Coronavirus leads restaurant industry down path of ‘financial tsunami,’ warns chain eatery owner – Fox News

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One industry that’s suffering greatly during the coronavirus pandemic is the restaurant business.

The National Restaurant Association projected revenues of $899 billion for 2020. That was before many restaurants were ordered closed by civil and government officials. The U.S. Bureau of Labor Statistics said 701,000 jobs were lost in March, and more than half of those job losses occurred in the leisure and hospitality sector, of which restaurants are a part.

“This is a financial tsunami in my restaurant business,” Consolidated Restaurant Operations, Inc. (CRO) CEO John Harkey Jr. told Fox News. “As a company, we’ve laid off 4,000 people. It’s devastating. Everyone is impacted. Probably 500 of those people have worked for me for over 20 years. Our people want to work.”

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CRO was able to retain about 25 corporate staff and 75 restaurant staff. Senior team members accepted temporary pay cuts of as much as 80 percent, and the CEO said he will not be taking a salary at all.

Several CRO restaurant employees did not immediately respond to requests for comment.

CRO's Cantina Laredo inside Los Angeles International Airport

CRO’s Cantina Laredo inside Los Angeles International Airport

Harkey’s company is based in Dallas, Texas, and operates and franchises 70 restaurants in 12 states, as well as in the UAE. CRO restaurant brands include Cantina Laredo, III Forks Steakhouse, Cool River Cafe, Silver Fox Steakhouse, El Chico, Good Eats and Lucky’s Café. They serve more than 6 million meals annually.

“We have sit-down restaurants that serve customers with [a complete] wait staff. We are in the social-gathering, fine-dining restaurant space, the ones who, by definition, are intended to get families together to celebrate events, birthdays and business gatherings,” Harkey said.

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More than 40 states in the U.S. have civil or government-issued orders preventing dine-in access at restaurants, designed to stop the spread of the coronavirus. Most states are allowing restaurants to offer customers carryout or delivery, but Harkey says that option isn’t always feasible.

“We are very different from fast food, traditional carryout restaurants or delis,” Harkey said. “I commonly get questions, ‘Well what about takeout? Doesn’t takeout work?’ To put it into perspective, we’re in some of the best malls in the U.S. We’re in Mall of America in Minneapolis. The mall is closed, and you can’t do takeout.”

Harkey has kept 15 CRO establishments open for takeout, but remains skeptical of how the math works.

“It does allow us to employ a couple of people in the kitchen and keep them working. It covers the food cost, the employee cost, and maybe some utilities, but it will never be enough to make a month’s rent.”

His landlords have given him mixed reactions.

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“Some are very empathetic and have come and said, ‘We’ll work with you. Take three months and we’ll put it on the end of the lease. We understand you can’t operate,” he said.

“And then they’re some landlords who say, ‘We want to get paid.’ Well, in that case, [there will] be a real robust legal debate on whether or not you have actually been constructively evicted from your site because you cannot operate it. It’s hard to see a landlord be able to collect rent when the tenant can’t, by civil order …operate that business.”

Harkey said he has great empathy for the workers he had to lay off.

“There’s no place for them to go except going to unemployment. It’s so hard on people and families. I do have to try and get my business back up and operating to provide an opportunity for those families.”

Many in the industry are worried that the $2 trillion coronavirus stimulus package does little to help the restaurants that were mandated by the government to close their dining rooms.

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“You have to have faith that there is going to be a pathway at the end of this, because our government leaders are going to figure it out and we’re going to work through it.

“But whether or not the fairness falls to certain industries, only time will tell.”

Source: Thanks https://www.foxnews.com/food-drink/coronavirus-leads-restaurant-industry-in-path-of-a-financial-tsunami-warns-chain-eatery-owner