After Reopenings Stall, Can Restaurants Survive a Second Coronavirus Blow?

Surging Covid-19 infections have cash-strapped restaurant, bar owners wondering how long they can survive.

Restaurants that survived the coronavirus hit in March and April are reeling from a second punch that could put more eateries out of business. Many restaurants that were just starting to recover some sales are bracing for another, potentially existential round of restrictions as a resurgence in coronavirus cases in the U.S. prompts a pullback in reopening plans.
Numerous states, cities and counties have halted or rolled back reopening plans for bars and restaurants amid a surge in Covid-19 cases and suspicions by public-health officials that gathering in crowded eateries and nightspots may be contributing to the virus’ spread. The turnabout comes as many restaurant owners spent thousands of dollars to equip dining rooms and staff for a new normal and were starting to recover some sales lost during the spring.
“This is the rainy day a lot of businesses don’t prepare for,” said Diego Galicia, a co-owner of Mixtli, a restaurant in a renovated train car in San Antonio.

Restaurant sales that had been improving since hitting lows in April are now sputtering in the first states to log rising case counts such as Arizona, North Carolina and Nevada, according to market-research firm NPD Group Inc. Restaurant reservations peaked on Father’s Day, then slammed back to earth in markets such as Miami, Houston, and Scottsdale, Ariz., OpenTable data showed. McDonald’s Corp.
said Wednesday it was halting the return of dine-in service in the U.S. for three weeks. Restaurant owners say they understand the need to pull back and the public-health reasons behind it. Those who were banking on a gradual reopening for the rest of this year are now recalculating sales expectations, after investing in new equipment and training staff to host diners again. Many owners are turning again to to-go menus they threw together during the pandemic, but that only replaces so much business.

Restaurant owners who received loans from the federal Paycheck Protection Program say they are trying to stretch the money. A $120 billion rescue fund for restaurants has some bipartisan support in Congress. The $800 billion restaurant industry employed 15 million
U.S. workers last year, according to the National Restaurant Association trade group. Restaurateurs say some suppliers and bankers have relaxed terms on contracts and loans, but they have had less luck with landlords. Rent payments by sit-down restaurant chains
are trailing pre-virus levels, according to real-estate data company Datex Property Solutions.
And a new wave of restaurant closures is growing. Review site Yelp Inc. found last month hat 53% of the restaurants noted as closed on its site marked their closures as permanent. Chain operators such as Darden Restaurants Inc. has permanently closed some locations since the pandemic hit. Blackbird, a Chicago restaurant that sparked the careers of numerous high-profile chefs, said on its website this past week that it was closing for good. “Our hearts are broken,” the restaurant wrote.

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