Restaurants everywhere have been forced to close in order to curb the spread of the coronavirus. Experts predict that because of the widespread shutdowns, the restaurant industry could lose up to 7.8 million jobs and a quarter of its annual sales. Many smaller restaurants will not survive. On Wednesday, the restaurant industry requested at least $325 billion in federal aid to help keep it alive through the pandemic.
The National Restaurant Association (NRA), in an open letter to President Donald Trump, Senate Majority Leader Mitch McConnell, and House Speaker Nancy Pelosi, asked for immediate cash funds, insurance, loans, and tax breaks for the industry. They are seeking $145 billion for the Restaurant and Foodservice Industry Fund, another $130 million in disaster unemployment assistance and $100 billion of federally-backed business interruption insurance. The coalition is also calling for $45 billion in loans and $35 billion of block grants and tax reforms.
This seems like a huge request, but the request is justified by analysts at the NRA claim who claim that in the three months, during which most cities will be in full lockdown, restaurants will lose $225 billion in revenue. Beside sales being down, closures will cause millions of cooks, hosts, servers, and managers to be laid off. New York’s Union Hospitality Group alone has announced they’ll have to lay off 2,000 workers.
At a time when consumer spending is vital, having large numbers of unemployed people will further deepen any economic downturn. The NRA notes that for every $1 spent at a restaurant, $2 is then generated elsewhere in the economy.
In most cases, the health of the restaurant industry represents the health of the economy because spending at restaurants usually indicates that the population in general has an income higher than the cost of their basic needs.
Sean Kennedy, Executive Vice President of Public Affairs at the NRA, said, “This is a public health crisis that needs a public response… We want to make sure we have an economic lifeline… We cannot do that on our own.” There have been few details released about the stimulus package, but it is clearly one of the most important economic steps that can be taken to moderate the economic effects caused by the virus.