How Many Restaurants Will Survive The Pandemic?

Apr 1, 2020

Over 270,000 unemployment insurance claims have been filed in North Carolina in the past two weeks, and Governor Roy Cooper is seeking to increase benefits by $600. Many of those most in need work in the restaurant and service industries.

 

 

Vince Winkel: COVID-19 is a major blow to the service industry in the Cape Fear region. All dine-in and bar areas are closed to the public. While the move allows takeout and delivery to continue, the financial impacts on the food and beverage industry will be severe. Ben Schachtman has been writing about this in recent weeks. He is the Managing Editor of Port City Daily. Ben, how bad do you think this is going to get?

Ben Schachtman: I think right now what we're seeing is a second phase of things. There was an initial phase where we saw a lot of restaurants shift to, like I said, just sort of a new business model, curbside service. The city of Wilmington was helping in the downtown community with that by providing parking spaces. But you know, more and more restaurants are seeing that it's just not as financially feasible as they thought. You know, a huge part of that is, you know, alcohol. Restaurants operate on very thin margins, For food those margins are incredibly thin. Margins are a little better on alcohol and beer, wine, especially for breweries that can make their own beer. Without the ability to have people in dining rooms at bars, it's just getting tougher every day for this restaurant.

Vince: Do you think this is a case where, when things return to something closer to normal we'll see some restaurants and bars remain closed?

Ben: Absolutely. I mean, I think that's the hard truth that a lot of people have been sort of skirting around. But I mean in the restaurant industry it's easy for a restaurant to go under. We all know the stats are pretty rough. A large number of restaurants go under in their first year under good conditions. I mean, that's with a great tourist season here in Wilmington. So under the best conditions you have restaurants go under. Under these conditions I can't imagine that a large enough restaurants won't close their doors.

Vince: Do you think there's anything more that the state can do, the General Assembly, to support the service industry in this situation?

Ben: Absolutely. So for me, that's the striking thing, looking at all this was that the restaurant industry was essentially used as the first line of defense against COVID-19. They took the first hit on the chin, followed by the rest of the front facing service industry businesses, like a tattoo artists, a hair salon, stuff like that. But these businesses were effectively put out of business or, or severely hampered for the general good. So I think there's a lot of ways the General Assembly could help them and whether that's finding ways to mitigate rent, which is a huge cost for these businesses. Whether it's improving unemployment insurance. You know, a lot of these owner operators are also employees, especially for tattoo shops and hair salons. But for restaurants, perhaps low interest loans, or no interest loans. I don't know if that's good enough. I honestly think that there ought to be a bailout package. My personal opinion is there should be a bailout package for the restaurant industry if for no other reason that they were put on the front lines two weeks before the rest of us were

Vince: President Trump is saying during his daily press briefings that the country will come back better than ever. But I'm sensing that may not true for the service industry.

Ben: I think if you'd look historically you know whenever there's a major disaster, the stock market tanks and then it rebounds. After the 2008 recession, the stock market came back stronger than ever and I think it's easy to use that as a rubric to say of course the country will come back stronger than ever and I think it absolutely overlooks the small businesses that just get left by the wayside. There was a lot of people who never came back after 2008 and unfortunately there will be a lot of small businesses that don't come back after this.

Ben Schachtman is Managing Editor of Port City Daily. You can find them at www.portcitydaily.com