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Coronavirus reopening policies could burn struggling restaurants

Brittany De Lea

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States are making plans to reopen their economies, offering hope to many businesses that have been forced to shut down under lockdown guidelines. But one industry that may have a tough time recovering under recommended reopening policies is the restaurant sector.

Restaurants, which operate on thin margins to begin with, will be bogged down by a number of new expenses – including providing protective equipment to workers, adjusting shifts, implementing new cleaning and sanitizing standards and even providing sneeze guards at cash registers.

The CDC has also proposed asking establishments to use disposable utensils and menus.

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Another challenge is likely to be digital. Erik Rosenstrauch, president and CEO of Fuel Partnerships, told FOX Business small businesses will likely have to shift part of their operations online – and many don’t have the necessary technology integrated with their services. For example, they may need to allow customers to make online reservations due to seating restrictions, or to order pickup, delivery or curbside service.

But the most obvious expense is that restaurants will also be missing out on revenue due to the sheer fact that they will not be allowed to fill their establishments. So while other costs remain the same, revenue will be a fraction of what a restaurateur relies on during normal economic times. And that’s following a months-long shutdown.

“You might just have some business owners saying … ‘I’m just not going to reopen,’” Rosenstrauch said.

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Award-winning chef and author Rocco DiSpirito said during an interview with FOX Business that it is possible restaurants will be forced to raise prices to compensate for revenue loss.

“Short of some relief from the government or another source, I’m not sure how we’ll be able to open up at 25 percent capacity with the same basic expenses and not look for a way to fill that void somewhere,” DiSpirito said.

The Independent Restaurant Coalition has asked Congress for a stabilization fund that would provide up to $100 billion in grants to help restaurants reopen.

“If we do not have funds to pay our vendors and the associated reopening costs, this will prove an insurmountable barrier to reopening our restaurants,” the group wrote in a letter to lawmakers. “With a $50-$100 billion reinvestment, independent restaurants would be able to navigate local and state closure mandates, hire back our employees, and survive for the future as patrons return to dining out in restaurants again.”

Restaurants have also faced challenges with regulations governing Paycheck Protection Program loans and competition with expanded unemployment benefits.

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As previously reported by FOX Business, it’s not just bars and restaurants that may be challenged by the reopening guidelines. The costs of ensuring customers and workers are safe are likely to be a burden for many small businesses – particularly those that have gone without income since the middle of March.

Ultimately, states and localities will be responsible for determining their own reopening guidance. However, should businesses be unwilling – or unable – to comply with the most rigorous health and safety standards, it remains to be seen how keen customers will be to return to the establishments.

“Safety is going to be important to every shopper at this point,” Rosenstrauch said. “Smaller companies are going to have to do this.”

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