It's been a bad year for restaurants but not as bad as predicted

Kate Krader
Bloomberg
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A year ago experts predicted that one-third of the restaurants in America might close in 2020 as a result of the pandemic. Chef and activist Tom Colicchio said the number of casualties could go as high as 75%.

New data from the National Restaurant Association, a Washington-based industry group, found that 90,000 restaurants across the U.S. have closed permanently or long-term. That's less than 14% of the country's restaurants. It's lower than the 110,000 figure reported by the association in December, when the executive vice president for public affairs, Sean Kennedy, described the industry's status as "an economic free fall."

Customers sit at the bar at Wilson Lives! in the Brooklyn borough of New York on May 3, 2021.

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While that's still disastrous compared with the 50,000 restaurants that shutter in a typical year, the most dire scenarios were averted thanks to such initiatives as government loans like the Paycheck Protection Program and changes in local restrictions.

According to Hudson Riehle, senior vice president of research and knowledge for the association, those places that survived run the gamut from powerhouse New York spots like Danny Meyer's Union Square Cafe and the brasserie Balthazar to the popular London-style pub Cavalier in San Francisco and the Michelin-starred tasting menu spot Rooster and Owl in Washington.

"The restaurant industry is definitely on a revitalization path now," said Riehle in a phone interview. "Sales trends numbers are trending in the correct direction, and with the advent of warm weather, it bodes well for outdoor dining, which has been a lifeline to restaurant operators." The group's survey found that 44% of operators expected their average sales from April to June to be higher than in March 2021.

Pointing to the high volume of business that restaurants do in July and August, Riehle expects the positive trend to continue as dining and travel restrictions ease. "Historically, 1 out of every 4 sales dollars in the industry comes from travel and tourism," he says. This summer "the leisure market will come back, followed by business, then international tourism."

The news isn't all good for restaurants. Even though owners saw improvement, eating and drinking sales for April 2021 were down $1.3 billion, or 2%, from sales of $66.2 billion in February 2020 before the start of the pandemic. The industry group's monthly sales and jobs reports estimates that, for the last 14 months, the restaurant and food-service industry sales are currently $290 billion lower than "expected pre-pandemic levels."

Additionally, much-publicized staffing shortages could hobble business as dining rooms continue to fill up. Restaurants are currently down 1.7 million jobs. In New York City, where 5,000 out of an estimated 24,000 restaurants are closed, there are about 140,000 fewer jobs than before the pandemic, according to Andrew Rigie, executive director of the NYC Hospitality Alliance.

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