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With about half of all beef consumption occurring outside the home, how COVID-19 affects restaurants may affect beef demand.
March 19, 2020
Boom! Your doors are closed!
Restaurateurs surely would have liked more advance notice from their government. Perhaps seeing what happened in China, Hong Kong, South Korea and Italy was enough warning that things were going to change soon in the U.S. as well. This week, with less than 24 hours’ notice, restaurants in Colorado, New York, Washington, California and many other states were ordered closed by their governors.
I’ve been speaking with many of my restaurant customers over the past few days, asking them how they plan to survive the sudden drop in business.
Many of my friends who own restaurants feel as attached to them as you likely are to your farm. They’ve poured their life, sweat and savings into their operation. Some will figure out a way to survive for the next month, or two, or perhaps three. But sadly, many others will be closing their doors permanently long before that.
One of my long-time customers, Lee, co-owns a half-dozen restaurants in Colorado. Tuesday, he was forced to lay off over 500 hourly workers and had to instruct them to go online immediately to collect unemployment. Lee can make no promises but told them all he plans on hiring them back as conditions allow.
If the U.S. follows Hong Kong’s pattern, restaurants can expect a slow recovery once they are allowed to reopen. My friends in Hong Kong report that coronavirus cases are declining, and restaurants are starting to get busy again, but the gains are slow as people are still cautious about infection and wary of failing finances.
In the U.S., we’re about to see many restaurants, especially small family businesses, go under in the next few weeks and months. Many lack the reserves to pay their debts to their vendors, rent, sales taxes and payroll.
Others who have some reserves, or an ideal location for takeout, will cash-flow through COVID-19. The best thing consumers can do right now is to support restaurants that offer takeout. Their sales may only be 20% to 30% of normal, but even that much will help them crawl through the weeks to come.
Keep in mind that you help a restaurant much more by picking up food yourself than by using a food delivery company like Uber Eats, Grubhub, or any of the others. These companies charge the restaurant operator up to 30% of the cost of the meal you order for delivery. This wipes out most of the profit the restaurant makes.
Why do restaurants use them? Cash flow… Cash is king in times of crisis, and even a break-even sale is better than no sale in the short-term.
So let’s do our part in keeping local small businesses alive through this crisis. If you can enjoy a delicious meal while simultaneously helping your favorite restaurants survive, that’s a win-win situation!
Bloom is owner of U.S. Protein, an international distributor of premium meats. Contact him at [email protected]. The opinions of the author are not necessarily those of beefmagazine.com or Farm Progress.
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