The COVID-19 pandemic could force a staggering 85% of independent U.S. restaurants to shutter by the end of the year, according to a new report commissioned by recently formed trade group the Independent Restaurant Coalition (IRC).


Many restaurants had to halt indoor dining due to the COVID-19 pandemic Getty

Conducted by Compass Lexecon, a Chicago-based consulting firm, the report predicts a grim future for roughly 500,000 Main Street restaurants unless a more robust financial assistance program is established.

According to IRC, privately owned restaurants with fewer than 20 establishments — including fine dining spots, neighborhood joints, pizza parlors, bistros and food trucks, among other types of businesses — make up 76% of the industry and directly employ 11 million people across the country.

Independent restaurants also indirectly support an additional 5 million jobs at small farms, fisheries, vineyards, distilleries, and other mom-and-pop businesses that work with dining establishments.

Millions of those jobs now hang in the balance after coronavirus-induced restaurant closures and stay-at-home orders forced owners to close their doors and shift to takeout orders only back in March.

According to the report, released last week, independent restaurants’ revenues fell by more than 70% year-over-year during the last two weeks of March as public health officials and state leaders mandated that operators halt on-premise service in a bid to slow the spread of the coronavirus.

That triggered the loss of 5.9 million total restaurant jobs (4.5 million from independent restaurants) and sent shock waves throughout the entire food supply chain.

In its report, the IRC shared several examples of small farms, creameries and fishing companies that work exclusively with independent restaurants and are now staring down bankruptcy if too many dining establishments do not reopen.

“With independent restaurants across the country shuttered or operating in reduced capacities, these ecosystems are on the verge of collapse,” the IRC wrote.

As states begin reopening and restaurants start welcoming back a limited number of patrons for outdoor service and reduced capacity indoor dining, owners are calling on Congress to “take urgent new actions” to ensure that spots are able to reopen and “reignite” the economy.

The proposal? A $120 billion “Restaurant Stabilization Fund” that would help save the industry and “generate at least $248 billion in economic returns.”

“Without the Stabilization Fund, hundreds of thousands of independent restaurants will likely close to the lasting detriment of local communities, small supply chain businesses, as well as the broader U.S. economy,” the report states.

BETHESDA, MD – JUNE 12: A waiter at Raku, an Asian restaurant in Bethesda, provides hand sanitizer and wears a protective face mask as they work amid the coronavirus pandemic on June 12, 2020 in Bethesda, Maryland. Many streets are closed to vehicles in downtown Bethesda as Montgomery County continues its phase one easing of COVID-19 restrictions. (Photo by Sarah Silbiger/Getty Images)

According to the group, the $120 billion fund would enable restaurateurs to rehire employees and cover fixed costs such as rent and utilities even as revenues — which remain 60% lower on average compared to last year — continue to suffer.

“The Fund is intended to simply cover the gap between costs and revenues as demand begins to recover, enabling restaurants to reopen earlier than they otherwise would,” the IRC said in its report.

Additionally, the money would provide restaurant businesses that need to reconfigure their dining areas with funds for partitions, digital thermostats and improved ventilation systems so operators can comply with prolonged social distancing protocols.

“Access to the funds for these expenditures will enable independent restaurants to more quickly make the recommended upgrades and to safely reopen for dine-in services,” the group said.

Without financial assistance, “a tidal wave of independent restaurants will fail facing unconquerable headwinds.”

According to the report, widespread restaurant closures will lead to “downward spiral of economic activity,” including heightened unemployment outside of the industry itself, and a destabilization of the real estate market.

It would also cause state and local governments to miss out on much-needed tax revenues, further “burdening already stretched (and in some cases insolvent) state unemployment trust funds.”

The group is asking consumers to support the effort by co-signing their letter to members of Congress, and by posting on social media. The IRC is also accepting donations on its website.

Oregon Rep. Earl Blumenauer recently introduced the “Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS)” Act of 2020, which would provide $120 million in grant money to independent restaurants.

“Few industries have been as uniformly ravaged as the food service industry, which is why I am working with a coalition of culinary experts and advocates and pushing my colleagues in Congress to provide support,” he said via a news release. “Local, independent restaurants are the beating heart of our communities. They need relief now.”

According to the National Restaurant Association, restaurants have lost an estimated $120 billion over the last three months as a result of the COVID-19 pandemic.

Several notable restaurant industry personalities, including IRC cofounders Andrew Zimmern and Tom Colicchio, are also using their platforms to express the urgency of passing a relief bill.

“If restaurants don’t receive help, we are looking at an extinction event,” Zimmern tweeted to 1.2 million followers.

Despite the attention that the IRC and many well-known chefs and restaurant proprietors are bringing to the effort, some notable businesses have already begun closing.

Last night, acclaimed chef Andy Ricker announced that several of his Pok Pok restaurants in Portland, Oregon would not reopen.

According to the IRC, at least 500 U.S. restaurants had permanently closed as of May 29, 2020.

Elsewhere, the 133-year-old Peter Luger Steakhouse in New York City began offering takeout and accepting credit cards for the first time in its history in an effort to stay afloat.

The full 59-page IRC report can be found here. Additional information is available on the group’s website.

Read the full article here: https://www.forbes.com/sites/chrisfurnari/2020/06/16/report-without-federal-aid-85-of-independent-restaurants-could-permanently-close/