Will the Restaurant Industry Make it Past the Coronavirus?


Published: April 6, 2020

Courtesy of Restaurant Failure Rate Studyrestaurantowner.com

Well, with the continuation of Small-Midsize Businesses (SMB) shut down and no revenue coming in, a merchant is beginning to ask the question, will we reopen? Small businesses don’t have the cash reserves as their larger counterparts, thus makes them weaker each week to come back and continue at the same vigor as before closing. Nevertheless, the Federal Government has passed a $2 Trillion stimulus plan that presented in helping the average worker survive without income coming in. However, the question is, how long will it take those who need this money to get it? With rents being due on April 1st, car notes, credit cards, and other bills are also due for the month, so what is one to do?

Having a thirty day shut down on most SMB is a death sentence, and they will not be able to reopen and will have no alternative but to file bankruptcy and go out of business. There seems to be some uncertainty as we move to the next business day to implement this financial program (April 6th, 2020) on how soon; it will take effect or get the money to that of who qualifies or not. Nevertheless, most businesses will not make it, and restauranteurs must then find other means of generating revenue. One thing is for sure we will never go back to the way that it was.  According to CNBC, 3.5 million workers will lose their jobs in the restaurant hospitality industry.

The financial devastation of 150,000 workers in New York who work in the hospitality industry will lose revenue of $4.7 billion in a year. Therefore, many entrepreneurs in this industry must look for other sectors to enter where the barrier of entry is not too high and can produce like-kind revenue as before the shutdowns started. Now let’s stop for a moment and have an understanding that as a small business consultant, the information passed off on these emailers is from an academic and practitioner standpoint. Thus, one who has obtained a Doctorate of Business Administration in Entrepreneurship and Business Management and passes relevant business information to this select group every week.

Coronavirus

Coronavirus (Corvid-19) is the reason of what is happing from a global format to every industry be it political, business, educational, religious; no one is immune to this crisis, and when it is all over, we all will work a different way, and nothing will be the same. However, the internet has made our world a little smaller. Through technology, and innovation we will come out of this crisis, but with that said, there will be new skill sets to learn to stay on top of the curve for further advancement of business and especially the restaurant industry and other small businesses. So how are we to deal with this new enemy?

The aid promised to small businesses, will it arrive in time to cover entrepreneurs’ monthly obligations? What about working America to pay their mortgages, auto’s, and credit cards? If not, then we have some issues that will unfold with the next 30-60 days, bankruptcies for business and individuals! The average small business person is not rich. They continuously are shifting income, making pay-roll, and balancing two fronts, one business and the other personal.

My wife is a nurse, so I get this Coronavirus from a different perspective than others. What is stated from the Administration is not the reality in these hospitals or with these health care workers? There is a disconnect from our current administration and health care professionals on the truth. The politics must be, put on hold and more work to save lives and come up with solutions to defeat this now familiar and deadly enemy. Thus will help business and other industries and possible a bridge of getting back to some type of norm of the past.

So what do we do from here?

We must be active on two or more fronts (1) move forward with governmental programs put in the applications to programs through research that would benefit one’s business and family. (2) Look into alternative financing solutions to your needs. Most traditional financing organizations want collateral to strengthen the loan, and yet there are others where the collateral is not needed.  Nevertheless, everyone is mindful of what is going on economically and how businesses and families are, strapped with debt at this time. And the same individuals that you will go to for leniency are going through the same in their lives must go to someone for help and forbearance in paying them as well.

But whatever you do, don’t put all your faith in this Federal Government, have some options. What they are promoting of being of service to small businesses and the average family worker has yet to be seen and may not come this month of April, then where are you now for May if this $2 Trillion Government Stimulus does not kick in? Remember, if you don’t pay your mortgage, auto, credit cards will report to the various credit bureaus. And now, you have an issue with the dropping of your FICO score, and the hard work of building a stellar credit profile.

Conclusion

As we all move through these uncertain times, it really comes down to self-preservation. The decisions we all make in the next few weeks will stay with us due to the new norm in America from health to wealth management and for others, just trying to make it from day-to-day. This parting thought I would leave with you If you get a commitment from any financial institution, and they tell you the funds will not be available for three weeks or more get a bridge loan to tide over until these funds become available. Then once you have possession of funds, then pay back the bridge loan.

So I close with stay safe, watch your health, and utilize technology to do business as much as you can. Just think of the silver lining here, if this would have happened 20-years earlier before the internet took hold, then we would be in a different business survival mood; think about it.
Dr. Donald E. Mitchell, Entrepreneur, Founder of Donald E. Mitchell Agency, Inc.
www.donaldemitchell.com

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