Restaurants Might Feel Coronavirus Effects for Years To Come
It feels like an eternity, but local bars and restaurants have been closed for exactly three weeks since Ohio Governor Mike DeWine first issued a statewide closure on Sunday, March 15. Many have shuttered completely, while some have continued to operate with takeout and delivery options, and thousands of employees have lost their jobs.
Ohioans will be sheltering in place until May 1 — and possibly longer if that date gets pushed back again — and the road to recovery for local dining and nightlife businesses is likely to take much longer than that.
“I think people who are expecting a quick recovery are being overly optimistic,” stated Bill LaFayette, Ph.D., Owner of Regionomics — a Columbus-based economic consulting firm. “After the crisis has passed and the economy improves, restaurants will return, but they are likely not to be the same restaurants or the same owners.”
According to the Ohio Restaurant Association (ORA), approximately 585,000 people were employed by restaurants in the state prior to the pandemic. ORA President & CEO John Barker said that some restaurants will not survive the shutdown.
“They won’t be able to sustain losses and federal support isn’t addressing the tremendous capital dollars required to reopen — for food, supplies, training and marketing,” he explained. “It’s heartbreaking for our restaurant owners and employees. These permanent job losses will have a major impact on the economic recovery.”
The Cheesecake Factory made the news two weeks ago when it announced that it would not be paying rent in April at any of it’s 200 plus locations across the U.S. — which include two Central Ohio restaurants at Polaris Fashion Place and Easton Town Center. The kind of leverage that comes with being a multi-billion dollar chain isn’t as easily accessible for smaller restaurants that likely aren’t able to strike deals with landlords or their many other types of ongoing business service expenses.
“Big chains have much deeper pockets, but small businesses are more nimble and can be innovative,” said LaFayette. “Overall, the small businesses are almost certainly hurting much more.”
Many local businesses have made quick shifts to focus on takeout, with some bakeries selling off ingredients as groceries and some restaurants restructuring menus to cater to delivery-friendly foods. The success of those strategies has varied greatly.
“Some operators who were already strong with drive-through, carryout, delivery, and online ordering/pay are doing the best, although most of them are reporting lower sales,” said Barker. “Operators where most of their business was dine-in and full-service are closed or struggling with sales down 50 to 90%.”
Columbus Underground tallied up over 100 restaurants that opened in 2019 — a much higher list than in years past — which left some people questioning if our dining scene was hitting a point of over-saturation, particularly in neighborhoods like the Short North or at entertainment destinations like Easton Town Center.
LaFayette says that while he’s concerned about neighborhoods like the Short North where “the small, single establishments make these neighborhoods unique,” he is less concerned about saturation causing issues whenever restaurants are able to starting reopening.
“I gathered the number of restaurants and total employees for 20 counties about the same size as Franklin County — population 1.1 million to 1.6 million,” he explained. “Of those 20 counties, we rank sixth highest in the number of restaurant employees per 1,000 people, and only 18th highest in the number of restaurants per 10,000 people. To get a full picture of potential demand, you also have to look at discretionary income, demographics, and spending allocations, but this certainly suggests that our restaurant concentration is not outrageously high.”
Barker hopes that once the pandemic has passed, some sense of normalcy can resume — whether that’s in May or June or some later date.
“Once Ohio is reopened — we anticipate huge pent up demand,” said Barker. “People will want to get back out and use restaurants to celebrate, relax and see friends and family. We are all looking forward to those days.”
LaFayette is a bit less optimistic, noting that a $1,200 government stimulus check is not going to cover a lot of discretionary spending at restaurants after the more essential household bills — like rent and utilities — are paid.
“Obligations are being deferred, not forgiven, so debt is piling up for many households,” he added. “It will take a while for people to dig their way out of this hole, and during that time consumer expenditures will be restricted.”