Headline Diplomat eJournal: Issue 1
The perilous lenses of COVID-19: The impact on the economy
Tayo Williams, Journalist, Headline Diplomat, LUDCI.eu
COVID-19 needs no introduction. It has disrupted our lives in a dramatic fashion. Lockdown measures all over the world have severely disrupted every business fibre of the economy. It has redefined the way we live and work and ushered in what is now being termed “the new normal”.
In the US, restaurants employ over 13 million people, and contribute $1 trillion. Independent restaurants are the backbone of many communities around the world. BankruptcyData indicates that the restaurant industry had the highest bankruptcy number. Around the World, many of the most successful businesses have sustained fatal blows from the lockdown measures, resulting in severe unemployment and eventually impoverished populace.
Starting with the big names – unexpected bankruptcies have been filed. The operator of Pizza Hut and Wendy’s has filed for Chapter 11 bankruptcy protection following closures of their locations due to the pandemic. NPC international – the largest franchisee of Pizza Hut restaurant in the U.S. with more than 1,225 Pizza Hut locations and over 385 Wendy’s stores in the country has filed for Chapter 11. FoodFirst Global restaurants – another chain of restaurants with 92 units have equally filed for Chapter 11 bankruptcy protection, subsequently shutting down 71 of their units. The owners have started selling off some of their locations. Popular buffet chains, such as Souplantation and Sweet Tomatoes, Le Pain Quotidien, and HopCat brewpub chain have also closed down.
These owners undoubtedly lost their business and part of their income. The same is not to be said for small restaurants run by single mothers, and households who face crippling debts and imminent impoverishment. For them, it has been losing their entire livelihood. La Morada is one of such restaurants that had to shutter its doors due to the pandemic. It was run by all members of the Saavedra family in the South Bronx. It was their only source of livelihood until it was closed. This family would not be getting any relief package from the government because they are not documented. Independent restaurants like La Morada make up about two-thirds of the restaurant industry.
For the Lovedays – the restaurant was their only retirement plan and inheritance to pass on to their children. As of last year, the couple had invested all their life’s savings into setting up Bacaro Kitchen and Wine Bar in Texas. The effect of shuttered doors just one year later could very well mean shattered dreams for the Texan seniors. Bill said, “I don’t see any light at the end of the tunnel right now”. Anna Roš, Chef of Slovenia’s Hiša Franko, has lobbied the Slovenian government to reopen its border to save her business and the livelihoods of her team members.
These local independent restaurants employ over 13 million people in the U.S. The problem with these independent restaurants isn’t just that some 7 million people will be laid off without much by way of a severance package. It is also about the ripple effect on the supply chain. Millions of farmers, beverage suppliers, delivery people, manufacturers, launderers will suffer because these restaurants closed.
While many physical diners and live event pubs took serious hits from the stay-at-home directives, some restaurants have managed to take advantage of the internet and phone to stay afloat during this period. Ghost kitchens that serve online food orders are surviving.
In the U.S., digital restaurant orders showed an increase by 63% and delivery by 67% in March, according to The NPD Group. Boka is a Balkan restaurant located in Kuopio, Finland that offers uncomplicated food with deep Mediterranean roots and rich flavour. The lockdown restrictions brought empty dining rooms for weeks before they had to fully move online. Sugarfish, a chain of 13 restaurants in New York City and Los Angeles has turned to what is now being called “contactless delivery” in order to stay afloat and avoid laying off several dozens of workers. All workers who are not involved in direct food preparation have been assigned to delivery duties.
Alex Theodosiou, SaddleBrook Diner, New Jersey discusses how shockingly unnerving these times are. “Unbelievable times. We are in absolute shock – so many people – so many deaths. My prayers go with the families that stay back. The pandemic has brought unsurmountable personal and professional loss. And we have all mourned – it is now time to put our chin up and keep fighting. There is nowhere else to go. Nothing else to do. No way out” – he said.
New Jersey, the diner capital of America has a dwindling number these days. Many diners are no longer able to make ends meet, while others have permanently shut down, counting down to 23% of closures – a number that is still climbing. “These are predominantly small, independent restaurants that don’t have the same access to capital or credit that some of the larger, more established places do,” said Marilou Halvorsen, President of the New Jersey Restaurant & Hospitality Association to NorthJersey.com.
One of the few diners that managed to stay afloat, SaddleBrook Diner, brings a wealth of 30 years of experience in the business. Theodosiou, recalls bad times both personally and professionally but remembered his parents’ words to never give up. So, he continued with call orders and takeout throughout the confinement period. Difficult days and nights, “But our lights remained open. We gave hope. We took orders with a smile. We delivered food with a big heart – this is what we do”. The diner is now open to outdoor dining, the nearby streets, and sidewalks. “It is not exactly the way to run a business, but desperate times call for desperate measures” – Theodosiou stressed.
Conclusion:
The Covid-19 pandemic has touched every sphere of the world’s economy. The restaurant industry has not been an exception. The cruelty of its effect is amplified by the ordeal of several unpopular local restaurants who are too small to ride out protracted closures. Many celebrity chefs such as Tom Colicchio and Chris Cosentino have started forming groups to lobby the government to provide support for independent restaurants. We use this medium to amplify their message. We also call on customers to help out as much as they can. Several small restaurants are open around the country and are selling gift cards and certificates. These are like microloans to help them stay afloat. Governments around the world must review their intervention plans to focus on the restaurant industry.
During these critical times, millions of livelihoods are at stake. The restaurant community has seen a dramatic decline in sales, running out of money and time to support their operations and continue paying for wages. Supporting your local restaurants by calling in, ordering online, and sitting out to dinner can count on that income later. During these turbulent times, we would need to rally for each other. Check out the latest restaurant insights here.
Featured photo by Tatiana Syrikova, Pexels
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