COVID-19 is changing the way we do business, the way we buy … and how all of this affects retail and other businesses
Greetings from my home office in New York. It’s my Week 6 with COVID-19 changing the way you and I literally live our lives. I’m sincerely hopeful you and your families are safe and remaining well. In this week’s installment of this special report on how this crisis is impacting businesses and changing their tax landscape, I take a deep dive into how those who own and operate restaurants and bars feel COVID-19 is affecting their industry, their businesses … and what governmental action may be required for their very survival. You can follow this series and more information on sales and use tax on our blog.
This is the sixth blog in this ongoing series.
National Restaurant Association Survey Provides Further Insight in How Devastating Restaurant Owners Believe COVID-19 Will Be on the Industry
Restaurants are clearly among the hardest-hit industries as the coronavirus pandemic has forced closures across our country.
To assess the economic impact of the coronavirus to date, the National Restaurant Association (Association) conducted a survey from April 10–16 of more than 6,500 restaurant operators nationwide (owners/operators of eating and drinking places, which employ 12 million out of the total restaurant and foodservice workforce of 15.6 million).
Through April, the survey found that the industry will lose $80 billion in sales and 8 million jobs, more than any other industry in the country. To deal with this, on April 20 the Association asked Congress for a focused restaurant relief and recovery program that goes beyond the various economic stimulus bills that Congress passed, which includes hundreds of billions of dollars to support small businesses, including restaurants and their employees.
Key Survey Findings
The Association survey indicates that restaurant job losses and sales are deep, widespread across segments. The findings include the following:
- 8 million restaurant employees have already been laid off or furloughed since the beginning of the outbreak.
- That represents 2 out of 3 restaurant employees who have lost their jobs.
- The restaurant industry will lose $80 billion in sales by the end of April and will sustain $240 billion in losses by the end of 2020.
- 4 in 10 restaurants are closed.
- 97% of restaurant operators say their total dollar sales volume was lower than it was during the same period in 2019 and their sales are down 78% on average.
In addition, 88% of restaurant operators say they laid off or furloughed employees since the beginning of the coronavirus outbreak in March. On average, these operators cut 83 percent of their restaurant’s total staff. Forty-one percent of these operators laid off or furloughed 100 percent of their staff.
Read the full survey details here.
Infographic courtesy of the National Restaurant Association.
Broad federal economic stimulus legislation, including the Paycheck Protection Program, which provides for hundreds of billions of dollars in aid for small businesses and their employees, will certainly help the restaurant industry and their employees. However, many believe that it simply will be insufficient, both in terms of amount and speed with which these funds will be received, to save many of these businesses.
As states begin the process of opening their economies, some have scheduled for opening restaurants in the second wave of the opening process. Depending on how all of this plays out from both health and consumer behavior perspectives, the hope is that these activities will help to lessen the negative impact on restaurants and their employees.
I will continue to closely track the impact of the COVID-19 pandemic on businesses in all sectors around the country. Please follow this series for further information guidance as we move forward.
This special report is part of an ongoing series from Wolters Kluwer focusing on tax and business developments, legislation and government relief efforts and other COVID-19-related activities. If you have questions, concerns or need additional insight on your situation, you can reach out to author and sales and use tax expert, Mark Friedlich at email@example.com.
COVID-19 (Coronavirus) Resources for Tax & Accounting Professionals
Wolters Kluwer is right by your side to help you stay up to date with tax and compliance changes and support your ability to work remotely. Please visit our Coronavirus (COVID-19) Resource Page for Tax & Accounting Professionals.