Welcome to the first post in our Coronavirus Case Studies series. In each post, will we talk about how the coronavirus pandemic of 2020 will affect different businesses for years to come. We’re all still processing this massive, life-changing event. This week, we talk about how coronavirus will affect the restaurant industry.

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The Restaurant Industry Was Devastated the Minute Coronavirus Became Serious

Restaurants occupy a special niche in social life, whether urban or rural. Our favorite eateries contribute so much to the character of every city that we adore and provide necessary social gathering places in even the smallest of towns. They’re more than just places to serve food, and this is important to remember when talking about how coronavirus will affect the restaurant business model in the intermediate future.

As early as mid-March, restaurants on average were seeing a nearly two-thirds decline in patronage in cities like Boston, New York, Seattle, and San Francisco. This, of course, isn’t even taking into account the effects of stay-at-home orders on restaurants, mandatory closures, or anything that’s still unfolding as I write this article.

Restaurants are a uniquely vulnerable business in the best of times. Maintaining quality food and customer service is difficult, the profit margins are low, and it’s a ton of work. As an industry, restaurants tend to be a magnet for first-time business owners who have neither experience nor deep pockets.

Many within restaurant industry were already sitting on shaky ground. Then the coronavirus happened. Talk about the ultimate sucker punch.

The Short-Term Problems that the Restaurant Industry Experienced Were Formidable

The coronavirus pandemic, along with subsequent lockdowns, left many companies with no revenue. This means that in order to pay their expenses, which may or may not have been meaningfully reduced during that time, they had to tap their cash reserves. Overnight, the most important metric for almost every business became days of cash on hand.

The average business in the US according the JPMorgan Chase Institute has 27 days of cash on hand, which is not much. For restaurants, it was a mere 16 days. For any restaurant without adequate access to cash, which was most restaurants, that meant a serious cash crunch.

The coronavirus was a Thanos snap for the restaurant industry. Many restaurants whose business models were otherwise solid, could not survive the complete cessation of revenue for even a short period of time.

With many businesses reopening, there are new short-term problems. This is still unfolding as I type these very words. Restaurants are now limited in how many people they can seat, which puts a hard revenue limit on many restaurants. Bear in mind: a lot of people don’t eat out for the food, they eat out for the experience. Takeout isn’t the same.

On top of that, a lot of people feel unsafe eating food in public. While the coronavirus isn’t known to be spread by food, you still have to take off your mask to eat it, and they risk of coming into contact with someone else while sitting in the restaurant is fairly high. Many otherwise enthusiastic customers don’t want to take such a risk.

The Restaurant Industry Will Struggle for 3-5 Years

The continuing short-term problems of restaurants will likely lead to a mass exodus of small businesses in that sector. Your favorite restaurant may very well close.

I know that’s a doom and gloom prediction. I take no pleasure in writing it. The logic is cold and simple: the only businesses which can survive an event like this are the ones with a lot of cash on hand and the ability to ride out a year or two of reduced revenues.

In the next 3-5 years, most restaurants will probably be chain restaurants like Chipolte, Starbucks, McDonald’s and so on. Buffets will probably be relegated to the history books. It will be a while before small businesses will be comfortable reentering the restauraunt business.

The restaurant business in the 2020s will likely be sparse, safe, and corporate. It will take a while for small business owners to want to get into the restaurant business again.

The Restaurant Industry in 5 to 10 Years Won’t Look Like it Does Today

The above predictions are ones that I am confident about. The next ones are more presumptive, but I feel are worth mentioning.

At the time that I’m writing this article, the worst affected areas in the United States on a case-per-thousand people basis are Chicago, the entire Washington-to-Boston corridor, New Orleans, and the Deep South.

With the exception of the Deep South, all of these areas are densely populated cities. A lot of people will want to escape cities because of bad memories of diesease outbreaks. Many companies who headquarted their organizations in big cities are starting to talk about having people work from home permanently.

It is my instinct, yet to be tested, that the resultant aversion to cities and probable crash in commercial real estate will make people flee to suburbs and rural areas, not unlike in the 1950s when suburbanization first started to take off.

In the late 2020s or perhaps early 2030s when starting a restaurant becomes attractive again, changes in the way people live will likely make the suburbs a more attractive place to start a business. What effect this will have on cuisine, in general, is not something I am knowledgeable enough to predict.

Chaos Will Create Room for Innovation, So There is Hope

The restaurant industry’s outlook is bleak. I don’t enjoy saying this, but I feel it improper to mince words. Even still, the absolute chaos of our current time creates unique opportunities. The entrepreneurial mindset will live on, reincarnated in a million unique ways.

Perhaps would-be restaurateurs will find themselves creating at-home meal kits. Lovers of gourmet food may focus their energies on creating better ingredients or exotic coffee blends. Foodies may very well come up with a new style of cooking known as “quarantine fusion.”

It’s hard to say how people will proceed from here. The spirit of creativity will survive. Food has been a part of human culture since we gathered berries and hunted on the savanna. It won’t go away because of a short-term problem – it will just find a different way to exist.


What do you think the future holds for the restaurant industry? Do you think this article is spot-on or off-base? (I hope I’m very wrong.)

Let me know in the comments below. I’d love to hear what you have to say so we can process this together.


41 Comments

Michelle · June 15, 2020 at 9:19 am

I know someone who owns a restaurant and they had to close it due to the virus. They could open their takeaway branch, but all that investment into the restaurant which was open for less than 2 months is now wasted, so many jobs lost.
Hopefully measures can be set where social distancing and sanitation can allow for them to be reopened

    Brandon Rollins · June 16, 2020 at 8:58 am

    That’s really difficult, Michelle, and I’m sorry to hear about your friend’s restauraunt. Especially only having been open for a few weeks. That’s just terrible luck and they didn’t do anything to deserve that.

    Debra · June 25, 2020 at 12:52 pm

    I am certainly hoping that we can all land on our feet.

Michael DeFren · June 15, 2020 at 9:29 am

I see this virus around for a long time, unfortunately even after this there will be a next, so this has to become a way of life

    Brandon Rollins · June 16, 2020 at 9:06 am

    Yeah, coronavirus isn’t going anywhere soon. I just hope we find a way to move forward socially and economically.

    I’m no “reopen, reopen, reopen” guy, but I really want to see life return to something like normal soon.

Lyndsey Valentine · June 15, 2020 at 9:52 am

Its unfortunate the effect that the corona virus has had on restaurants economics having to shut down till government allows you to open then when you finally do reopen you have to stick to social distancing rules so you wont be getting as much costumers as before.

    Brandon Rollins · June 16, 2020 at 9:10 am

    Yeah, the greatly reduced dining capacity is a particularly brutal rule right now for restaurants. I totally get it from a health perspective…it just makes many perfectly good business models non-viable for the next year or two.

William Waychoff · June 15, 2020 at 10:08 am

This “Virus” scare ruined a lot of small business. Some will never recover.

    Brandon Rollins · June 16, 2020 at 9:12 am

    I take at face value the real threat of the virus, but I completely agree that it’s been hard on small business. I hate how hard this virus has been on businesses and I hope that as many as possible can find a new business model to survive in the long run.

L. Edwards · June 15, 2020 at 10:48 am

This is so scary for any business but especially the dine in restaurants.

    Brandon Rollins · June 16, 2020 at 9:15 am

    Yeah, it’s deeply unfair.

Alex · June 15, 2020 at 11:42 am

I took advantage of the social atmosphere dining out gave me. Unfortunately that same experience won’t be the same for a very long time. Restaurants will probably be more exclusive now. I feel like this will also cause more waste with disposable menus, disposable dishes and utensils and so on.

    Brandon Rollins · June 16, 2020 at 9:17 am

    Yeah, the magic of restaurants is less the food and more the experience. People serve you stuff that you can’t easily make yourself. No amount of Blue Apron in your home is the same as socializing in the ambience of a trendy downtown restaurant. Even dining in at a fast-food chain restaurant is comforting. I hope the businesses don’t become too exclusive.

    Jodi Armstrong · June 23, 2020 at 10:48 am

    For me restaurants are all about good food I cant make. I would happily eat at home the same food you would buy at a sitdown

      Brandon Rollins · June 23, 2020 at 3:09 pm

      Exactly! They’re so often about the experience, and no amount of meal kits can ever truly replace that.

Maria Teresa Fernandez Ferreira · June 15, 2020 at 12:36 pm

As it is always necessary to update for this new problem, unfortunately many will have to close their doors and others with a lot of effort will get ahead, but it is something that at the moment does not have a good expectation.

    Brandon Rollins · June 16, 2020 at 9:25 am

    Agree – I think there we be a lot of places having to close their doors soon. Hopefully as many avoid that fate as possible.

Janice · June 15, 2020 at 2:30 pm

We can only hope that restaurant businesses will stick it through the tough times. Hang in there.

Linda A · June 15, 2020 at 6:46 pm

The continuing short-term problems of restaurants will likely lead to a mass exodus of small businesses in that sector

    Brandon Rollins · June 16, 2020 at 9:28 am

    That’s my fear and I hope we’re wrong.

      Shannonn Peterson · June 17, 2020 at 10:51 am

      I think alot of it depends on weather it was a well run business to begin with.

        Brandon Rollins · June 18, 2020 at 7:41 am

        A lot of it does, particuarly if they had the foresight to stockpile cash on hand (so they can stay solvent). But if this thing drags on for a year or two, I think a lot of well-run businesses will get caught in the pandemic crossfire too.

Paulo Oliveira · June 16, 2020 at 11:29 am

Um tema bastante actual em Portugal temos uma classificação de “Clean & Safe” que os restaurantes utilizam para garantir que tudo está conforme ….

Susan Harner · June 17, 2020 at 5:31 pm

I believe this article to be very accurate. I am always talking to the man who owns a pizza store, that is next to my work. He has been in that area for well over 25 years. One day he told me he doesn’t think he is going to make any longer. Costumer’s just aren’t there.

    Brandon Rollins · June 18, 2020 at 7:44 am

    I hope your neighborhood pizza store owner pulls through. Twenty-five years strong – it’d be a real shame if the pandemic pushed him out of business. Clearly not his fault!

marilyn nuovo · June 19, 2020 at 11:44 am

in my area we try to support our restaurants being curbside pick up some dine in has opened hopefully and safely soon will be open

    Brandon Rollins · June 22, 2020 at 8:22 am

    Curbside pickup is a great way to keep supporting local businesses! From what I understand, it’s much safer than dining in.

Ameliah Greenley · June 19, 2020 at 4:32 pm

This is so true. I’ve seen a lot of business take a financial hit or close because of COVID-19.

    Brandon Rollins · June 22, 2020 at 8:22 am

    Yeah, and I’m hoping the worst is already behind us.

Nicole Margrif · June 22, 2020 at 2:30 pm

I think if the restaurant isn’t well established, it might be hard but I been trying to do carryout to still support.

Richard Hicks · June 23, 2020 at 2:02 am

It is sad that many will not survive. Open buffets will be a thing of the past.

    Brandon Rollins · June 23, 2020 at 3:06 pm

    Yeah, I didn’t realize how much I’d miss buffets until this happened.

Javier Vallejo · June 23, 2020 at 11:21 am

I think that the current situation has made us all think about the future, that future will go through online sales to a great extent.
Many restaurants that previously only served food on their premises have been transformed to serve food at home.

    Brandon Rollins · June 23, 2020 at 3:12 pm

    Yeah, and I’m wondering if what we’ll see in the future are restaurants hybridizing their business models so they won’t be so susceptible to future shocks like this.

Jordan · June 24, 2020 at 1:50 am

In my country most restaurants are really really bad but at the same time, I feel sorry for them.

    Brandon Rollins · July 6, 2020 at 11:16 am

    Yeah, I feel that way too. I know many in my area are not going a job of social distancing, but you know, they’re run by small businesses. Normal people. I have immense empathy for how tough it has to be for them to cope right now.

terry murphy · June 24, 2020 at 12:55 pm

just thankful am not in the restaurant biz

    Brandon Rollins · July 6, 2020 at 11:16 am

    You and me both, Terry

Brandon Sparks · June 26, 2020 at 10:09 am

So very true and also so very sad…

Stephen Reddington · June 26, 2020 at 10:48 am

What percentage of restaurants will never reopen after this pandemic?

    Brandon Rollins · July 6, 2020 at 11:19 am

    I am scared to even make a guess at a number.

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