Restaurants are dealing with demand uncertainty, worried customers, and staffing issues. Some food chains remain undecided over indoor dining
With the rising COVID cases due to Delta, the reopening of dine-in options for food chains like McDonald’s Corp and Chick-fil-A Inc has been delayed. Some restaurants are losing diners again with the lack of outdoor space for dining and the uncertain weather.
The owner of Mallorca in downtown Cleveland, Laurie Torres shared that her Spanish-themed restaurant had revenue growth in early summer since the pandemic but the sales fell again last month due to worried customers.
Torres added that they started to reattach tables and install interior dividers to make the customers feel better but they expect the results may not be as good.
Torres said, “The sand is shaking again,”. They are closing early on the weekend and closing completely on Monday because of unknown demand and staff issues. “It’s so hard to predict.”
Restaurants that have struggled since the beginning of the pandemic are suffering again with this new surge. The summer sales have been steadily declining for the past five weeks according to restaurant analytics data of Black Box Intelligence.
The Labor Department released some data earlier this month and the biggest monthly fall of employment in a single sector came from the bars and restaurants who lost 41,500 jobs in August. This is the first monthly decline of the foodservice industry since December.
As sales were picking up the pace early this summer, it started to fall due to Delta. Many restrictions such as masking mandates have returned as well as canceled gatherings and travels.
Many restaurant owners were hopeful after the lift of COVID restrictions and sales returning.
However, recently, one in every five Americans say they will not go to restaurants based on last month’s national survey of 1,000 adults done by the National Restaurant Association.
About 9% of the respondents shared that they have canceled their plans of eating out recently.
A 64-year-old resident from North Carolina, Ellen Corey says, “I’m going to stay home for a while.” After her vaccination, she has been eating out and traveling for about four months but she has recently stopped.
Restaurant chains relying on dine-in sales compared to fast food groups have experienced a decline in the value of their shares recently.
According to Chilean owner Brinker International Inc, Delta has caused the sales to decline last month. Their shares plummeted by 16% since early June.
Similarly, the shares of Applebee’s fell by 14% according to the owner, Dave & Buster Entertainment Inc. Shares of Dine Brands Global Inc.
McDonald’s Sets to Close Dining Rooms
Fast-food chains were saved by drive-thru and to-go sales last year. As the restrictions eased, the owners tried to offer dine-in services again.
The Fast-food companies were planning to reopen indoor dining, however, according to NPD Group market research, the number of customers dining indoors remains low.
Several operators also found it hard to get enough employees this year, some even said that getting sit-down service staff would not justify the low business sales.
Wendy’s company informed investors that they are closing dining rooms at certain times of the day due to staff shortages.
The Atlanta-based Chick-fil-A also allowed their franchise owners to close dining rooms if needed. According to their spokesperson, this option has been extended until January for security reasons.
Short Staffing Caused Many Chick-fil-A Venues to Close their Dining Rooms
Policies regarding indoor dining have kept companies and restaurant owners divided.
The group of McDonald’s franchisees, the National Owners Association, informed the company that some franchise owners of McDonald’s shared that they felt pressured to reopen last May due to corporate representatives, based on the email they sent.
“It’s when you’re ready, not a countdown timer,” one McDonald’s franchise representative mentioned in the email.
McDonald’s stated that they are working with the franchise owners to prioritize the employee’s well-being when making a decision.
National Franchise Leadership Alliance president Mark Salebra said that the decision on opening or closing dining rooms depends on the count of local COVID cases.
According to messages from McDonald’s US owners, the company is asking franchisees to offer sales only in areas with high concentrations of COVID-19 cases.
The company said in an email to owners late last month, that restaurants should only consider to-go orders in places where daily cases are more than 250 per 100,000 people on an average of three weeks.
In a separate message last August, McDonald’s said “Consumers have become more concerned as the latest outbreak worsens. We must reaffirm and reaffirm our commitment to security.”
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Franchisees remain undecided on a policy on dining rooms. Some McDonals franchise owners have closed dining rooms voluntarily because of increasing COVID cases while some others remain open because competitors remain open and closing dining rooms will only mean losing sales.
Independent sit-down restaurants say offering a dine-in option is needed to keep the customers. Many restaurant owners are now worried about the financial burden they have to deal with due to the pandemic.
Denver Chocolate Lab restaurant owner Phil Simonson had no debt before the pandemic but now has over $100,000 in loans just to balance his business. Simonson added, he is paying the bills but not decreasing his debt.
“Keeping our dining area open and safe is my top priority,” said Mr. Simonson. “It’s definitely a challenge.”