The COVID-19 outbreak threatens the future of countless businesses across the world, but among the hardest hit is the restaurant industry.
Big and small restaurant companies are both facing challenges, but famed American restaurateur Ming Tsai warned that small restaurants might not be able to emerge after the outbreak subsides.
“I think 50% of mom and pops cannot get through this,” Tsai said Monday in an interview with Yahoo Finance. “Even with the bailout and the SBA loan, assuming you will bring back full staff. You're not going to have a full staff. You're not going to get the full reimbursement.”
Restaurants are notoriously difficult business with tight margins. Tsai argued that mom and pop restaurants cannot afford to stay closed for prolonged periods of time. “Once they're closed, they're closed — 15% of Chinatown restaurants permanently closed, [they are] never coming back.”
Tsai pointed out that the damage caused by COVID-19 will disproportionally impact restaurant workers. “[Restaurant employees] have nowhere to go. They are the ones that are going to suffer the most in which most disasters, the poorest suffer the most. Economically it's so scary.” Tsai said.
Unlike discretionary purchases, food is a necessity, Tsai explained. “I don't need to buy a car today. However, I do need to eat today, as does everyone else,” Tsai said. “Do I pay rent or pay for food? At a certain point it's going to break. That's what we're scared of.”
Tsai is well respected in the restaurant industry and has received critical acclaim for his Boston-area restaurant Blue Dragon. He’s also authored five cookbooks and won an Emmy award for his work hosting a Food Network show.
Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.
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