When the coronavirus lockdowns were first imposed, some worst-case scenarios projected that 75% of independent restaurants might not survive. That figure has now been revised upwards to 85%, according to the Independent Restaurant Coalition.
The government’s Payroll Protection Program (PPP) was rolled out in March, and has subsequently been adjusted. But according to a report commissioned by the Independent Restaurant Coalition, a lot more needs to be done to prevent a catastrophic collapse of independent restaurants by the end of the year.
The report, conducted by consulting company Compass Lexecon outlines the threats facing independent restaurants. It claims that while the pandemic has affected the whole hospitality sector, it is the independently-owned restaurants that have suffered the most.
Independent restaurants, say the report, comprise 70% of all restaurants and rely much more heavily on dine-in revenue than chains and franchises. They also lack the pooled resources that corporations have to be able to face a prolonged crisis like the coronavirus.
"What I'm afraid of is the people that are the least likely to survive are going to be these small, single-location, immigrant-run, women-run, people-of-colour-run operations. That we're the ones that don't have the infrastructure like the chain restaurants to survive this," Dan Wu, owner of Atomic Ramen in Lexington, Kentucky, said on an IRC press call. Wu is an immigrant, like many other independent restaurant owners and workers.
Amanda Cohen of Dirt Candy, New York, told Business Insider that what looked initially like a two-week problem has now morphed into a two-year fiasco.
"I think it's going to be a long haul to get back to where we were," Cohen said. "I still have most of the same bills that I had before I closed. I still have to pay electricity and gas and purveyors. And I don't think I will have enough customers to keep my business going."
PPP has temporarily stemmed the flow, however it can only be effective in the short term. The pandemic has not gone away and a second wave looks imminent if figures in China are to taken as indicators.
"We do have the support of the PPP loans and also the grants that are paid by the government but simply not enough to stay open long term. I don't think most restaurants will even last to December," Nina Compton said on the IRC press call. Compton is the chef and owner of Compère Lapin and Bywater American Bistro in New Orleans.
"We don't have the infrastructure or the financial support that chain restaurants have," Amanda Cohen added. Despite receiving a PPP loan that she said will last her through December, she is unsure if she'll be able to stay open after that. "I don't know who I turn to now if I need more money."
Despite pivots to take-out and other creative measures taken by restaurants, revenue will be nowhere near pre-pandemic levels until next year at the earliest. What happens when all the PPP money has dried up, nobody knows.
In Washington, the IRC is pushing for a bailout, much in the same vein as that already granted to some other sectors. Oregon Representative Earl Blumenauer has proposed a bill for the RESTAURANTS (Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive) Act, a stimulus of $120 billion in grants specifically for independent restaurants.