Fiscal Response to COVID-19: The Restaurant Industry


  • COVID-19 is impacting the restaurant industry on all fronts, from disrupting the food supply chain to causing many restaurant employees to be out of a job – all of which can effect states’ economic future.
  • The industry has suffered the “most significant sales & job losses since the COVID-19 outbreak began.”
  • States remain innovative in helping restaurants survive, especially as some consider reopening their economies soon
  • The Paycheck Protection Program (PPP) by the federal government is still processing loans and working to get financial aid intot the hands of small businesses, ie restaurants

Addressing the Problem

  • COVID-19 has disrupted the food supply chain because:
    • Some meat processing factories cannot keep up with federal guidelines needed to remain open;
    • Other processing plants are closing voluntarily for sanitization purposes; and
    • All of which has the potential to cause massive food waste and meat shortages
  • Furthermore, the virus may be linked to worker conditions in these plants
  • According to the National Restaurant Association:
    • Over 8 million restaurant employees have been laid off or furloughed
    • The industry will sustain $240 billion in losses by the end of 2020
    • The industry will lose $80 billion in sales by the end of April
    • 61% of operators believe existing federal relief won’t prevent more restaurant layoffs
    • 4 in 10 restaurants are closed

How are States Impacted?

  • 36 out of 50 states employed more than 100,000 restaurant workers in 2019; now an estimated 2 out of 3 workers are out of work due to COVID-19
  • In all 50 states, for every dollar spet in the tablesrvice industry in 2019, at least an additional $1.51 (up to $2.03) was added to the state economy; if restaurants aren’t operating to full capacity or if consumers aren’t spending money there, a significant chunk of states’ economies will suffer
  • States are already seeing the direct impact to their economies:
    • Texas lost almost 700,000 jobs due to COVID-19
    • New York has seen a 70% decline in sales and almost 527,000 restaurant employees have been laid off or furloughed

Action by State & Federal Government

  • Federal:
    • The first round of the PPP, despite rocky starts and negative publicity, approved about 1.7 million loans through April 16, draining the entire $349 billion fund in two weeks
    • The second round of the PPP processed $90 billion worth of loans in just 3 days
  • States:
    • Arkansas plans to allow restaurants to have dine-in customers on May 11 as long as they take health precuations for employees and customers; additionally, Gov. Hutchinson announced a plan to provide grants up to $100,000 each to help small businesses
    • Nebraska and South Dakota never mandated dine-in services to close in contrast to most other states
    • Multiple states have extended unemployment benefits to workers affected by COVID-19

What is the Expected Outcome?

While most restaurants qualify for PPP loans, and while the current oulook of the loans look more promising since their first debut, restaurant owners and employees are still wary about the true impact the financial help will have – if they even receive it in time.  On the flip side, as states consider reopening their economies, restaurants have a chance to catch up on their losses if they can comply with health precautions set by each state.  Employee cuts and losses in sales are certain for the near future, but restaurants remain hopeful that they can weather the storm that is COVID-19 until better help comes along, rather that be in the form of more financial assistance or the end of quarantine.

Resources for State Leaders: