  • However, there’s nothing to be done when consumers simply refuse to spend.
  • Newsom signed a law in September jacking up the minimum wage for fast-food workers from $16-per-hour to $20 – making decades-old businesses unprofitable overnight.
  • One California trade group estimated the Maduro-style edict led to the firing of nearly 10,000 workers even before the law went into effect on April 1.
  • A West Coast Burger King franchisee with 140 restaurants announced he’d replace workers with digital order-taking kiosks. A major Pizza Hut operator eliminated delivery services and laid off thousands of drivers.
  • Now, just 90 days into the new regime, businesses are dropping like flies.

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Restaurants are feeling the pressure: Cost of goods is up 30% and they are having to shell out higher wages to keep staff

Gusto-Pizza

Important Takeaways:

  • A ‘perfect storm’ is wiping out America’s restaurants – here’s why the Midwest is hardest hit by closures
  • Americans are eating out less as inflation weakens the dollars in their pocket, which is leading to some harsh consequences for restaurants across the country.
  • Visits to sit-down restaurants were down nearly five percent in 2023 from the year prior, according to location analytics firm Placer.ai.
  • Even big metropolitan areas in the US known for their great dining spots are struggling to maintain an environment where it’s profitable to run a restaurant.
  • Eater NY reported that over 40 bars and restaurants closed in New York City from December 2023 to January 2024, with some of the owners saying business simply never picked up after the COVID lockdowns in 2020.
  • In middle America, where there are fewer people and household incomes are lower, almost all restaurants are feeling the pressure of empty seats.
  • Iowa’s capital city of Des Moines, for example, has seen many restaurants close because of lower foot traffic. Establishments are of course aware of this but so are the remaining restaurant regulars.
  • Jessica Dunker, the president and CEO of the Iowa Restaurant Association, said the reason restaurants are shuttering is because the cost of goods is up 30 percent and they are having to shell out higher wages to keep staff on.
  • Dunker also pointed out that many food businesses are struggling to pay back loans they took out during the pandemic. The deals, most of them 30-month deferred loans, were likely necessary when lockdowns were in full swing and restaurants had virtually no customers by force of law.

Read the original article by clicking here.

Higher prices caused consumers to curb spending

Rev 6:6 NAS And I heard something like a voice in the center of the four living creatures saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius; and do not damage the oil and the wine.”

Important Takeaways:

  • Retail sales dropped 1.9% in December as higher prices caused consumers to curb spending
  • Weak online sales were responsible for much of the slide along with a fall in spending at bars and restaurants.
  • Online spending took the biggest hit as a share of overall spending, with non-store retailers reporting a plunge of 8.7% for the month.
  • Furniture and home furnishing sales declined 5.5% and sporting goods, music and book stores saw a 4.3% drop.
  • Restaurants and bars, which posted a 41.3% annual gain in 2021 to lead all categories, saw a decline of 0.8% for the month. Gas stations were a close second for the year, with a 41% surge in sales
  • The Biden administration has joined central bank leaders in placing much of the blame for rising prices on pandemic-specific factors such as a huge demand for goods over services and supply-chain issues

Read the original article by clicking here.

From ‘congratulations’ to ‘fully canceled’: California cafe owners hit roadblock

By Ann Saphir

(Reuters) – After more than a year of heavy losses at their two cafes in the San Francisco Bay Area, Amy and Chris Hillyard were relieved to get word in May that they’d been approved for a $381,000 grant from the U.S. Small Business Administration.

The money was from a fund earmarked by Congress for restaurants hurt by the economic fallout from the coronavirus pandemic, like the Hillyards’ Farley’s SF and Farley’s East operations.

Equal to their losses last year, it would let the couple pay back debt, hire new employees, expand opening hours, replace a broken freezer, buy tables and chairs for outdoor dining, and do all the other things Chris Hillyard says need to get done “to get back to normal and be ready for normal, come September,” when more workers might be expected to return to nearby office buildings.

Then, last month, the Hillyards learned they won’t get the money after all.

“We are back in a holding pattern” Chris Hillyard said. “It’s not a very fun place to be.”

Even after roughly $800 billion in aid from the federal Paycheck Protection Program (PPP) and nearly $30 billion more earmarked for hard-hit restaurants this year, small U.S. businesses face an uncertain outlook.

Many enterprises that were thriving before the pandemic are still hobbled.

At the same time, a widely predicted wave of bankruptcies has not materialized, with commercial bankruptcies in 2020 at their lowest level in five years and year-to-date filings lower still, according to data provider Epiq AACER.

Complicating the picture are regional discrepancies.

Some 35% of San Francisco Bay Area establishments like those of the Hillyards still report a large negative impact from the pandemic and more than 41% think it will take more than another six months to return to normal, a U.S. Census Bureau survey from mid-July shows. Meanwhile, in Atlanta, only 21% and 31%, respectively, of respondents reported the same concerns.

That suggests a genuine national recovery may be some ways off.

“The problem is for the economy, the pandemic has gone on longer than we thought, and it looks like different industries and different geographies have been affected very differently,” said Karen Dynan, an economics professor at Harvard University. “It’s just another reason that we are not going to see the economy go back to full employment overnight.”

NOT BACK TO NORMAL

Reuters has been following the Hillyards and their cafe business since March 2020, when they laid off their entire staff after California shut down all “non-essential” businesses. They reopened six weeks later with a PPP loan, got through the summer with help from donors like Golden State Warriors basketball star Stephen Curry, and pulled through the winter viral surge and renewed government curbs on business with a second PPP loan.

But despite the state’s decision to end all pandemic-era restrictions in mid-June, Farley’s in San Francisco is making only 70% of its pre-pandemic sales. Farley’s East in Oakland – the bigger operation of the two – is at just 40%, and any hope for improvement depends on how businesses manage their employees’ return to offices.

“I think the service sector that supported the downtown work community is one we should be worried about it,” Dynan said, because many businesses will likely allow at least some remote work in the post-pandemic period. “Breakfast places, lunch shops, dry cleaners, pharmacies downtown – they are just not going to see demand that’s as robust.”

The Hillyards have spent the $520,000 in federal aid they received, most of it on payroll for their 20 employees.

The latest grant the Hillyards were counting on was part of the $1.9 trillion pandemic relief package passed by Congress and signed by President Joe Biden in March, which included $28.6 billion for restaurants that lost money during the pandemic.

By the time the restaurant fund had run out, the owners of 278,000 restaurants had applied. Some 101,000 got grants ranging from as large as $10 million to as small as $1,000, critical support for one of the sectors hardest hit by the pandemic.

The Hillyards were relieved to be among them.

“Congratulations,” the May 18 email from the SBA read. “Your SBA Restaurant Revitalization Fund application has been approved.” It continued, “The SBA will now process the funding of this award directly to your Bank account within 3-7 business days from this notification.”

Weeks went by. The Hillyards made inquiries. “Be assured the award funds are reserved for those applications that have been fully approved and will be sent,” one SBA portal response reviewed by Reuters said.

On June 23, Chris Hillyard received another email from the SBA. “We regret to inform you that, due to recent court rulings, the SBA will not be able to disburse your Restaurant Revitalization Fund award,” it read.

A legal group founded by Stephen Miller and Mark Meadows, who held senior positions in former President Donald Trump’s White House, had sued the SBA in Texas, arguing that the Biden administration’s efforts to prioritize applicants on the basis of race and gender was unconstitutional.

On June 11, the court barred the SBA from handing out any more of the funds to priority applicants like Farley’s, which is majority woman-owned because of Amy Hillyard’s larger share in the business.

“In coming days … you will see the status of your application in SBA’s portal change to ‘fully canceled,'” the June 23 email said. Some 2,964 other restaurant owners got similar notices, SBA said. A spokesperson for the SBA said the agency was “frustrated” with the outcome and remains committed to helping disadvantaged businesses.

The Independent Restaurant Coalition, a U.S. trade group which lobbied to get the grant program into the pandemic relief bill in the first place, is now trying to convince Congress to replenish the program’s funds.

To the Hillyards, that’s cold comfort, even as the economy as a whole, despite the rising tide of COVID-19 infections, surges back to life. Their cafes continue to lose money each month.

“Everything is going back to normal – but our business is not back to normal, and it’s going to take us a lot longer to get there,” Chris Hillyard said.

(Reporting by Ann Saphir; Editing by Dan Burns and Paul Simao)

Chicago mayor loosens COVID-related capacity restrictions for businesses including bars, restaurants

(Reuters) – Chicago Mayor Lori Lightfoot on Monday loosened COVID-19-related capacity restrictions for businesses such as bars, restaurants and health clubs, a move that will go into effect later this week.

The new guidelines, which will take effect on Thursday, will increase indoor capacity to 40% for certain businesses, reopen bars for indoor service and increase maximum group sizes for fitness classes and after-school programming, a statement from the mayor’s office said.

(Reporting by Brendan O’Brien in Chicago; editing by Jonathan Oatis)

Florida restaurants can now operate with no restrictions, governor says

(Reuters) – Florida Governor Ron DeSantis lifted COVID-19 restrictions on restaurants as he announced the state would enter Phase 3 of reopening on Friday.

“I think that this will be very very important to the industry and it also will be a recognition that they have worked as hard as anybody to create safe environments,” DeSantis told a news conference. “In fact, the idea that government dictating this is better than them making these decisions so that their customers have confidence I think is misplaced.”

(Reporting by Maria Caspani, Editing by Diane Craft)

Indoor dining to resume in New Jersey this week, governor says

(Reuters) – New Jersey restaurants may open their indoor dining areas to patrons later this week for the first time since the state shut down most of its commerce when the coronavirus pandemic erupted in March, Governor Phil Murphy said on Monday.

The number of diners must be limited to 25% of the restaurant’s capacity and tables must be spaced in accordance with social-distancing rules when indoor dining resumes on Friday, Murphy said.

“Reopening responsibly will help us restore one of our state’s key industries while continuing to make progress against #COVID19,” Murphy wrote on Twitter.

The governor is expected to elaborate later on Monday on the coronavirus status in the state, which has moved incrementally in reopening its economy since May.

New Jersey, the country’s most densely populated state, was among the hardest hit in the months when the coronavirus first spread to the United States. It still has the second-most COVID-19 deaths of any state, with nearly 16,000, and is eighth among total cases with more than 193,000, according to a Reuters tally.

But the state has had much better control of the pandemic in the past several weeks, with a transmission rate that has largely been below 1%.

Across the rest of the country, total coronavirus cases topped 6 million on Sunday as many states in the Midwest reported increasing infections, according to a Reuters tally.

Although the national metrics on new cases, deaths, hospitalizations and positivity rates of tests have been declining, new hot spots have emerged in the Midwest.

Iowa, North Dakota, South Dakota and Minnesota recently reported record one-day increases in new cases, while Montana and Idaho are seeing record numbers of currently hospitalized COVID-19 patients.

(Reporting by Maria Caspani and Peter Szekely; Editing by Chizu Nomiyama and Peter Cooney)

Drive-in cinemas, raves and dining behind plastic: the new going out

LONDON (Reuters) – With lockdown measures more relaxed, social lives are slowly becoming possible. Restaurants, bars, gigs and museums beckon. But as we take our first cautious steps back into the wider world, we are finding it transformed.

Gone are restaurants so busy that you have to wait for service or the check. Now, in the coronavirus-era, social distancing has made eating out a very different experience.

At Da Enzo’s in Rome, waiters no longer hand out menus but hold up a scan code. Customers point their smartphones at it and a menu pops up on the screen with the day’s specialties.

Dining companions – from the same household, please – might eat around a candle-lit table inside a glass booth on the banks of an Amsterdam canal, a concept being tried out by the ETEN restaurant.

If that doesn’t appeal, diners can try eating with a see-through lampshade on their heads, created by French designer Christophe Gernigon for restaurant owners who want to protect customers from COVID-19.

Other designs on the market resemble visitor booths in prisons, Gernigon said, prompting him to create a cylinder of transparent plastic that hangs from the ceiling, much like a lampshade.

“I wanted to make it more glamorous, more pretty,” he said.

Want to catch a movie after dinner but your local cinema is closed under lockdown rules? Drive-in cinemas are seeing a revival, popping up in Lithuania, Dubai and the United States.

On the Cote d’Azur, in Cannes, you can drive to Palm Beach and watch films from the comfort of your own car.

If clubbing is your thing, Germans got the party started with a drive-in rave. In the car park of Club Index in the town of Schüttorf near the Dutch border, clubbers – limited to two per car – parked in rows in front of a DJ and hopped around to the beats while respecting government-imposed social distancing measures.

Lasers, glowsticks, confetti and a whole lot of horn honking set the mood as people celebrated their new-found freedom.

“The night had quite a party vibe here. It was perhaps even better than a normal club night would be,” said organizer Holger Boesch, who runs Club Index.

And forget lockdown beards and daytime pajamas – soon there will be no more excuses for the Robinson Crusoe quarantine look.

Designers from Lebanon to China to Nigeria are creating extraordinary face masks and protective clothing, and in South Korea, YouTubers are giving tutorials to maximize the make-up and mask look.

In Lagos, designer Sefiya Diejomaoh believes a global pandemic should not get in the way of style. Gold-colored and studded with sparkling diamante jewels, her face mask matches her floor-length dress.

(Writing by Raissa Kasolowsky; Editing by Janet Lawrence)

Restaurants in parts of California can open for sit-down dining

By Sharon Bernstein

SACRAMENTO, Calif. (Reuters) – Restaurants in a half-dozen California counties can host sit-down dining, and shopping malls throughout the state can open for curbside pickup as coronavirus restrictions ease, Governor Gavin Newsom said on Tuesday.

Offices can also open with some restrictions, Newsom, a Democrat, said in his daily press briefing. But his latest plan for reopening the world’s fifth-largest economy still does not allow nail salons, tattoo parlors or gyms.

“It’s a mistake to over-promise what reopening means,” said Newsom, who has hesitated to loosen restrictions aimed at slowing the spread of the novel coronavirus even as other states have done so.

On Tuesday, leading U.S. infectious disease expert Anthony Fauci warned Congress that a premature lifting of lockdowns could lead to additional outbreaks of the deadly coronavirus, which has killed more than 80,000 people in the United States and brought the economy to its knees.

In California, the modest loosening of stay-at-home rules imposed in March comes as infections in the most-populous U.S. state appear to be stabilizing. But the state allows local governments to keep imposing stricter guidelines, and health officials in high-density areas like Los Angeles and the San Francisco Bay Area have not yet supported easing restrictions.

Similarly, counties with few or stabilized cases can apply to the state for permission to open more businesses, including restaurants serving sit-down meals, and allow customers inside shopping malls, retail stores and swap meets. Schools can open with modifications.

Six Northern California counties, Butte, El Dorado, Lassen, Nevada, Placer and Shasta, received that permission on Tuesday.

To reopen, restaurants must retool their dining rooms to accommodate social distancing, closing areas where customers congregate or touch food, and stop setting tables with shared condiments such as mustard containers. Menus must be disposable and table-side food preparation is no longer allowed.

California’s slow pace of reopening has been criticized by lawmakers in Republican-leaning rural parts of the state, and a conservative lawyer filed a federal lawsuit on Tuesday contesting the state’s restrictions on beauty salons.

Harmeet Dhillon, a San Francisco-based attorney and the former vice chair of the California Republican Party, filed the lawsuit on behalf of the Professional Beauty Federation of California in U.S. District Court for the Central District of California in Los Angeles.

She has also challenged Newsom’s order closing houses of worship, saying that while she supported the initial efforts to slow the virus’ transmission, the shutdown had gone on for too long.

“The premise was never lock everybody down, deprive them of their livelihoods, their properties, their dreams, everything they built,” she said.

(Reporting by Sharon Bernstein; Additional reporting by Steve Gorman in Los Angeles; Editing by Peter Cooney and Richard Pullin)

Georgia cafes, theaters open as U.S. states ease more restrictions

By Rich McKay and Susan Heavey

ATLANTA/WASHINGTON (Reuters) – Georgia on Monday will start allowing residents to dine inside restaurants or watch a movie at a theater, as more U.S. states from Minnesota to Mississippi took steps to ease coronavirus restrictions despite the warnings of health experts.

Colorado, Montana and Tennessee were also set to reopen some businesses to start reviving their battered economies. Oklahoma, Alaska and South Carolina, along with Georgia, previously took such steps following weeks of mandatory lockdowns that threw millions of Americans out of work.

President Donald Trump and some local officials have criticized Georgia Governor Brian Kemp for orders that enabled restaurants and theaters to join a list of businesses, such as hair and nail salons, barber shops and tattoo parlors, he allowed to reopen last week with social-distancing restrictions.

One restaurant chain, Waffle House, was imposing seating arrangements in Georgia that will keep patrons at least six feet apart, stricter sanitization measures and a requirement that employees wear masks, CEO Walt Ehmer told WSB-TV.

“I know the unemployment system has been enhanced to help take care of the most vulnerable people, but people want to have jobs, and they want to have something to do and take care of their families,” Ehmer said. “I think it’s going to give them some hope.”

Public health authorities warn that increasing human interactions and economic activity may spark a fresh surge of infections just as social-distancing measures appear to be bringing coronavirus outbreaks under control.

Meanwhile, the number of known infections in the United States kept climbing on Monday, topping 970,000 as the number of lives lost to COVID-19, the highly contagious respiratory illness caused by the virus, surpassed 54,800.

ROADMAPS

Officials in some of the hardest-hit states such as New York, New Jersey and Massachusetts have been emphasizing for weeks that more testing and contact tracing for the virus needed to be in place before they could implement roadmaps for restarting their economies.

Contact tracing involves tracking down and testing people who may have been around anyone already infected.

“Testing is the way forward, and it’s been a long fight just to get the testing,” New York City Mayor Bill de Blasio said at a briefing on Monday.

He said a new “self-swab” test, which allows patients to administer it to themselves under the supervision of medical personnel, will be available this week at sites run by New York public hospitals.

New Jersey Governor Phil Murphy said in a Twitter message that he would announce a roadmap for “responsibly reopening” the state at a news conference on Monday.

New York Governor Andrew Cuomo said on Sunday that businesses including manufacturing and construction in parts of the state with fewer cases of the virus might reopen after his shutdown order expires on May 15.

In Colorado, Governor Jared Polis has given the green light for retail curbside pickup to begin on Monday. Hair salons, barber shops and tattoo parlors may open on Friday, with retail stores, restaurants and movie theaters to follow.

“I would stay home if the government encouraged that, but they’re not. They’re saying, ‘Hey, the best thing to do is go back to work, even though it might be risky,’” Royal Rose, 39, owner of a tattoo studio in Greeley, Colorado, told Reuters.

In a further step to ramp up supplies to fight the pandemic, Trump planned to meet with American textile industry representatives on Monday as clothiers seek to shift their production lines to face masks and other critical items, the White House said.

Companies are aiming “to repurpose their factories from making things like T-shirts into gowns and masks and things like cotton swabs” used for coronavirus testing, White House trade adviser Peter Navarro told Fox News.

Business shutdowns have led to a record 26.5 million Americans filing for unemployment benefits since mid-March with predictions from the Trump administration that the jobless rate would likely hit 16% or more in April.

“The next couple of months are going to look terrible,” Trump’s economic adviser Kevin Hassett told reporters on Sunday.

South Dakota Governor Kristi Noem on Monday said she hoped Smithfield’s Sioux Falls pork processing plant can reopen soon, a day after U.S. labor regulators urged the meat industry to adopt certain measures to prevent the spread of coronavirus among workers. The country’s meat plants have emerged as hot spots for the spread of the virus.

(Reporting by Rich McKay in Atlanta; Susan Heavey in Washington; additional reporting by Maria Caspani and Jessica Resnick-Ault; writing by Grant McCool; Editing by Frank McGurty and Howard Goller)