A Difficult Winter for Sit-Down Restaurants Benefits Fast Casual Chains

There’s no way to gloss over the devastation Covid-19 brought to food service retail. 110,000 restaurants have permanently closed this year, and 10,000 of those closures occurred over the past three months, according to new National Restaurant Association data.

For the sit-down restaurants that remain, there’s a balancing act of managing ongoing Covid-19 concerns and shifting, retightening state restrictions on indoor dining.

Seeking solutions

“Outdoor” dining: What started as the occasional heat lamp has warped into cabanas, tents, and yurts. Diners may be enticed to book a reservation, but they’re not perfect fixes.

• Enclosed sidewalk dining eliminates the airflow epidemiologists suggest for a safe experience.
• Winterizing outdoor dining also requires more 1) space and 2) cash than many struggling restaurants can afford.

Overnight stays: Bloomberg reports that a handful of restaurants are setting up shop in empty hotel rooms for private, small group dining.

• One restaurant owner trying this model said diners are willing to pay slightly more than a typical meal for the extra experience.
• Some are allowing diners to bundle their dinners with an overnight stay.

Creative, but...

All that ingenuity isn’t a substitute for federal aid, according to many industry analysts. Talks for a new business relief package are ongoing, but more restaurants will likely shutter before it’s approved. According to National Restaurant Association data, 83% of restaurant owners expect sales to get “even worse” over the next three months.

Without a new plan...the estimated $39 billion that evaporated from the restaurant industry with business closures creates opportunities primarily for mass chains.

• They know it: Starbucks CEO Kevin Johnson already said its coffee shops will become “destination No. 1 for community" once a vaccine is available.

But those businesses say they want to keep indie coffee and takeout alive. Starbucks and McDonald’s are among the nationwide chains requesting additional government aid for restaurants.

Zoom out: As neighborhood establishments disappear, so do many middle-class jobs.