Restaurants

Phased Reopenings May Be Too Little, Too Late for the Restaurant Industry

Falling demand and strict social distancing requirements are leaving many restaurants with no path to profitability.

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The coronavirus pandemic has been devastating for the nation's restaurants, as health concerns and forced closures dry up most of their business. The phased reopenings that most cities and states are now implementing are proving too little, too late for many eateries to hope of being profitable again.

New York Mayor Bill de Blasio has now announced the details of an executive order that would allow the city's restaurants—which have been forced to subsist on takeout and delivery service since March—to open outdoor dining by Monday.

The Mayor's Open Restaurants plan would let restaurants set up tables and chairs in curb lanes and sidewalks, reports the New York Post, as well as patios and backyard spaces if they have them. Come July, they'll be able to start serving alfresco meals on streets that have been temporarily closed to traffic.

Indoor dining rooms would remain closed during this second phase of the city's reopening.

"At a very difficult time for the bar & restaurant industry, this program will help them stay afloat," tweeted City Councilmember Keith Powers. "It also gives us a vision for a city where we better use outdoor space and streets.

Several other cities and states have been letting restaurants spill out onto sidewalks, parking spaces, and even streets as part of a partial easing of their lockdown orders. Other jurisdictions are going farther by allowing indoor dining rooms to open, albeit with the requirement that they operate at reduced capacity and follow social distancing protocols.

The hope is that this will let businesses start making money again while mitigating the risks that come with packed dining rooms. More likely, many restaurants will be left operating in the red.

Restaurants that have had to subsist on takeout and delivery are like "a person being on 25 percent lung capacity," says industry analyst Aaron Allen. "You can sustain that for a period of time but it's not healthy to do it over an extended period. With a few more chairs on the patio, you just went from 25 percent capacity to 28 percent. You need to be at a minimum of 90 percent lung capacity."

A May survey of restaurant owners conducted by the New York City Hospitality Alliance found that two-thirds of them said they would need to reach 70 percent occupancy in order to survive.

The Open Restaurant guidelines released today specify that business can place tables on the sidewalk only directly in front of their storefront, and that they must maintain eight feet of distance between their seating and the curb.

"I'm only excited for Phase Two because it gets us closer to Phase Three when we can have a 50 percent capacity indoor crowd," one restaurant owner told the Post.

Even indoor dining isn't necessarily a full cure, says Nick Zukin, who owns the Mexican restaurant Mi Mero Mole in downtown Portland, Oregon.

"Most floor plans pre-Covid were designed for efficiency," he tells Reason via email. In other words, restaurants did their best to fit as many diners into their space as possible. In normal times, Zukin says, he was able to have 60 seats for patrons while still complying with the Americans with Disabilities Act requirement that walkways be at least 30 inches wide. After redesigning his floor plan to abide by the state's social distancing guidelines—which require six feet between customers at all times—Zukin says he's now only able to fit 20 seats in his restaurant. He's also had to close down his bar seating.

The Portland Bureau of Transportation has created Healthy Business permits that allow restaurants to apply for permission to set up seating on sidewalks and streets. Outdoor tables would still have to be six feet apart.

That's feasible for Zukin—his restaurant has a nice, wide 14-foot sidewalk in front of it, by virtue of being next to a light rail line. But that's hardly typical. "Most sidewalks do not allow this. If the city strictly enforces the new outdoor seating guidelines, I would guess at least 95 [percent] of all sidewalk seating is eliminated," he says.

Countrywide, restaurant reservations are down about 60 percent from where they were last year, according to data from the reservation website OpenTable. Even in Florida and Arizona, which have gone further in easing their lockdown orders, restaurants are down by about half.

Allen says that a lot of restaurants will be able to survive by cutting costs, slimming down menus, and experimenting with new business models and delivery options. He still predicts that 20 percent of restaurants will closer permanently without a massive government bailout.

Today, Sen. Roger Wicker (R–Miss.) and Rep. Earl Blumenauer (D–Ore.) proposed a $120 billion bailout fund for restaurants.

An analysis by Allen's firm found that two-thirds of publicly traded restaurant chains have debt burdens high enough to put them at risk of bankruptcy.

Zukin puts his restaurant's odds of survival at 50–50, given that he's operating in a downtown where most nearby businesses and offices are still closed. "The suburbs with lots of parking and outdoor seating or a drive-thru window is definitely the place to be now," he says.

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  1. “City Councilmember Keith Powers. “It also gives us a vision for a city where we better use outdoor space and streets.”

    Shall we say he has let the mask slip? It is not about any kind of safety at all; it is about sneaking in the left’s agenda.

    1. Another step for turning this into a third world country. Up next, hawking goods on the sidewalk like a Moroccan bazaar.

      1. You say that like it’s a bad thing. Shouldn’t there be fewer restrictions on how and where people can engage in commerce?

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        2. You say this like the merchants in a Moroccan Bazaar own the real estate that they hoc their wares on before they pack them up for the night.

    2. I’m all for fewer restrictions on outdoor seating for restaurants, provided the primary purpose of streets and sidewalks is not encumbered too much.

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    3. Before covid thousands of businesses failed every month. Why is it that restaurants can’t fail? I live in the Dallas area and the turnover is a little high in that segment. Just close and reopen in a few years. It’s going to happen that way anyway.

    4. It’s about keeping people apart because they are too retarded to keep 6ft apart without a law.

  2. Our restaurants are open at full capacity but people still aren’t going.

    1. People seem to be going where I am. Not sure how it compares to “normal”, but I see a lot of people.

    2. We went out to brunch Sunday at newly reopened patio dining place. We were the only patrons from noon until 1pm. Five employees. I don’t see the “pent up demand” that was forecast.

      1. I think a lot of the people who have pent up demand are still penting it up, because they realize that restaurants are one of the most likely places to catch COVID, even if the government allows it. You can’t wear a mask while you’re eating, and the restaurant case study from Guangzhou demonstrated that it could spread to people more than 10 feet away, depending on how the ventilation is set up.

        1. gee and I thought the best place to get the rona was a Trump rally. or was that a looting riot and a donkey bar be que ? hard to tell`

      2. Yeah, here in Florida, where restaurants have been open for a while, albeit at reduced (50%) capacity, the restaurants remain relatively empty, even the ones that were usually packed all year long. I think that a lot of people lost their jobs, especially here in hospitality and tourism reliant Florida, or had their salaries cut. Also, people have “discovered” how much they can save by not eating out, and may continue to limit their dining out just because they enjoy the savings. Also, because a lot of people are working from home and not commuting, they have time to cook after work. I know that I work much longer hours than my boyfriend, and despite the fact I am the much, much, much better cook, he usually did the cooking pre-COVID by ordering through Home Chef. Now, I have some time to cook every day again, and everybody’s happier, thinner, and richer.

  3. cities and states have been letting restaurants spill out onto sidewalks, parking spaces, and even streets as part of a partial easing of their lockdown orders.

    Are there plans to deal with the drive-by shootings after the police are defunded?

    1. Police don’t prevent crime, shootings and victimization happen regardless so one must protect oneself; I can’t believe I’m arguing this on a Libertarian website???

      1. The existence of police provides some deterrent effect. But more people willing and prepared to defend themselves would have a similar (likely more significant) effect.

        1. “The existence of police provides some deterrent effect.”

          Yeah, about 1% of what the police would like you to believe it is.

          1. I don’t know why people blow off the notion that police provide a deterrent effect. Why don’t we just dissolve the police and find out what happens to society?

            The cops probably can’t stop a rando from breaking into my house at 3 am. But I can file a police report, an investigation of some sort may ensue, and if they get a description of the guy he might be apprehended in the future. Future crimes might prevented.

            1. File all the reports you like. the police hardly do anything.

  4. I have an idea that can make restaurants more profitable. We can lower their expenses by allowing unlimited, unrestricted immigration of laborers from Mexico.

    #OpenBordersWillFixEverything
    #ImmigrationAboveAll

    1. Or eliminating their taxes and licensing fees.

    2. Or better yet, bring back slavery. Although, that’s only technically different from what you’re suggesting.

  5. Concert venues and movie theaters are worse off.

    1. In a way. The restaurants still have some hope that they’ll be able to survive. At least the concert venues and movie theaters can give up now and save themselves the heartache.

  6. The Portland Bureau of Transportation has created Healthy Business permits that allow restaurants to apply for permission to set up seating on sidewalks and streets.

    APPLY. FOR. PERMISSION.

    1. Yes you too can dine side by side with a bum taking a shit!

  7. We went out to brunch Sunday at newly reopened patio dining place. We were the only patrons from noon until 1pm. Five employees. I don’t see the “pent up demand” that was forecast.

    1. “OK, Boomer. ‘Dining out’ is so 20th century!”

  8. Shocking that an industry with notoriously razor-thin margins, that is brutally difficult to succeed in during the best of times, can’t make it go when you slash their revenue potential by 70%.

    Of course from my standpoint, a lot of restaurants are complicit in this by not demanding and accepting nothing less than full, business-as-usual reopening. As a consumer, this is what I want, and am much less likely to go out and eat until I can get it. I’m in WI, where there are zero restrictions on a state level. But unfortunately, many restaurants (particularly chains) still act like this is something to worry about, and that CDC “guidelines” matter. Most fast food restaurants still don’t have dine in, and casual chains are stupid with masks and “social distancing.” I have found myself patronizing locally owned bars and restaurants a lot more. Especially bars- they do not give a fuck, and everything is completely normal. Anyone with a mask would probably be laughed out of the place.

    1. Exactly how I see it. I’m not gonna go to a restaurant and watch theatre. We all need to knock it off already. But politicians keep the bull shit going. Shit, Fauci just said it’s not clear if the virus passes through ACs. Is he retarded saying that heading into summer? So now we’re gonna get old people dying because they were scared to turn the AC on and be classified as ‘Covid’?

      Plus these son of a bitch incompetent politicians bully small restaurants like cowards because it’s easy but leave rioters alone.

      This moment was ‘transformative’ for me. It really showed how spectacularly full of shit politicians are.

    2. Of course from my standpoint, a lot of restaurants are complicit in this by not demanding and accepting nothing less than full, business-as-usual reopening.

      The President of the Illinois Restaurant Association stood shoulder to shoulder with Pritzker when he announced the lockdown. I don’t recall his exact words immediately following Pritzker, but it was essentially “You gotta do what you gotta do.”

      If I owned a bar or restaurant, I’d kick that dude in the testicles if I saw him walk in.

  9. The average margin the industry is under five percent at the best if times. I believe it hovers closer to two percent. At 25 to 50 percent capacity, most restaurants are almost certainly losing money or at best breaking even. There’s no way they are running at a full complement of staff. As usual, it is small businesses that are being devastated to the benefit of the giant corporations the leftists profess to loathe.

    1. Speaking of which, I’ve been wondering when we’re finally going to see an apocalypse in the chain restaurant world. The last five years has seen the Mallpocalypse, with dozens of retail chains going bankrupt and simply disappearing en masse from the landscape, but so far the restaurant chains have held study. I find that peculiar, because restaurants operate on lower average margins than do clothing stores. Are restaurants just not as grossly overbuilt as malls were, so there is still room for restaurants to expand their footprint or at least hold their ground? The United States had by far the most per capita mall space in the world—something like four times as much square footage per person as Great Britain—and was long overdue for a major correction in that field.

      1. Retail isn’t food service I don’t know why you would assume they would be categorically same/similar. Are there Amazon warehouses full of hot food where you are?

  10. The cure was worse than the disease.

    Change my mind.

    1. Change my mind.

      The disease is socialism and COVID didn’t kill enough socialists to cure us.

  11. restaurants were cesspools and needed a biblical cleansing anyway which I would have hoped happened … but Saturday I watched a certain cheescake restaurant person drop a togo box on the floor pick it up and put food in it so what do I know

  12. On a tangent to my earlier comment about the opening (or not) of restaurants even when they are allowed, I think a lot of restaurants that have traditionally strong carryout and (especially) drive through business have realized that they kind of like not having to deal with dine in and would just as soon never bring it back. Which I suppose I can’t really blame them- people give you their money, you give them their food, and that is the end of the interaction. No free drink refills, no condiment stations, no disgusting mess to clean up in the dining room after a two year old throws a shake on the floor. McDonald’s has limited their menu during this, and apparently decided that it is kind of nice to have things more simplified and streamlined and thus are going to keep it that way for the foreseeable future. Perhaps we might see a look at a return to something like the original McDonald’s fast food model- limited menu with walk up and drive through only.

  13. I ate at the Mexican place here last night. It was just like before this ‘crisis’. Place was full, no masked to be seen , chips and salsa served and condiments on the table. And as always the food and service were great. I’ve worked through all this, it was nice to have a normal evening out.

  14. I’ve gone out to eat numerous times and the restaurants are always at their maximum allowed capacity. There is no fear because enough people now know that the coronavirus is not the black death, isn’t as bad as the spanish flu, is about like a normal flu https://reason.com/2020/05/24/the-cdcs-new-best-estimate-implies-a-covid-19-infection-fatality-rate-below-0-3/ .

    The democrat governors and mayors just need to stop their tyranny and open everything up!

    Watching the creation of The State Science Institute is one reason for my sig:

    Atlas Shrugged was supposed to be a warning, Not A Newspaper!

  15. Portland. eat at a restaurant? LOL. is there still a Portland? They used to make good beer and some decent wine. and of course your chicken had a name at every restaurant. I think it was Colin or at least that is what Portlandia said ( plus the fart patio which is open air and has not risk of rona but you still might want to wear a mask)

  16. Why?

    Has the pandemic made people inspired cooks?

  17. I pretty much cook 24/7, but we used to like to go out to eat for a nice dinner or lunch a couple times a month. At first during the panic-demic, we would order out and pick up curbside, but the food was invariably rubbery, lukewarm, and all the packaging is a waste—and it adds at least a few bucks to the cost of the meal to boot

    Once our city opened to 50% capacity, we did dinner and brunch out with a bunch of friends and both places were full. It felt almost normal.

    But managers at both places told us they probably wouldn’t survive if they had to go a few more weeks at 50 percent capacity.

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