Industry Has Already Lost 110,000 Eateries While Bracing for Another Grim Period Ahead
Restaurants are “under siege,” according to the industry’s largest trade group, but Shake Shack founder Danny Meyer said now is the best time to think about opening one.
During a stretch when pandemic-driven social-distancing rules have led to more than 110,000 eateries closing forever, including his own Blue Smoke barbecue restaurant, and when the National Restaurant Association is ramping up its calls on Congress to pass a second round of relief funds, Meyer sees opportunity.
“It’s been pretty dire,” the CEO of New York-based Union Square Hospitality Group said on CNBC. Independent restaurants have suffered the most, particularly those not in warm-weather destinations, he said.
But fast-food and fast-casual restaurants, including Shake Shack, have fared better, catering to consumers’ desires to eat “out.” And now, with the promise of COVID-19 vaccinations coming, Meyer thinks even those who have never owned a restaurant should consider opening one soon.
This is “absolutely” the “best time,” Meyer said. “If you can hang in there for another six months or so, you are going to walk into the best possible scenario.
“The rent structure is going to be so much more rational and not based on a set of circumstances that no longer exists,” he said.
In populous cities such as New York, Los Angeles and Chicago, lease rates often are based on the density of nearby residential neighborhoods and business areas that include tourists and workers in surrounding office towers who take lunch breaks as well as dinner meetings.
Meyer, a 40-year industry veteran who owns such high-profile establishments as the Gramercy Tavern, Battery Park City and Union Square Cafe, also noted that build-out opportunities will be better too, considering how many restaurants have gone dark and how expensive it is to construct one from the ground up.
“Whomever gets into this business in the next six months has a golden opportunity,” he said. “People are still going to want to go out and eat, probably more than ever.”
That may be so, but the industry is bracing for another grim period ahead — possibly even for longer than six months. As COVID-19 infections continue to climb and some cities and states reissue indoor restaurant and bar closures, the National Restaurant Association reupped its call on Capitol Hill to gin up “immediate relief” to those establishments.
Stressing that the nation’s second-largest private-sector employer is in an “economic freefall,” Sean Kennedy, the National Restaurant Association's executive vice president of public affairs, urged legislative leaders to “finally reach agreement on a compromise coronavirus relief package for our industry and employees, our suppliers, and the communities that rely on the strength of the industry."
“More than 500,000 restaurants of every business type — franchise, chain and independent — are in an unprecedented economic decline, and for every day that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good,” he said in a letter to House and Senate leaders this week.
“Our nation is losing a generation of industry talent, knowledge and entrepreneurial spirit,” he added.