MNI INTERVIEW: Winter to Ruin U.S. Eateries Confined to Patios

The U.S. faces another wave of job losses as cold weather drives customers from patio and sidewalk dining that kept restaurants afloat with health rules limiting indoor seating, threatening an industry that employs more than 5% of the population, sector experts said.

That could even spell bankruptcy for some restaurants, adding to a growing number of permanently closed businesses linked to Covid-19, Tom Gimbel, the founder and CEO of the LaSalle Network, a staffing firm in Chicago, told MNI.

"You're going to see unemployment numbers go through the roof" when the weather changes, he said. Without a vaccine the industry could be responsible for a surge in job cuts that may overtake April's record-breaking losses.

More than 15 million Americans were employed by restaurants at the beginning of the year, according to a February report from the National Restaurant Association. The leisure and hospitality sector that includes restaurants has lost 8 million jobs since March, according to the Bureau of Labor Statistics.

Takeout Not Enough

With outdoor dining services out of the picture, some smaller restaurants may be forced to rely on delivery orders alone and slash already-cut staffing levels even further to turn a profit.

"Going back to takeout alone would require more layoffs," New York State Restaurant Association President and CEO Melissa Fleischut said. Many New York restaurants have only hired more employees during the pandemic in part because of outdoor dining.

New York restaurants are experimenting with things like heaters to keep outdoor dining viable into the fall and winter, but in a state where the average winter temperature often falls below freezing, that may not be a sustainable solution, Fleischut said.

Restaurants are relying on more stimulus from the government, she said, and eateries need "something to shift in their favor" in the next 1-2 months to avoid closing permanently.

"You're going to see more permanent closures in the next 30-60 days if this federal package doesn't get passed," she said.

Cutting Hours Before Jobs

Disjointed local rules are also an obstacle for some nationwide chains, with states and even counties imposing their own restrictions, said Jeffery Elsworth, who teaches business entrepreneurship at Michigan State University's School of Hospitality Business.

The potential for major new damage is limited because there was never a full recovery from the Covid shutdown in the first place, Elsworth said. Few restaurants have reopened with more than half their original capacity.

Immediate signs of new damage as winter comes may be blunted as some managers cut employee hours rather than reducing their workforce, said Elsworth, also a member of the board of directors of Michigan's Restaurant and Lodging Association.

"If you're doing 25%-30% of your business on the patio right now and you can't get people to come back to your restaurant to eat inside, you're probably going to be laying people off or at least not hiring anybody else," he said.