Coronavirus: US eateries on the brink of failure

The Americana Diner in West Orange, New Jersey, which is open and serving takeaway orders, on March 19.
The Americana Diner in West Orange, New Jersey, which is open and serving takeaway orders, on March 19.PHOTO: NYTIMES

WASHINGTON • It was supposed to be a happy time for Will, a musician in the Washington area. He was planning a wedding reception at a local restaurant.

Instead, he had to cancel the party due to the coronavirus crisis.

And, despite a few misgivings, he has also decided to ask the restaurant for a complete refund right away - in case the pandemic forces the eatery to shut its doors forever.

"My original plan was just to save the money to credit and to have a big party there in the future," the 47-year-old said, who asked that his last name not be used.

But then, he lost his job at a music store. And of course, he can no longer perform in restaurants and bars because they are all closed for the foreseeable future.

"We're just too worried about them shutting down the business and not getting the money back," he said.

The restaurant industry has been one of the hardest-hit since local governments across the United States started ordering residents to stay at home as much as possible to curb the spread of the novel coronavirus.

Many Americans have launched appeals to help their local restaurants, which are either closed or offering only takeaway while the country rides out the crisis.

Such help could come in the form of buying gift cards, which are a "much-needed revenue source during the pandemic disruption," according to the US National Restaurant Association.

"In the best of times, restaurants operate on razor-thin margins, typically 3 to 6 per cent, and 90 per cent are small businesses with less than 50 employees," said Mr Sean Kennedy, the association's executive vice-president of public affairs.

A KEY U.S. SECTOR

Of course, a few gift cards are not going to save the sector, a vital one in the world's largest economy.

 
 
 

It is the country's second-biggest employer, behind only the healthcare sector.

There are more than one million bars, restaurants and fast-food outlets across the US.

Before the coronavirus crisis took hold, the National Restaurant Association had said it was expecting sales of nearly US$900 billion (S$1.3 trillion) this year.

Now, it says the industry could lose at least US$225 billion - and five million to seven million jobs - over the next three months. There are no guarantees those jobs would be restored after the crisis.

So far, 40 of the 50 US states have ordered restaurants to shut their doors or severely curtail their activities. For many, their survival is on the line.

A survey carried out by the restaurant association among 4,000 places of business and released on Wednesday showed that 3 per cent were forced to close for good.

Another 11 per cent said they would have to do so in the next month.

Restaurant owners have asked for US$455 billion in government aid, including a US$100-billion emergency fund, US$130 billion to pay unemployment benefits and US$45 billion in loans.

'NO NEST EGG'

Since last week, two petitions have been circulating - and gaining hundreds of thousands of signatures - to ask the local authorities for relief, including waived payroll taxes and rent abatement.

"Just as many individuals live from pay cheque to pay cheque, so too do restaurants and bars. There's no nest egg," says the Save America's Restaurants petition signed by more than 330,000 people, including a number of celebrity chefs, as of Thursday.

"We are on the brink of extinction," it warns.

 
 
 

Mr Kennedy says while takeaway and delivery meals have kept some restaurants going, it is no substitute for regular service.

"That is just a lifeline and is not sustainable," he said.

Mr Kennedy, who has been lobbying American leaders for more help, hailed the US Senate's passage of a US$2 trillion economic rescue plan, which is under consideration by the House of Representatives.

"This measure is an important first step to help restaurants weather the storm, take care of our employees and prepare for when we are given the signal to open our doors once again," he said.

But he warned of the "challenges that remain".

Restaurant owners say they hope the emergency funds will come quickly - and not get tied up in bureaucratic red tape.

 
 

Mr Alain Roussel, who owns La Ferme in Maryland, is supposed to celebrate 35 years in business in November.

In recent days, he was forced to lay off his 38 employees.

"I am lucky. I own the place and I don't have any debt. But I can only hold on for a couple of months," Mr Roussel said.

As for whether he can eventually rehire his staff, he said that would depend on his customers and how quickly they come back.

"After the global financial crisis, business was slow to pick up again," he recalled.

AGENCE FRANCE-PRESSE

 
A version of this article appeared in the print edition of The Straits Times on March 28, 2020, with the headline 'US eateries on the brink of failure'. Print Edition | Subscribe