America’s Restaurants Will Need a Miracle

America’s Restaurants Will Need a Miracle

By Anne Rowe for DPS board, April 9, 2020

Social distancing has changed that landscape almost overnight. According to the booking website OpenTable, which publishes information for all 50 U.S. states and dozens of cities on a daily basis, online bookings held steady through February. But in the past week, reservations cratered by more than 40 percent in New York, Los Angeles, Boston, and Denver. In Seattle, where the outbreak is especially virulent, bookings last weekend were 60 percent lower than on the same day last year.

New executive orders ending dine-in service across the country could cut reservations to zero in most cities, threatening the employment of America’s nearly 3 million waiters and waitresses.

“We are in uncharted waters,” said Steve Salis, a Washington, D.C.–based entrepreneur with several properties, including the BBQ restaurant Federalist Pig and Kramerbooks & Afterwords Cafe, a long-standing bookstore and restaurant. Same-store sales across his businesses had already declined up to 50 percent, he told me on Sunday, with the deepest pain at full-service restaurants.

Now that D.C. restaurants have officially shuttered for dine-in customers, Salis is looking to completely overhaul his business to keep workers paid and the community fed. “We have implemented more promotions around delivery,” he said. He also plans to expand catering-size orders available via “curbside pickups.” National chains are following the same script. On Monday, McDonald’s, Starbucks, and other other fast-food franchises announced that their locations would be temporarily take-out only. This is the near future of American restaurants: Dine-ins are transforming into drive-throughs, and their chefs now operate de facto neighborhood groceries for prepared food.

How long this transformation lasts is unclear. Arguably, however, these measures are an acceleration toward the future rather than a break from the past. Last year, analysts predicted that in 2020 Americans would for the first time spend more money “off-premise”—on takeaway and delivery—than on dining in restaurants. The coronavirus outbreak all but guarantees that this prediction will come true.

Restaurants in a pandemic are like beachfront properties in a hurricane. Their devastation is both a tragedy and an omen of greater havoc to come. Already operating at paper-thin margins, restaurants face the loss of their entire dine-in business, but they will still have to make rent. In the same way, hotels, airlines, and the entire face-to-face services sector are looking ahead at several months without customers, yet they will still have to make regular payments on corporate loans.

This is our great economic crisis in a nutshell: Consumers are vanishing, but financial obligations are not. Without a major intervention, the entire global leisure and retail economy—and soon, perhaps, the entire economy, period—is facing mass layoffs, mass bankruptcy, or both.