Two months since our last report on restaurant statistics, restaurant industry sales continue to whipsaw. In April, sales from Food Services & Drinking Places (NAICS code 722) totaled $30 billion, a collapse of -53% versus April 2019. By June, sales had increased 57% from that trough but were still 36% lower than June 2019 levels.
Prior to the COVID-19 pandemic, restaurants were responsible for 10% of America’s labor force. Despite unprecedented fiscal stimulus, including the $659 billion Paycheck Protection Program that required employers to maintain at least 60% of pre-coronavirus headcount, approximately 1/5 of restaurant workers have permanently lost their jobs.
Today, restaurants employ about 8% of America’s labor force. However, today’s forecast from Chicago’s Aaron Allen & Associates projects that 231,000 of 660,000 U.S. eateries will close permanently this year in the absence of additional fiscal stimulus. Depending on which type of establishment an analyst classifies as an eatery, that number can exceed 1 million. Yelp forecasted an even worse permanent closure rate than Aaron Allen’s -35% rate.
Prior to COVID-19, restaurants employed 12 million workers. From March to June, the restaurant industry shed 3.1 million jobs, according to seasonally adjusted data from the U.S. Bureau of Labor Statistics.
Zenreach CEO John Kelly says that restaurant walk-in traffic in Georgia, Florida and Texas is up 20% since May 1, yet still only half of what it was a year ago.
On February 27, 2020, the century-old National Restaurant Association released its forecast for the full year, estimating $899 billion in 2020 restaurant sales. Its renowned economist calculated “moderate 4% growth rate mirroring general economic conditions.”
Fast-forward two months later, and that same economist forecasted foregone revenue of $240 billion by the end of the year.
Data from the U.S. Census Bureau somewhat corroborates his forecast. Sales from Food Services & Drinking Places for the first half (H1) of 2020 totaled $291 billion, a decrease of -22.8% versus H1 2019. In a year of unthinkably large percentages, that -22.8% figure roughly matches the National Restaurant Association’s -26% forecast, issued on April 21.
Bloomberg today estimates that restaurants contribute 4% to the U.S. Gross Domestic Product. Including ancillary workers and closely associated industries, that is true.
However, assuming restaurants alone will generate $700 billion in 2020 — slightly better than the National Restaurant Association’s forecast — these establishments directly contribute 3.3% of the U.S. $21 trillion GDP. Had the coronavirus pandemic not occurred, restaurants would have generated $899 billion, or a 4.3% GDP contribution. Therefore, it would not be surprising to see restaurants responsible for a full 1% of lost U.S. GDP this year.