Winter is coming, bringing a new challenge to already-struggling restaurants

Key Points

• The restaurant industry is at an inflection point, facing down changing seasons and a lack of additional aid from Washington.
• The National Restaurant Association projects $165 billion in sales has been lost industry-wide from March through July due to the pandemic.
• Outdoor dining, which has sustained bars and restaurants throughout the summer, will be a more limited option this fall and winter.

Just over a year ago, Adam Rammel was struggling to find workers. The owner of local craft beer bar, Brewfontaine, in Bellefontaine, Ohio, was gearing up to open his new events and catering business, and the tight labor market was standing in the way of finding talent.

Fast forward to this fall, millions are out of work and talent is no longer a battle. Instead Rammel's biggest challenge will be a Midwestern winter like no other due to the pandemic. 

Rammel pivoted from operating the events space, instead making it a higher-end restaurant called The Syndicate. Meanwhile, his bar will be operating without the outdoor dining options that have kept him afloat for the last few months. Beyond that, Rammel's facing a 10 p.m. curfew for last call serving drinks and is operating with limited seating capacity to adhere to social distancing requirements.

"The last six months have been some of the most challenging that I hope we ever have to face," Rammel said. "We're fighting every day just to stay afloat to survive. People prefer outside dining right now. We are going to try to get creative, I have been looking at [heated] igloos and everything else to be able to use that space in the winter. Winter is our biggest fear right now."

New data from the National Restaurant Association outline how hard the industry has been hit by the pandemic, with an estimated $165 billion in sales lost from March through July and more than 8 million workers either furloughed or laid off at the peak of the outbreak. The industry advocacy group projects that 15% of all eating and drinking places, some 100,000 establishments, are not open for business in any capacity. It remains to be seen how many of these closures become permanent.

"We are at an inflection point in the industry. First, the seasons are changing, we've been limping through high season and are about to go into the low season. We are doing that when the industry continues to be at its weakest point, ever," said Sean Kennedy, the association's executive vice president of Public Affairs. "And so far, the federal response has been to provide eight weeks of federal funding for a pandemic that has brought this industry to it knees for six months now."

The group's survey of more than 3,500 members finds that sales are down by about a third, and nearly 40% of operators say their restaurants will likely be out of business in six months if economic conditions remain. As sales declined, 60% of respondents also said they were spending more on operational costs as a percentage of sales.

"The average restaurant has 16 days of cash on hand," Kennedy said. "It is just simple mathematics that something needs to be done."

Despite many job losses in the industry at large in recent months, publicly traded restaurant names have been on a hiring spree as consumers opt for digital ordering and contactless experiences. Domino's, Papa John's, Chipotle, McDonald's, Dunkin', Wingstop and more have said they're looking for a combined half a million workers as business booms. The National Restaurant Association survey finds nearly 70% of operators have added curbside takeout and about a third have added third-party delivery to boost business while facing down limited operations.

Small businesses beyond just those in the restaurant industry are in dire straits waiting for Washington to move ahead on a next round of aid. Recent data from the National Federation of Independent Business finds that one in five businesses say they will have to shut down if economic conditions don't improve within the next six months. The survey from the advocacy group finds that 84% of respondents have used their entire Paycheck Protection Program loan, with the remainder likely not far behind. Forty-seven percent of PPP  loan borrowers anticipate needing additional aid in the next 12 months, the survey of 562 members found.

Rammel has run through his $160,000 in PPP funds and his disaster loan from the Small Business Administration, and said a next wave of aid is crucial.

"Mom-and-pop independent restaurants are the lifeblood and character in our small towns," he said. "We need all the help we can get."