Statewide NewsNearly 20 Percent of Restaurants, Bars Permanently Closed as Others Struggle During Coronavirus Lockdown

Despite government attempts at assistance, Texas restaurants and bars are being hit hard by the coronavirus lockdown, with over half of their employees estimated to be laid off by the end of April.
April 27, 2020
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19 percent of Texas restaurant and bar owners responding to a new survey said that they were forced to permanently close one or more of their businesses amidst the ongoing coronavirus lockdown between March 19 and April 6.

Another 41 percent of respondents to the survey, conducted by the University of Houston Hobby School of Public Affairs, said that they had to temporarily close their restaurant. 

If Governor Greg Abbott extends his ban on dine-in facilities past its April 30 expiration, yet another 11 percent said that they were planning to close permanently and 21 percent would close temporarily.

Four-fifths of respondents said that they laid off some employees, and 86 percent said that they had to reduce employee working hours — with most having their hours cut by more than 40 percent.

According to the Texas Restaurant Association, of the 1.2 million restaurant employees in the state, approximately 688,000 will be laid off by the end of April.

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“Texas restaurant owners and employees are in a desperate situation. We’re looking at the potential extinction of the Texas restaurant ecology,” said Dr. Emily Williams Knight, President and CEO of the Texas Restaurant Association. 

“What else has to happen to demonstrate to the government that a mandated shut down, a [paycheck protection] program that reached fewer than 7% of restaurants, and nearly 700,000 unemployed Texas restaurant workers will lead to a permanent closure of many Texas restaurants?” she continued.

In an attempt to help small business owners, Congress allotted a total of $670 billion for the Small Business Administration’s (SBA) “Paycheck Protection Program” (PPP), which essentially grants money to struggling small businesses so that they can continue to pay employees.

The PPP had mixed results among the restaurant owners surveyed, though.

While nearly all were familiar with the program, only six percent said that it would be enough to keep them “whole and profitable” as they endure the crisis.

56 percent were optimistic that it would keep them “on life support” throughout the crisis, while 38 percent said it would keep them “on life support for a short while, but not enough to make it.”

Even if dine-in resumes in May, over half of the respondents said that it would take them over nine months to recover.

“Restaurant owners are well aware of the headwinds they face, but most are optimistic they will eventually recover,” said Pablo M. Pinto, a political scientist and director of the Center for Public Policy at the Hobby School. “Almost all say they have or will apply for the federal government’s relief program for small businesses, but it is clear they don’t expect recovery to be easy.”

Employees are not the only ones feeling the new pressures placed on restaurants.

“Restaurants are a microcosm of the business world,” said Mark P. Jones, a research associate at the Hobby School and a political science professor at Rice University. “They indirectly support a network of other businesses, and their struggles will reverberate throughout the economy.”

Over 75 percent of respondents said that they are making payments to their food suppliers that are less than a quarter of what they paid in February.

38 percent said that they were no longer making payments to their landlords, while 32 percent said they were paying the same amount and the remaining were somewhere in between.

“Restaurants and bars are key players in the national and Texas economy, and they have been among the most negatively affected by the virus and the closures and stay-at-home mandates that were called in response,” said Jim Granato, the executive director of the Hobby School. “How well they recover when we start to reopen commercial activities will be an important part of the nation’s overall recovery.”

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Daniel Friend

Daniel Friend

Daniel Friend is a reporter for The Texan. He participated in a Great Books program at Azusa Pacific University and graduated in 2019 with a degree in Political Science. He has studied C.S. Lewis’s science fiction trilogy and in his spare time you might find him writing his own novel partly inspired by the series.

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