About 100,000 U.S. eateries will close this year, the National Restaurant Association (NRA) has predicted.
Most of the dead will be locally-owned businesses. During the pandemic, many restaurant chains are thriving.
The Chipotle chain reports more than tripling online sales during the second quarter. McDonald’s same-store sales bumped up 4.6 percent in the third quarter, during which Domino’s, Papa John’s, and Wingstop all saw double-digit sales increases.
This summer, Chili’s debuted its delivery-only “Just Wings” brand, which it expects to generate $150 million in sales in its first 12 months. The 475-store El Pollo Loco opened three new stores this year and will emerge from the pandemic and lockdown stronger than before, said CEO Bernard Acoca.
Darden Restaurants, which owns Olive Garden, is planning to expand into urban centers, including Manhattan, where rents have, until now, been exorbitant.
In contrast, about 75 percent of the 22,000 restaurants that closed between 1 March and 10 September had fewer than five locations, according to review site Yelp.com.
In a recent survey of 450 New York City bars and restaurants, more than 390 said they were unable to pay their August rent.
The loss of independent restaurants threatens the livelihoods of suppliers and small farmers who deal more often with local diners than with chains. Every 100 restaurant jobs support 50 others among farmers and suppliers, according to the Economic Policy Institute.
When Arizona banned eating indoors in restaurants, the local McClendon Select organic farm lost 95 percent of its sales to those outlets. Since then, the farm has regained only about two-thirds of those customers, and they place orders about half as often as previously.
“Big chains don’t buy from local farms,” said co-owner Kate McClendon.
Chain restaurants buy from industrial-scale food suppliers. They also typically are better capitalized than independent shops, can exert more leverage in negotiating rent and supply prices, are more adept at online sales, and have corporate experience with delivery and take-out services.
“With a few clicks, I can order a whole meal, pay for it, and not have to leave my car to pick it up,” said Joyce Hill, a college professor in Akron, Ohio. She orders more often now from chain restaurants because she finds it easy and feels unsafe eating inside a restaurant.
She recently stopped by a locally owned restaurant for tacos but it was closed.
Still, not all chains are faring well. Ruby Tuesday’s and California Pizza Kitchen have filed bankruptcy; Dunkin’ Brands, Pizza Hut, and Starbucks are planning to collectively close 1,500 stores nationwide.
Bars and restaurants have shed 2.3 million jobs since the shutdown began, about 20 percent of the sector’s total workforce, the U.S. labor department has said.
The shutdown will cost the sector $240 billion in sales this year, the NRA calculates.
PUBLISHER’S NOTE: As we have long forecast and as the data proves, across the business spectrum, the rich are getting richer, the Bigs are getting bigger and the smalls businesses are being pushed out of business.
Indeed, some 20 years ago, in my book, “What Zizi Gave Honeyboy – A True Story About Love, Wisdom, and The Soul Of America,” I wrote how my beloved aunt Zizi reminisced, “When we supported our local shopkeepers, the money we spent ended up staying in the neighborhood,” and how I saw the Bigs getting bigger.
Listening to Zizi talk about the old neighborhood, I wrote in 2000, “And as we move into the 21st century, the consolidation trend will continue as multinational mega-giants devour national big boys – the killer whales will eat the barracudas.”
