WEBVTT - How Coronavirus Has Affected the Restaurant Industry

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<v Speaker 1>It's Tuesday, May. I'm Oscar Amrrors from the Daily Dive

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<v Speaker 1>podcast in Los Angeles, and this is your daily coronavirus update.

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<v Speaker 1>As the country continues to reopen for business, one of

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<v Speaker 1>the hardest hit industries will still have a difficult time recovering.

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<v Speaker 1>Restaurants will see a long, slow ramp up back to

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<v Speaker 1>the way things were. Real time industry data is showing

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<v Speaker 1>that while people are starting to get out there, restaurants

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<v Speaker 1>are only seeing a fraction of the business they used

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<v Speaker 1>to have, partly due to capacity limits for social distancing.

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<v Speaker 1>The estimates are still dire as to whether some businesses

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<v Speaker 1>can remain open after the comeback. Jordan Weissman, senior economics

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<v Speaker 1>reporter at Slate, joins us for more. Thanks for joining us.

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<v Speaker 1>Jordan's Hey, thanks for having me on. I wanted to

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<v Speaker 1>talk about restaurants and how they're gonna be faring as

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<v Speaker 1>states are reopening. I think all fifty states now are

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<v Speaker 1>starting to reopen in some capacity. The restaurants scene is varying,

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<v Speaker 1>obviously state by state, but the restaurant industry really one

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<v Speaker 1>of the hardest hit industries in this whole coronavirus pandemic.

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<v Speaker 1>There's been a lot of restaurants who have managed to

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<v Speaker 1>stay open just doing delivery and take out, But there's

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<v Speaker 1>a ton of other restaurants who have clothes throughout this

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<v Speaker 1>and might never reopen. And as we're seeing some states reopening,

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<v Speaker 1>we're getting some headlines and some good shots of people

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<v Speaker 1>actually making out to restaurants, but it could be a

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<v Speaker 1>little misleading. We get a lot of real time data

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<v Speaker 1>from the industry, from places like open table and other

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<v Speaker 1>places to do analysis on restaurants and people eating out,

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<v Speaker 1>and the numbers aren't all really, they're just yet. So Jordan,

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<v Speaker 1>tell us a little bit about what's going on with restaurants.

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<v Speaker 1>You know. The first thing I want to say is

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<v Speaker 1>before you even get into the numbers, some people ask

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<v Speaker 1>me why do we care so much about restaurants specifically

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<v Speaker 1>right A lot of different small businesses are hurting right now.

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<v Speaker 1>Why is it such a big deal how the food

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<v Speaker 1>industry is doing. And one very simple and not technical

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<v Speaker 1>answer to that is people like to eat out. Like

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<v Speaker 1>a restaurants are a huge part of just like the

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<v Speaker 1>cultural fabric of cities and towns, and there are part

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<v Speaker 1>of what makes going out on a weekend fun. People

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<v Speaker 1>can are about these They with def emotional attachment to restaurants,

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<v Speaker 1>but also there are economic reasons to care about this industry.

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<v Speaker 1>It's a huge employer. There are more than six hundred

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<v Speaker 1>thou was in full service restaurants in the country that

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<v Speaker 1>haven't essentially shut down in some capacity or another, partially

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<v Speaker 1>or entirely because of this crisis. There are millions of

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<v Speaker 1>jobs attached to them. And the more of these businesses

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<v Speaker 1>that go busts, that don't make it through this crisis

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<v Speaker 1>or its immediate aftermath, the longer it's going to take

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<v Speaker 1>for the whole economy to heal. The more small businesses

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<v Speaker 1>that disappear and can't bring their workers back, the longer

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<v Speaker 1>it's going to take us to kind of crawl out

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<v Speaker 1>of this hole we've ended up in. So it's important

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<v Speaker 1>how quickly restaurants can recover, and at the same time,

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<v Speaker 1>you have to balance their concern for their business with

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<v Speaker 1>public health issues. Right. So, what we're seeing is that, yeah,

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<v Speaker 1>there are all these stories about how in Georgia, restaurants

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<v Speaker 1>in some places are getting packed again, and how you know,

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<v Speaker 1>in Texas you're seeing people show up at dinners and stuff.

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<v Speaker 1>But if you actually look at the numbers, they're not

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<v Speaker 1>quite as encouraging. You mentioned open table, which is actually

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<v Speaker 1>a surprisingly youthful data source right now, because they track

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<v Speaker 1>obviously reservations made on their platform, but they also track

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<v Speaker 1>walk in diners and people who make phone reservations, because

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<v Speaker 1>people who run restaurants use the software for a bunch

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<v Speaker 1>of different tasks, and they'll tell you that right now,

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<v Speaker 1>the number of diners at restaurants in places like Georgia

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<v Speaker 1>are still down about eighty percent in Florida, same thing

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<v Speaker 1>in Oklahoma, which is doing as well as anyone it's

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<v Speaker 1>closer to. And you can look at other data sources too.

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<v Speaker 1>There's credit card activity data that suggests that of restaurants

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<v Speaker 1>are entirely closed in places like Texas and Alabama and Arizona,

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<v Speaker 1>which has been a lot of handfair about how these

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<v Speaker 1>states are reopening again. That's a fifth to a quarter

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<v Speaker 1>of restaurants they are not doing any business at all,

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<v Speaker 1>not even doing takeout. Again. There's this one company called Toast,

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<v Speaker 1>which is essentially a point of sales software provider. You know,

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<v Speaker 1>when you go and swipe your credit card at a restaurant,

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<v Speaker 1>they are the ones who are recording your sale or

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<v Speaker 1>recording what was charged on your check. According to their data,

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<v Speaker 1>total spending year over year at the well early bird

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<v Speaker 1>states as I refer to them in my teeth, are

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<v Speaker 1>still down again. Total spending of restaurants is down year

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<v Speaker 1>over year. In states that have reopened early it's gradually recovering,

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<v Speaker 1>but those are not the kind of numbers that are

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<v Speaker 1>going to sustain a business if that continues. A lot

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<v Speaker 1>of them are not going to survive with the reopening,

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<v Speaker 1>and a big part of that, obviously is the social

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<v Speaker 1>distancing measures that are put in place. You know, restaurant

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<v Speaker 1>is not going to be able to fill to capacity

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<v Speaker 1>anytime soon. Just looking at kind of where all the

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<v Speaker 1>states stand right now, there's a handful of states that

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<v Speaker 1>are letting restaurants open at fifty percent capacity, but the

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<v Speaker 1>vast majority of them are either twenty five or thirty

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<v Speaker 1>three percent capacities, which you can have in there. So

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<v Speaker 1>a lot of times these restaurants, depending on how many

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<v Speaker 1>covers they have throughout the night or throughout the day,

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<v Speaker 1>they're barely meeting the expectations that they need to keep

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<v Speaker 1>the restaurant open and to make any type of profit there.

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<v Speaker 1>So these capacity limits are going to be hurting them

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<v Speaker 1>for some time to come. Leading it's going to be

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<v Speaker 1>a long, slow recovery for them because they're not gonna

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<v Speaker 1>be able to hit that's been very quickly. A restaurant

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<v Speaker 1>can handle having half the three quarters of its tables

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<v Speaker 1>empty on a Monday night, it cannot handle it if

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<v Speaker 1>that's every Friday, Saturday, and Sunday. They will not survive

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<v Speaker 1>that way. It's that clear and simple. And so the

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<v Speaker 1>question is how long will these social distancing measures have

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<v Speaker 1>to stay in places the stake of public health. My

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<v Speaker 1>guess is probably for a while. Even in places where

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<v Speaker 1>the number of infections is fairly low, people are nervous.

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<v Speaker 1>They want these protections in place, and so do the

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<v Speaker 1>local officials. And then second is what else can they

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<v Speaker 1>do to make money. One option that's promising is to

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<v Speaker 1>expand the amount of outdoor seating for the summer, and

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<v Speaker 1>that seems to be what I'm told has happened in

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<v Speaker 1>South Carolina, which is probably having one of the quickest

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<v Speaker 1>recoveries right now. Restaurants in Charleston are being given a

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<v Speaker 1>lot of sidewalk space and that's allowed them to start

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<v Speaker 1>making up business a little bit quicker. But to me,

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<v Speaker 1>it seems pretty obvious that they're going to have to

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<v Speaker 1>be some longer term support programs in the government in

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<v Speaker 1>order to make all these businesses survive or at least

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<v Speaker 1>tried to water until things get a little bit more

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<v Speaker 1>favorable for them. So far, what the data is showing

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<v Speaker 1>is that is kind of a good news bad news scenario.

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<v Speaker 1>It's good news that the states are reopening their restaurants.

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<v Speaker 1>People are getting out there, although not to the capacity

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<v Speaker 1>that we wanted to just yet. But on the flip side,

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<v Speaker 1>the bad news is that how long can these restaurants

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<v Speaker 1>be sustainable that way? And in a lot of cases

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<v Speaker 1>it doesn't seem that they will be able to survive.

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<v Speaker 1>So it's this tough balance that needs to happen. I

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<v Speaker 1>would even go a little further and say part of

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<v Speaker 1>the good news here is also that it doesn't seem

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<v Speaker 1>like people are being too irresponsible. Right. We've seen all

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<v Speaker 1>those pictures of and I guess you know, videos of

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<v Speaker 1>like crowds running back to brunch or whatever, But it

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<v Speaker 1>doesn't seem like that's the norm. Places are not packed

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<v Speaker 1>to capacity. Businesses and diners are gradually returning to the

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<v Speaker 1>dinner table, and so that's not a bad thing if

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<v Speaker 1>you're worried about public health. Just the question is, since

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<v Speaker 1>everyone is worried about public health, nobody wants to take

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<v Speaker 1>crazy risks. How do we make sure that these vital

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<v Speaker 1>businesses that we all love and cherish don't just get

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<v Speaker 1>wiped out. Yeah, definitely something big point of concern for everyone.

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<v Speaker 1>Jordan Weissman, senior economics writer at Slate, Thank you very

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<v Speaker 1>much for joining us. Great by Oscar Ramirez, and this

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<v Speaker 1>has been your daily coronavirus update. Don't forget that. For

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<v Speaker 1>today's big news stories, you can check me out on

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<v Speaker 1>the Daily Dive podcast every Monday to Friday, So follow

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