4 Ways 2020 Left The Restaurant Industry On The Brink Of Disaster – Forbes

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For many of us, it’s safe to say that 2020 has been the most challenging year in memory, and few industries have been as hard-hit as restaurants. As I write this, the number of US restaurant closures for the year hovers around 100,000, with no sign of relief.

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As the COVID-19 pandemic ripped across the country, restaurants became the front lines of safety protocols including social distancing, mask-wearing and sanitation. Many had to vastly reduce their capacity, move seating outdoors and rethink their takeout and delivery strategies, and still many did not survive.

“Words like stress, fear, depression, losing life’s work, survival, shock, pain, anger, acts of heroism and ingenuity come to mind,” says Izabela Wojcik, Director of House Programming for the James Beard Foundation.

Wojcik is one of the panel of food and restaurant industry experts I surveyed for my annual food trends article. In a normal year, it’s a fun, upbeat year-end roundup covering ingredients, cooking styles and maybe a societal change or two, but the peril facing the industry overshadowed everything. The experts were also kind enough to weigh in the big picture of the year gone by.

The Stats

As late as early this year, Izabela Wojcik says, optimism reigned. “2020 was promising to be a record year for many chefs and restaurateurs in terms of revenue and achieving dreams and goals.” Predictions included:

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  • 2020 restaurant industry sales would rise by 4 percent over 2019, to $899 billion.
  • An expanding economy and positive consumer sentiment would boost restaurant sales.
  • High pent-up consumer demand for restaurants.

Instead, she says, here’s what we got:

  • 100,000 restaurants shuttered permanently (or expected to by end of this month)
  • The restaurant industry, employing 11-plus million people (with an additional 5 million in support industries), lost 2.3 million jobs since February 2020, according to the Bureau of Labor Statistics.
  • With openings, closings, re-openings, limited indoor capacity, weather conditions, and consumer discretionary income declining, the industry is in jeopardy of more dire consequences in 2021.

The Before Times: A Broken Business Model

“Many restaurants were teetering on the brink even before the pandemic,” says Bret Thorn, Senior Food & Beverage Editor of Nation’s Restaurant News. “The business model already was broken.”

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San Francisco chef and hospitality industry talent manager Richie Nakano calls the pre-COVID situation an “unsustainable tightrope.” Restaurants operated on razor-thin margins, and it was just accepted that a certain number wouldn’t make it even in the best of times.

On top of that, Thorn adds, trends had already been heading in the wrong direction, citing “extortionate third-party delivery fees cut into profits,” “rising labor and overhead costs,” and “food price instability.”

Looming over it all, Nakano says, “We all knew that we were all one giant earthquake away from being completely decimated. When the earthquake wound up being COVID-19, it wound up being so much worse than anyone could have ever predicted.”

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Impact on Restaurants

“This is going to sound dramatic, but I mean it,” says Nakano. “I fear that this is going to be the end of independent restaurants.” 

“Many have called this an extinction event,” says Simon Majumdar, Food Network personality and restaurant critic for Time Out Los Angeles.

“Full-service restaurants have largely been crushed by the pandemic,” says Bret Thorn.

The damage, “will resonate for years to come,” says David Rose, Food Network personality and executive chef for Omaha Steaks.

It started, Thorn says, when restaurants were forced to curtail operations to comply with “what I think are perfectly reasonable restrictions on gatherings, particularly indoors.”

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Majumdar adds, “Customers are very wary about putting their health in the hands of the sanitary vigilance of others, no matter how much they love a restaurant.”

“Some segments have thrived,” says Thorn, “such as many pizza chains and wing chains, and some individual restaurants have done well by adjusting their business models to focus on takeout and delivery.”

Among other restaurants, “The dire circumstances have also forced truly inspired innovation and creativity,” says Izabela Wojcik, like retooling menus for “more broad consumer appeal” and renegotiating leases that have enabled some to survive, at least so far. “Outdoor dining,” she adds, “has been reinvented in urban areas,” though she adds “with winter now settling in, we’re going to experiences sweeping closings.”

And the catering business has had to adapt. “Last year, my company had its best year in its over 40 years,” says Robin Selden, Managing Partner and Executive Chef of Connecticut- and New York City-based Marcia Selden Catering and Naked Fig Catering. In 2020, however, “we’re working harder than ever to keep our doors open and our business alive during this pandemic, and yet we are not even covering our operating costs. We are on trend to finish our year down 58% over last year.” And they’re relatively lucky.

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Impact on Workers

“So many of my peers who have spent the past 20-plus years working their way up have seen everything wiped away in an instant,” says Richie Nakano.

“I’ve talked to so many talented chefs who want to leave the industry for good,” he adds, “and I can’t really blame them. They sacrificed their bodies and their health and spent so much time away from friends and family, devoted to their craft, and now they have nothing to show for it.”

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“There is precious little support for the workers involved in this massive business,” says Simon Majumdar, “and many are on the edge if not in very dire circumstances.” He cites the work of restaurant pros like Guy Fieri and his Restaurant Employee Relief Fund, which to date has raised over $21.5 million. “That is amazing on their part,” Majumdar says, “but shameful for those who should be supporting Americans during this crisis.”

Then there’s the impact on communities. “Restaurants are vibrant part of neighborhoods,” says Izabela Wojcik. “The closings change tone of neighborhoods, in some instances contributing to increase in crime.” The long-term impact of the closures remains to be seen.

Missing in Action – Government Leadership

“I think it didn’t have to be this bad,” says New Orleans chef Isaac Toups. “A national strategy from the beginning could have shortened the horrible pain small businesses – especially restaurants – have endured and continue to endure.”

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Simon Majumdar blasts “the blithering incompetence of American government, both local and federal, to come up with a rationalized plan to fight the virus and support the industry during the pandemic.”

“With rules seeming to vary from street to street across America, restaurants are struggling to know what they can and can’t do,” he continues. And as restrictions “seem to change on a daily basis,” restaurants (and, he says, cinemas, theaters and museums) “are spending what little money they have trying to comply.”

“Things are terrible,” Richie Nakano agrees. “There is no leadership, no guidance. Sure, dining indoors is extremely dangerous — so can the government maybe chip in a little since the closures are mandatory?”

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Bret Thorn calls it “the wholly unreasonable and irresponsible lack of support from the government, particularly on a national level where so much of the money is.”

The Future

“The restaurant industry will survive,” says Simon Majumdar. “It will be a stuttering process to bring us back to the vibrant scenes of pre-pandemic. And, we will lose many favorite bars and dining spots along the way.”

But it will survive, he says, “because restaurant folks are ornery old buggers and will keep finding ways to open restaurants, and a new younger generation will find alternative ways of offering food to willing stomachs.”

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“We have to rethink restaurants,” says Izabela Wojcik, “to be more resilient, to focus on employees and internal culture rather than on guests first.” Among the modifications: making permanent some of the COVID-19 safety protocols and updating technology.

“As a society, I hope we have learned how difficult it is to run and work in restaurants,” says Bret Thorn. “And maybe we’ll be better guests.”

We’ll end with these words of hope from Chef David Rose: “The hospitality industry is a community without borders. It’s filled with love, creativity, support, passion and perseverance. Once we get through these tough trying times together, we will emerge on the other side stronger and more dedicated.”

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