Restaurants Continue To Be Pinched By The Coronavirus: More Than 20% Could File For Bankruptcy

While several industries are hurting from the loss of revenue during state shutdowns because of the coronavirus, one of the most significantly impacted by the virus has been the restaurant sector.

Allen & Associates, a consulting firm, told Bloomberg that hundreds of restaurants have filed for bankruptcy since the pandemic hit, with the situation only expected to get worse.

Stay-at-home orders have forced restaurants to change their business model. Many are offering curbside pickup or have turned to selling groceries to keep money coming in like Panera.

With states reopening and easing restrictions on restaurants, it may be too late for some to salvage what they have lost.

“Based on our estimates, we believe up to 10% of all restaurants globally will disappear, with 20% or more also going through a restructuring process,” Aaron Allen, founder of Allen & Associates, told the news outlet. “This is a conservative case, in our view.”

The scenario gets even grimmer, with over 15.6 million workers relying on restaurant jobs, according to the National Restaurant Association.

Many restaurants are also considering bankruptcy as an option, with Le Pain Quotidien and Garden Fresh Restaurants, the owner of Souplantation and Sweet Tomatoes , already seeking Chapter 11 protection. Garden Fresh has closed all of its restaurant locations while Le Pain is looking to sell to Aurify.

Chuck E. Cheese is also struggling and considering bankruptcy while Pot Belly, Steak ‘n Shake, and Denny’s are looking to close several locations because of the impact of the coronavirus.

Restaurants such as Golden Corral have had to rethink their business entirely with new safety measures that restrict buffet-style locations from serving customers. Others, such as TGI Friday’s and Ruby Tuesday, will not reopen locations despite the lifting of stay-at-home orders as part of cost-cutting measures.

Recovery for the restaurant industry isn’t expected until later in 2021 or 2022 as fears of more state shutdowns and restrictions linger because of the rise in coronavirus cases, Pacific Management Consulting Group told Bloomberg.