Restaurant Association says industry on ‘precipice of collapse’

By CBJ News Staff
news@corridorbusiness.com

The Iowa Restaurant Association has released dire statewide numbers indicating sales are down an average of 75% at restaurants and 89% at bars, with an estimated 66,000 workers laid off or furloughed since the beginning of the coronavirus outbreak in March.

“Iowa’s hospitality industry is on the precipice of collapse,” Jessica Dunker, president and CEO of the Iowa Restaurant Association said in a release. “We desperately need to find a path to responsibly open our doors, even if it’s a graduated, rolling re-open strategy that includes social distancing measures. The longer these on-premise service suspensions are extended, the more operators we will permanently lose.”

The national and state associations conducted independent studies last week, one month into Iowa’s mandated suspension of on-premise restaurant and bar service due to COVID-19. The Iowa study included 650 hospitality operators, or 10% of establishments, from across the state.

“It’s hard to say which indicator is most distressing,” said Ms. Dunker. “Sales declines, job losses, waning prospects of re-open and re-hire, or how little help the various relief programs have provided. You just can’t put a bandage on a hemorrhage this big.”

The Iowa and National Restaurant Association studies of Iowa operators found that:

• About 95% of Iowa restaurant operators report their total dollar sales volume is down from this time last year. When compared to 2019, survey results indicate Iowa’s restaurant and food service industry will lose more than $310 million in sales in April alone.

• Eighty-seven percent of Iowa’s restaurants and bars have laid off, furloughed or terminated employees in the past 30 days, with only 45% projecting being able to re-hire all of the employees they released.

• Fifty-eight percent of restaurants, bars and other hospitality venues that offer food are trying to use carryout, drive-thru and delivery to stay afloat. However, for most it’s not profitable, simply covering the costs of maintaining a small number of employees and paying rent.

• If restaurants are able to fully re-open by May 1, 10% of Iowa operators will be unable to do so. The number jumps to 18% if re-opening is delayed until June 1 and 26% if closures last until July 1.

• According to the Iowa survey, 70% of respondents carried business disruption insurance policies, but 99% of those had not yet received any claims benefit, with many reporting their claim had been denied. Just 17% of restaurant and bar owners said they had received loans through the Paycheck Protection Program included in the recently passed CARES Act. Another 26% had been approved, but not yet received funds.

The Iowa Restaurant Association and the National Restaurant Association are calling for significant new federal assistance, including the creation of a “Restaurant and Food Service Industry Recovery Fund.”

“The state of Iowa has taken a number of steps to try help us — from relaxing rules to granting tax deferrals and small grants,” Ms. Dunker said. “We will work with the state to try to extend and expand those programs where possible, but ultimately, it’s going to take the type of federal-level bail-out afforded to huge industries like the airlines, to save small restaurants and bars. We just hope it comes before it’s too late.” CBJ