New capacity limits will destroy most remaining restaurants


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The beatings will continue until morale improves: The new capacity limits being imposed by state governments due to their panic over the Wuhan flu will likely destroy the bulk of the remaining restaurants that have managed somehow to get through the lock downs.

As some states across the country allow businesses to reopen with limited occupancies, there are still serious obstacles in the paths of restaurant owners. In those Tennessee counties that have already reopened, restaurants can’t exceed 50 percent of their maximum occupancy. Restaurants in most of Iowa will also have the option to reopen at half capacity. Those in Alaska will be limited to 25 percent capacity, and will only seat diners who make reservations in advance.

Ryan Pernice, who owns three restaurants north of Atlanta, didn’t jump with excitement when Georgia Gov. Brian Kemp released a list of 39 guidelines in advance of a push to open certain businesses — including restaurants — on April 27. Most notably for restaurant owners, the guidelines do not allow more than 10 patrons per 500 square feet in dining rooms. After Pernice closed his restaurants on March 17, leaving just one of his restaurant kitchens open for delivery, he sat down to crunch some numbers.

Even with the lights and the walk-in refrigerators turned off, running a restaurant remains an expensive endeavor. Pernice decided to continue paying for services, like pest control, that couldn’t just be ignored, as well as major costs like rent and outstanding vendor invoices. To break even and cover expenses at Table and Main, Osteria Mattone, and Coalition — his three restaurants — would cost $4,128 a day. Though he’ll take the measurements and rearrange the tables to see if reopening is feasible, Pernice can’t imagine hitting that number with only half of the seats in his restaurants occupied. “Not having run the numbers, I seriously doubt that in Table and Main, a tiny restaurant of 1,800 square feet, that I could make more doing sit-down dining than I can right now through our takeout … I think there’s very little to be gained by being the first to this party, in terms of opening the dining room again.”

In other words, under these new rules, a large percentage of the remaining restaurants will be unable to make a profit and die.

The lock downs are expected to bankrupt 20% of all restaurants, putting more than 8 million people out of work. These new rules will probably destroy, at a minimum, another 40%, mostly the smaller, independently owned businesses.

And the rules are absurd, on their face. They will not stop the spread of COVID-19, in the slightest. All they will do is destroy the lives of the people who own the restaurants.

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12 comments

  • mkent

    Just a note to record that yesterday, 04 May 2020, the United Statues recorded its 69,801st death due to Covid-19, surpassing the total of the 1957 Asian flu. That makes Covid-19 the third deadliest pandemic in American history, behind only the 1918 Spanish flu and the 1968 Hong Kong flu.

    At current rates, Covid-19 will pass the Hong Kong flu by the end of the month.

  • Andrew_W

    They will not stop the spread of COVID-19, in the slightest.
    Except when people actually practice the rules around social distancing as they have done in most Western countries, dramatically reducing transmission of the virus, bending the curve downwards.

  • john hare

    Florida “opened” yesterday. Restaurants to 25% capacity. I took the crew out to lunch for the first time in two months. 3 booths out of +-50 occupied with more staff than clients. Still can’t get a haircut or go to my dentist.

  • NavyNuke

    The CDC 1957-1958 H2N2 web page lists 116k for the US when it had a population of 172M. We need to reach ~225k to match that fatality rate. I think we will exceed that number but not this month. We have a much higher fraction of our population today that is 60+ than we did in the 1950s.

  • Cotour

    Just now a friend emailed me:

    As a massage therapist I won’t be able to wear a mask gloves and sterilized equipment but the gym I work for will be open for people to use treadmill….. ???? Sigh. And my liability won’t cover me if somebody claims that I passed Covid to them. Going to be long time before Im allowed to work.

    My response:

    Yes, as long as this declared national emergency is in place business insurance will be / can be / is an issue. You should consult your insurance company to find out what exactly your coverage is in this situation.

    I think the only thing you can do is if you do work document that you are wearing a mask and have proper ventilation where you are working. And possibly a release from your customers? People are going to need physical / massage therapy and a way will be found to safely and properly provide that service.

    Figure it out.

  • Edward

    mkent noted: “that yesterday, 04 May 2020, the United Statues recorded its 69,801st death due to Covid-19,

    This means that already a quarter of the people have died that Fauci said we were going to save by shutting down our economy and locking down our population. The futility of it all is disturbing. The consequences are upsetting. Yes, I am enraged about it all. It is all just one big series of cluster bleeps.

    How happy I am that some states did not stupidly shut down their own economies or lock up their populations.

  • Rick

    The article assumes that restaurants that have been doing take out will drop that in order to open 25% of their tables.
    I think that they should be able to do both, and hopefully be able to survive until the restrictions ease some more.

  • mike shupp

    I don’t think this is going to destroy all restaurants, but it’s going to wipe out quite a few . I think the places that charge 115 bucks for a single entree will continue to exist quite happily serving their affluent customers. It’s going to be rough at MacDonalds and Dennys, I expect. Perhaps over time, a number of restaurants will make a go of it with one third as many tables and somewhat higher prices. Not necessarily prices three times as high — the idea will be to find prices in this new age so that one table generates three times the profit and contribution to expenses that one table generated in the golden days of 2019. I do think that’s going to cause a real drop in restaurant use by middle and lower income patrons.

    As to the “fairness” of this …. stuff kind of happens. I think of Covid 19 as being rather like a big war. The economy isn’t going to be the same when we’re at an end to this, and people will adjust and eventually find it “normal.”

    I recall as a kid, back in the mid to late 1950’s, moving from rural Ohio to the San Francisco area, and then to Vermont and then back to Ohio, sitting in the back seat of an old Nash Rambler. Super highways were rare back then and fast food places non-existent, so my family ate at a lot of hole-in-the-wall “restaurants” that seemed to specialize in hamburgers and roast beef sandwiches. The Mom & Pop eateries were pretty much gone by the end of the 1960s, and not too many people have lamented their passage. So we can endure this change.

  • wayne

    Jon Taffer: Resetting America
    Restaurant & Bar Recovery Podcast Series
    April 30, 2020
    https://youtu.be/WDynA4kK3ZE
    21:24

    “Jon Taffer of Bar Rescue, discusses innovative ideas to save the bar and entertainment industry post COVID-19. The expert behind building back the bar business is resetting America during this unsettling time by enlightening us with unique concepts to resourcefully conduct business in the new era of dining and entertainment. A revolution around operations are discussed including compartmentalizing areas within the restaurant and bar setting, technological advancements for safe, contact-less service and an emphasis on re-engineering menus.”

  • pzatchok

    I was talking to a friend the other day about his bar/restaurant.

    When this started he had to lay off almost everyone(10 bartenders and wait staff). He concentrated on carry out and selling off his beer stock.
    A week later he started to rehire his people. Now he is looking for even more people.

    He is selling more now than ever. Carry out is expanding his business.

    Someone gave him a cash “gift” when this started to give away free 12 inch pizzas. He is still doing it. People keep gifting him a few bucks to keep the give away going.

  • Edward

    mike shupp wrote: “,i.As to the ‘fairness’ of this …. stuff kind of happens.”

    This didn’t “kind of happen.” It was imposed upon us by those we elected to protect us from this very kind of economic destruction.

    I think of Covid 19 as being rather like a big war. The economy isn’t going to be the same when we’re at an end to this, and people will adjust and eventually find it ‘normal.’

    What an excellent analogy. Now, if we can only find a country rich enough to provide us with a Marshall Plan so that we can recover from the economic and productivity destruction.

    The Mom & Pop eateries were pretty much gone by the end of the 1960s, and not too many people have lamented their passage. So we can endure this change.

    Actually, Mom & Pop eateries are still around in large number, or were before the shutdown. Mike has difficulty seeing them for the forest of fast food places. Back in the 1950s and 1960s, people did not eat out as much as today, which is why he really only noticed them during his travels, when the kitchen at home was not as available.

    Wouldn’t it be too bad if we endured this kind of change, to tyranny, and eventually found it “normal?” “Normal” used to be “secur[ing] the Blessings of Liberty to ourselves and our Posterity.” If this become the new normal, how well would we have done at that task? The new “normal?” Securing the Yoke of Tyranny to ourselves and our Posterity, Obeying those who are more Equal than the Rest of us.

    Just as the Wuhan flu reaction suffered from mission creep, there are those who are willing to accept mission creep to the supreme law of the land, the Constitution.

  • Cotour

    ” and maintain a 30-day running log of all customers – including their names, the time they were present, and “telephone/email contact information.”

    https://disrn.com/news/washington-state-restaurants-required-to-keep-log-of-customers-to-re-open

    I would never participate in this system, I would never go to any restaurant that was mandated to do such.

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