Full-Service Eateries Bear Brunt Of Financial Downturn

Full-Service Eateries Bear Brunt Of Economic Downturn

A report from According to Marcus & Millichap, full-service restaurants are facing the brunt of the economic downturn sparked by the coronavirus pandemic, while limited-service restaurants are well positioned to survive.

The report said many of the nearly 400,000 full-service restaurants doing business prior to the coronavirus pandemic will be "struggling to survive."

The coronavirus pandemic sparked a huge number of shutdown orders in the U.S. this year, forcing many companies to shut down their personal activities in an attempt to reduce the spread of the virus.

According to the report, an average full-service business is nearly 5,000 square feet, but most occupy a smaller area. These companies, it is said, are more likely to have problems during an extended shutdown "because they are unable to operate under social distancing guidelines or because they lack outdoor seating."

"More than 100 million square meters of space are in danger of having to be re-let," said the report. “Redevelopment contracts are also challenging, as an increase in cases threatens to overload health systems. The Sunbelt states were forced to reverse their course to some extent upon reopening as the number of infections increased. "

The Marcus & Millichap report also predicted that the inability to operate while exercising social distancing will play a role in the closure of a significant portion of the country's restaurants.

"The estimate of how many restaurants will be permanently closed should move more into focus in the coming weeks as more impulses are fed into the system and vaccine trials move into the final phase," the report said.

Compared to full-service restaurants, reduced-service restaurants seemed to get a better forecast in the report, which found that many fast food restaurants were able to continue operating in April and May due to widespread coronavirus-related shutdowns.

"Drive-Thrus, pick-up on the roadside and little competition from full-service concepts have spurred the industry so far," the report says. "However, many independent locations that have had difficulty obtaining PPP loans or those without the support of a corporate office with more accessible lines of credit have closed permanently."

The report also weighed on retail sales, saying that online retail is expected to account for 18 percent of sales when the economy reopens "fully".

"As the retail market adapts to a post-pandemic environment, the impact on the transition to online shopping will be postponed by about three years," the report said.


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