Last Year a disaster for hospitality industry
By Paul F. Vang
(Reprinted with the permission of Paul F. Vang – first appeared in the Montana Tavern Times newspaper)
Yes, we finally made it to the New Year, and there are hopes that this will be better than last year, as immunizations for COVID-19 roll out and as more and more people get vaccinated, we should finally get a handle on the pandemic and start figuring out a new normal.
The coronavirus pandemic affected most everyone in one way or another, but it’s clear that the hospitality industry took the biggest hits, and it’ll likely take longer for it to recover.
The restaurant segment is likely the hardest hit segment of the hospitality industry. A pymnts.com (a business news website) report suggests that closures to slow down the spread of COVID-19 could permanently close as many of a third of U.S. restaurants. The report refers to a Financial Times estimate that one in six U.S. restaurants has already closed for good and more are coming.
Among the restaurants forced to close are some iconic places such as 157-year old Cliff House in San Francisco and 90-year old Club 21 in New York City. The New York Daily News reports that the famous eatery may reopen in the future, but some 120 workers fear that they won’t be rehired.
This isn’t a U.S. phenomenon. Thedrinksbusiness.com reports that some 50,000 hospitality businesses in England will go under by the end of the pandemic. This includes both bars and bar/restaurant combinations.
The National Restaurant Association reported that the restaurant industry is in free-fall, with some 10,000 restaurants closing over the past three months, and some 500,000 restaurants of all business-types being threatened. Sean Kennedy, the National Restaurant Association executive vice president for public affairs, warned, “For every month than passes without a solution from Congress, thousands more restaurants will close their doors for good.”
Edward Lee, a Louisville chef and restauranteur, with two sites in Louisville and one in Washington, D.C., was forced to close the doors to his businesses. In an interview with Bon Appetit magazine, he commented, “We’re trying our best to keep everyone hopeful, but at the end of the day, it feels like piling sandbags against the tsunami.”
Another report from the National Restaurant Association estimates that restaurant sales dropped 4 percent in November, and most operators expect business conditions to get worse during the winter months. The November decline is partly due to the end of the outdoor dining season in many parts of the country. This comes after an estimated shortfall in restaurant and foodservice sales of $235 billion during the last nine months.
A footnote to outdoor dining was the news a week before Christmas, as reported by the New York Post, when the Cuomo administration in New York ordered that hardy outdoor diners cannot enter the facility to use indoor restrooms. After an uproar from businesses, as well as NYC Mayor de Blasio, who called the ruling “stupid”, the State reversed itself, with Governor Cuomo commenting. “There was never an intention to tell diners that you can’t use a restroom.”
Gavin Hattersley, CEO of Molson Coors, believes the pandemic has changed the way the world drinks beer – maybe for good, according to a report at chicagobusiness.com. Hattersley added, “It will take a very long time to recover to 100 percent of bars and restaurants, if we ever get back to that level,” and even when establishments reopen, they will likely stock fewer brands. On the other hand, it hasn’t been all bad news for Molson Coors. In general, consumers have favored brands they know well, such as Miller Lite and Coors Light. Retail sales have increased more than 10 percent.
The pandemic has hurt craft distillers much more than major spirits producers. According to a thedailybeast.com story, craft spirit sales often are generated by recommendations from a bartender, or from the distiller’s own tasting room. Both of those avenues to sales have been severely limited by various shutdowns, even while premium spirits have had booming sales.