store closed

Will 50% of restaurants close permanently from the COVID-19 fallout?

While many people are hoping for a V-shape recovery for the economy, restaurateurs aren't so optimistic. It is scary to think about what the restaurant landscape might look like in the fallout of COVID-19 especially for fine dining which simply can't operate at half capacity.

Top Chef judge Tom Colicchio believes that between 40-50 percent of restaurants will permanently close. A James Beard Foundation survey reported that 38 percent of its respondents had closed temporarily, and potentially permanently. This has huge implications for the industry and long lasting job losses. 

Danny Meyer, founder of Shake Shack and Union Square Cafe, says that in his over 30 years experience if you are operating at below 80 percent capacity, then a restaurant isn't profitable. Because of social separation guidelines, restaurants won't be able to operate anywhere near 80 percent capacity and one wonders how many great American eateries will be forced to shut permanently.

One of the world's best restaurants, Eleven Madison Park, already said that they may not reopen after the pandemic subsides. David Chang's Momofoku group has already announced two of his restaurants will permanently close. James Beard nominated restaurants Auburn and Bon Temps had little to celebrate, instead closing their Los Angeles doors.

Jobs not coming back

In just two months, the economy has lost 36 million jobs with 22.83 million continuing jobless claims. Of the jobs lost, 28 percent of them are in the restaurant and bar industry. 

If many restaurants are closed and the others running at half capacity, the job losses could still be over 3 million unemployed in the industry at year end. 


While the future may look bleak for the industry, chef David Chang believes the industry is made up of fighters who will innovate and adapt to the future. For his company that means diversifying. 

“We cannot be this vulnerable ever again,” he says. “There’s no excuses, and I hope the government helps out, but we cannot operate thinking the government’s going to help out. So we have to be proactively making decisions thinking that no help is going to come. That’s diversifying. That’s making sure not all our eggs are in one basket: restaurants.”

This is what makes America great, and we believe that some companies will not only survive, but will thrive in adapting to the new normal. Entrepreneurs will find ways to innovate and to make the world a better place. While the future will certainly be different, perhaps the changes will be for the better.

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"Store Closed" by crazytales562 is licensed under CC BY 2.0

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About the Author: Chris Wang

Chris Wang


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