The restaurant industry has been vulnerable to the vicious economic impact of the pandemic rampaging across the U.S. Nonetheless, the highly susceptible sector has recently shown signs of varying performance in withstanding the downturn.
In March and April 2020, restaurants lost nearly 6 million jobs, according to the Bureau of Labor Statistics. This number equaled almost three times as many job losses as other industries.
Additionally, the industry reached its lowest employment level since May 1989, according to the BLS and National Restaurant Association’s analysis.
Furthermore, industry-wide sales of the same two-month period fell by $80 million, according to the U.S. Census Bureau. April’s sales of $32.4 billion indicated consumer spending at its lowest since October 1984, the National Restaurant Association reported.
In May, multiple national corporations underwent downgrades in credit rating, according to Moody’s. Bloomin’ Brands, Inc., which owns chains including Outback Steakhouse and Bonefish Grill, was among the many struggling enterprises on the list.
Consequently, the closures of restaurant companies started making headlines. CEC Entertainment, Inc., known for its primary brand Chuck E. Cheese, filed for Chapter 11 in late June. NPC International, the largest franchisee of Pizza Hut and Wendy’s, followed in early July.
Momentum of Recovery and Resilience
In May, however, the sector began rebounding. BLS reported nearly 1.4 million jobs that restaurants added nationwide. Sixty-two percent of surveyed restaurant operators rehired nearly half of laid-off or furloughed staff, according to the National Restaurant Association. The positive change remained in June.
July marked a third month of improvement in sale and employment at U.S. restaurants, according to S&P Global Market Intelligence. Increasing demand for delivery, takeout, and outdoor dining has contributed to the recovery over three consecutive months.
Year-over-year gaps in sales narrowed to below 20 percent in July, the National Restaurant Association reported in its August 14 report. Sales in May had declined from the same month of 2019 by 38.1 percent. June also fell short by 22.4 percent year over year.
Uncertainty of the Industry’s Future
While noticeable shortfalls from the previous year’s performance remain, the restaurant industry’s sales and employment have slowly but surely improved. Most publicly traded U.S. restaurants posted stock gains through mid-August, according to S&P Global Market Intelligence.
The recent surge of COVID-19 cases, however, has slowed the promising trend of May and June. The industry may face uneven job growth and sales in the coming months due to these uncertain factors.