Senate Committee Finds Nearly One-Third Of All Restaurants Closed in CA Due To Pandemic

A Special Senate Committee formulated to focus on pandemic related responses reported on Tuesday that restaurants in California had been damaged inordinately hard by the COVID-19 pandemic.

According to the Special Committee on Pandemic Emergency Response, around one-third of all restaurants closed in California during the pandemic, with two-third of all restaurant workers either temporarily or permanently losing their jobs due to new COVID-19 rules, months of restrictions that allowed only delivery and takeout options, and Governor Gavin Newsom twice installing statewide lockdowns. The California Restaurant Association noted that pre-pandemic, restaurants employed around 1.8 million people. But the special committee noted that 1 million of them were fired or laid-off in the immediate few weeks of the pandemic, with many more facing similar consequences  in the following weeks.

In total, tens of thousands of restaurants had to close in California, with the entire industry nationwide losing $240 billion in 2020 alone. While recovery is noted to have begun with restaurants now offering expanded serving once again with some indoor service returning, in addition to outdoor options that had been scaled up during the pandemic, statistics show a heavily depleted market. The number of restaurant-related jobs in the state is still down 26% when pre-COVID March 2020 figures are compared to March 2021 figures.

Between the statistics of the CRA and the findings of the Commission, full recovery is estimated to take years for the industry. Worker shortages were highlighted by the report, with many potential workers now weary to return to the industry due to a desire for more stable jobs, a desire for higher wages, health and safety concerns, and unemployment insurance currently paying more than restaurants would. The report even noted that many restaurants would likely close after the reopening date of June 15th due to a lack of staff, meaning that the figures from the report are not yet final.

Lawmakers and industry insiders all agreed that recovery would take some time and, as a result, would likely keep several COVID-19 innovations, such as expanded outdoor seating and greater delivery/take out options, for some time to come on Tuesday.

“COVID-19 has upended all of our lives, but its impacts have been felt more acutely in the restaurant industry,” said Senator Josh Newman (D-Fullerton), who is heading the special committee. “It is clear that recovery will take time.”

A long time for recovery for the restaurant industry

The restaurant association agreed, but noted that the industry is still hurting.

“Right now we’re just at the beginning of feeling this crunch,” explained CRA senior vice president for government affairs and public policy Matthew Sutton.

While there was no agreed upon timetable to recovery on Tuesday, many noted that it might take between one and three years to recover, with some markets possibly taking more time.

“There’s no way of knowing for sure, especially with this labor shortage right now,” Southern California new restaurant consultant Maury Nolan told the Globe on Wednesday. “There are a lot of new open spaces now, and if they can time it right, new restaurants can get good locations for good lease rates.”

“But let’s be real here. Say we get the labor problem solved by the summer, and we have COVID go away by the fall with minimal, if any, restrictions. Might not happen, but let’s just say. New restaurants still need to start up, build up, get licensed. It’s not that easy. And returning restaurants need to get the word out that they are back and do their best with whatever restrictions are still in place. Add to that a segment of the public not wanting to go out to eat again because of virus fears. It’s at least 3 years. At least. And that’s not counting the rebound cycle. Because a huge wave of new and reopened restaurants will probably come at more there is demand for, so there will be a few cycles of openings and closings.”

“Usually that’s a normal thing, but with COVID-19, that will be amplified. And prices will likely rise if employee wages go up by a lot. So now we’re talking a few more years. Honestly, it may be, at least for LA, until the Olympics in 2028 when it’s really all back, because an event that large enough will need as many places open as possible to satisfy the crowds. I mean, LA always has a few big things each year, as does San Diego, Long Beach, and cities up north. But LA, big sprawling LA, needs more than a baseball all star game and a Super Bowl coming up in the next few years to really set things straight.”

Future reports on the restaurant industry as it recovers from the pandemic are expected in the near future.