How Coronavirus Has Affected the Restaurant Industry

the way things were. Real time industry data is showing that while people are starting to get out there, restaurants are only seeing a fraction of the business they used to have, partly due to capacity limits for social distancing. The estimates are still dire as to whether some businesses can remain open after the comeback. Jordan Weissman, senior economics reporter at Slate, joins us for more. Thanks for joining us.

Jordan's Hey, thanks for having me on. I wanted to talk about restaurants and how they're gonna be faring as states are reopening. I think all fifty states now are starting to reopen in some capacity. The restaurants scene is varying, obviously state by state, but the restaurant industry really one of the hardest hit industries in this whole coronavirus pandemic.

There's been a lot of restaurants who have managed to stay open just doing delivery and take out, But there's a ton of other restaurants who have clothes throughout this and might never reopen. And as we're seeing some states reopening, we're getting some headlines and some good shots of people actually making out to restaurants, but it could be a

little misleading. We get a lot of real time data from the industry, from places like open table and other places to do analysis on restaurants and people eating out, and the numbers aren't all really, they're just yet. So Jordan, tell us a little bit about what's going on with restaurants.

You know. The first thing I want to say is before you even get into the numbers, some people ask me why do we care so much about restaurants specifically right A lot of different small businesses are hurting right now. Why is it such a big deal how the food industry is doing. And one very simple and not technical answer to that is people like to eat out. Like a restaurants are a huge part of just like the cultural fabric of cities and towns, and there are part

of what makes going out on a weekend fun. People can are about these They with def emotional attachment to restaurants, but also there are economic reasons to care about this industry. It's a huge employer. There are more than six hundred thou was in full service restaurants in the country that haven't essentially shut down in some capacity or another, partially or entirely because of this crisis. There are millions of

jobs attached to them. And the more of these businesses that go busts, that don't make it through this crisis or its immediate aftermath, the longer it's going to take for the whole economy to heal. The more small businesses that disappear and can't bring their workers back, the longer it's going to take us to kind of crawl out of this hole we've ended up in. So it's important how quickly restaurants can recover, and at the same time, you have to balance their concern for their business with

public health issues. Right. So, what we're seeing is that, yeah, there are all these stories about how in Georgia, restaurants in some places are getting packed again, and how you know, in Texas you're seeing people show up at dinners and stuff. But if you actually look at the numbers, they're not

quite as encouraging. You mentioned open table, which is actually a surprisingly youthful data source right now, because they track obviously reservations made on their platform, but they also track walk in diners and people who make phone reservations, because people who run restaurants use the software for a bunch of different tasks, and they'll tell you that right now, the number of diners at restaurants in places like Georgia are still down about eighty percent in Florida, same thing

in Oklahoma, which is doing as well as anyone it's closer to. And you can look at other data sources too. There's credit card activity data that suggests that of restaurants are entirely closed in places like Texas and Alabama and Arizona, which has been a lot of handfair about how these states are reopening again. That's a fifth to a quarter of restaurants they are not doing any business at all, not even doing takeout. Again. There's this one company called Toast,

which is essentially a point of sales software provider. You know, when you go and swipe your credit card at a restaurant, they are the ones who are recording your sale or recording what was charged on your check. According to their data, total spending year over year at the well early bird states as I refer to them in my teeth, are still down again. Total spending of restaurants is down year

over year. In states that have reopened early it's gradually recovering, but those are not the kind of numbers that are going to sustain a business if that continues. A lot of them are not going to survive with the reopening, and a big part of that, obviously is the social distancing measures that are put in place. You know, restaurant is not going to be able to fill to capacity

anytime soon. Just looking at kind of where all the states stand right now, there's a handful of states that are letting restaurants open at fifty percent capacity, but the vast majority of them are either twenty five or thirty

three percent capacities, which you can have in there. So a lot of times these restaurants, depending on how many covers they have throughout the night or throughout the day, they're barely meeting the expectations that they need to keep the restaurant open and to make any type of profit there. So these capacity limits are going to be hurting them for some time to come. Leading it's going to be a long, slow recovery for them because they're not gonna

be able to hit that's been very quickly. A restaurant can handle having half the three quarters of its tables empty on a Monday night, it cannot handle it if that's every Friday, Saturday, and Sunday. They will not survive that way. It's that clear and simple. And so the question is how long will these social distancing measures have to stay in places the stake of public health. My guess is probably for a while. Even in places where the number of infections is fairly low, people are nervous.

They want these protections in place, and so do the local officials. And then second is what else can they do to make money. One option that's promising is to expand the amount of outdoor seating for the summer, and that seems to be what I'm told has happened in South Carolina, which is probably having one of the quickest recoveries right now. Restaurants in Charleston are being given a lot of sidewalk space and that's allowed them to start

making up business a little bit quicker. But to me, it seems pretty obvious that they're going to have to be some longer term support programs in the government in order to make all these businesses survive or at least tried to water until things get a little bit more favorable for them. So far, what the data is showing is that is kind of a good news bad news scenario. It's good news that the states are reopening their restaurants. People are getting out there, although not to the capacity

that we wanted to just yet. But on the flip side, the bad news is that how long can these restaurants be sustainable that way? And in a lot of cases it doesn't seem that they will be able to survive. So it's this tough balance that needs to happen. I would even go a little further and say part of the good news here is also that it doesn't seem

like people are being too irresponsible. Right. We've seen all those pictures of and I guess you know, videos of like crowds running back to brunch or whatever, But it doesn't seem like that's the norm. Places are not packed to capacity. Businesses and diners are gradually returning to the dinner table, and so that's not a bad thing if you're worried about public health. Just the question is, since everyone is worried about public health, nobody wants to take

crazy risks. How do we make sure that these vital businesses that we all love and cherish don't just get wiped out. Yeah, definitely something big point of concern for everyone. Jordan Weissman, senior economics writer at Slate, Thank you very much for joining us. Great by Oscar Ramirez, and this

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