U.S. restaurants hoping to stay afloat during the pandemic have seen a “massive slow down” in dining as the Omicron variant and chilly temperatures cause another wave of disruption for the hospitality industry.
“We are being forced into situations where we don’t have enough staff to open the restaurants, we’re seeing a slowdown,” Gabe Stulman, founder and CEO of Happy Cooking Hospitality, a restaurant group in New York, told Yahoo Finance Live on Friday.
Citing a litany of reasons related to surging Omicron infections of COVID-19, Stulman added that “we’re seeing diners canceling parties, canceling New Year’s reservations plans, canceling holiday plans, a slowdown in diner interest.”
Outdoor dining, while still a lifeline to thousands of restaurants, is at risk as the winter turns brutal. Frigid temperatures and a massive winter storm is targeting the Northeast in the next few days, making al fresco eating nearly impossible.
“With the temperatures dropping, a lot of diners that were more comfortable dining outside, that option’s also being removed away,” Stulman said.
Since the pandemic hit, innovations like outdoor dining, takeout and delivery and technology have been critical lifelines to help the industry stay afloat. Yet Stulman suggested that eateries may have reached the end of their rope.
“I don’t think that this is a matter of continuing to look at restaurateurs and ask us to keep pivoting and innovating. We’ve been doing that,” Stulman said. “There’s not much more we can do.”
Indeed, even with creative workarounds, nearly 60% of restaurants across the country reported sales decreased by more than half in December, according to a survey of 1,200 conducted by the Independent Restaurant Coalition. Meanwhile, 46% of restaurant owners said Omicron impacted their operating hours for more than 10 days.
And spending at restaurants and bars dipped in December as surging cases driven by the variant have weighed on consumer activity.
We expect a further decline this month,” Ian Shepherdson, Chief Economist of Pantheon Macroeconomics, wrote in a note on Friday.
The pandemic rocked the hospitality industry, with over 100,000 restaurants forced to close in the first year of the pandemic, according to data from the National Restaurant Association.
Still, the ongoing headwinds from the pandemic have impacted and become more challenging for businesses that didn’t get a slice of the Restaurant Revitalization Fund (RRF)— a $28.6 billion federal effort to rescue struggling businesses that was part of the $1.9 trillion COVID-19 relief package.
Over 40 percent of businesses who did not receive the grants have said they are in danger of filing for or have filed for bankruptcy, compared to 20% who received the federal grants. And nearly 30% of businesses with RRF funding are bracing for an eviction, versus 10% of those that received funding.
Yet there’s been no movement on legislation to replenish RRF funding, prompting the IRC to release last week a letter in a Congressional call to action, signed by current and former mayors from 27 cities.
“I wish the government felt that same sense of responsibility to us as businesses and citizens and the impact that we have on this economy,” Stulman told Yahoo Finance.
“People that did not get RRF [money] are taking our personal loans. They’re literally taking on new investors and liquidating themselves out of their own businesses,” he added.
Thus far, 295 lawmakers in the House of Representatives and 52 members of the Senate have signed onto four pieces of legislation supporting adding money to the RRF, but it’s unclear whether that will be enough to move the needle.
“We just need to make good on everyone else and recognize that the impact that restaurants have on the economy as a whole is so much greater than our immediate steps,” Stulman said.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv
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