The 4 Reasons Why Reopening Could Crush The Restaurant Industry – Forbes

Restaurant News

While 97% of the US Population is still under some form of shelter in place order, restaurants are beginning to reopen in 62% of the USA. Two highly-populated states, Georgia and Texas, are allowing for patrons to dine inside at restaurants with a 25% capacity restriction. While restaurant owners nationwide take precautions and diligently strive to stay safe, significant risks remain. Risks that, despite our best efforts, could crush the restaurant industry. Here’s why:

  1. Safety and Enforcement Is Next to Impossible: in most states, restaurants have to limit inside dining to 25% capacity. Clearing tables just got riskier: what if guests just won’t leave, so that capacity restrictions can be maintained? How does that work, exactly? How about in between courses, while waiting for drinks or appetizers: will patrons be asked or expected to keep their masks on? Does it seem like a stretch to expect that those who decide to frequent dining rooms during the coronavirus might be a little more demanding about their rights, freedoms and choices? Perhaps. And who will police the hungry restaurant owners if they decide that if 25% capacity is good, 50% is better – and full capacity is really what’s best? Seems most owners are ready to abide by the restrictions – but what about those who don’t? Would owners be fined for over-capacity, or would the restaurant’s guests be the only ones who pay a frightening penalty?
  2. Partial Capacity Crushes Profitability: Working with a skeleton crew (what’s been working so far for curbside service) isn’t the profit model when bar backs and servers return to the front lines. Welcoming patrons inside requires additional staff – and the new normal requires new safety measures. Does that mean additional hiring? The math doesn’t make sense; revenues and profits are both taking a massive hit. For servers, 25% capacity might mean 75% less shifts. Or the same amount of shifts, but only 25% of tips. Meanwhile, 100% of the rent, utilities and other expenses are due and payable – in an industry that’s already tight on margins. Is that a sustainable model for workers, or business owners?
  3. Tightening the Noose: as I mentioned in this Forbes article, small business owners will see little relief once the option to open is open for restaurants. Landlords who might have considered reduced rents or some form of forbearance will have no reason to ease up on overhead. If the business has some form of insurance, that claim will be denied – because the business isn’t experiencing an interruption, now that sanctions are lifted. That’s not a good recipe for owners – or their employees. In a recent tweet, Texas Governor Greg Abbott announced new guidance for the Texas Workforce Commission, the state’s governing body for worker’s claims. The state provides guidelines on certain health reasons for not returning to the job. As expected, “being afraid for your life, safety and well-being” is not an acceptable reason for claiming unemployment.
  4. A Branding Nightmare: What happens when your favorite restaurant becomes the kind of hotspot that everybody wants to avoid? If a patron – or employee – gets sick with COVID-19, it could be insurmountable for the business. What if tracing leads back to a particular restaurant as ground zero for one or more sick patrons? What happens when someone catches this virus and pays the ultimate price? Texas Lt. Governor Dan Patrick might fight me on this, but here it is: Loss of life is much more important than loss of revenues. What price are we willing to pay to return to restaurants – and does this timing really make sense? Only time will tell.

Some states, like Montana, South Dakota and Florida are already seeing declines in the number of coronavirus cases. However, Minnesota Governor Tim Walz is watching cases spike in his home state, since economic easing began on April 27. Regardless of your state’s stats: if you contract COVID-19, the odds of you getting sick are exactly 100%. Whether restaurant, bowling alley, shopping mall or any other enterprise, business leaders, workers and hungry consumers have to ask: are we really ready for this? The truth is, there’s still a lot we don’t know about the way this virus works.

Reopening is the way forward, there can be no doubt. Here’s hoping that we do so safely and in a way that protects small business owners, workers and the folks who just want to grab a little dinner. In reaching for prosperity, pub owners could get crushed in the process. Because, right now, restaurants have more than bad Yelp reviews to consider. A lot more.

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