Industries that serve people in person are at risk of being left for dead as the pandemic grinds on into the fall.
The situation facing restaurants, bars, gyms, movie theaters, and other such businesses is far more dire than that of the economy as a whole.
Overall unemployment is at 8.4% and trending down — very bad, but not the apocalypse once feared. And some sectors and industries, such as housing and grocery stores, are holding up well or performing during the pandemic.
But places where people gather for fun and recreation are in big trouble. They will be the first to lose business or to be shut down by authorities amid virus outbreaks because time and money spent at those places are thought of as discretionary.
The hospitality and entertainment sectors face the prospect of the pandemic and government restrictions stretching into the fall and winter, depriving them even of the possibility of moving business outdoors.
“Spending on services that typically require people to gather closely, including travel and hospitality, is still quite weak,” Federal Reserve Chairman Jerome Powell noted Wednesday.
At the same time, it’s been months since Congress extended aid.
A coalition of gyms, theaters, and venues warned Thursday that those industries couldn’t hold on much longer.
“You must act NOW. Please do not abandon us. We cannot wait for more assistance,” the groups wrote in a letter to Congress signed by the International Health, Racquet, and Sportsclub Association, the League of Historic American Theaters Live Events Coalition, and the National Association of Theatre Owners, among other groups.
Movie theaters have begun reopening, but sales remain less than a quarter of what they would be during normal times, according to Box Office Mojo, despite the release of the highly anticipated Christopher Nolan film Tenet.
Similarly, restaurants are in bad shape because the coronavirus is thought to spread easily in crowded indoor spaces.
“We’re a very social-facing industry, and that is usually our greatest asset, but during the pandemic, that has become our greatest liability,” said Sean Kennedy, the executive vice president for public affairs at the National Restaurant Association.
Through August, restaurant and bar employment was down 2.5 million from before the pandemic, according to the Bureau of Labor Statistics.
Millions of workers have already gone back to work at restaurants. But the industry is at huge risk, especially in the absence of more aid from Congress. Restaurant-going is down by 20% to 60% across the country, according to real-time data from OpenTable. Yet, the business model for restaurants is to operate at full capacity. If the virus dissuades people from dining, or governments forbid them from doing so, many eateries will fail.
Restaurants operate on thin margins and can’t survive the loss of good days in the spring and summer, Kennedy said. Furthermore, as the weather gets colder, restaurants in northern states will empty out if diners aren’t allowed inside. “You can do blankets and heaters for so long, but soon, people are just not going to be dining out as much,” he said.
In other words, time is running out for many restaurants that have been able to survive through the summer months through a combination of spending down savings, relying on government help, and hustling for takeout orders and setting up outdoor dining.
The top request of restaurants, Kennedy said, is another round of the Payroll Protection Program, originally set up by the March CARES Act coronavirus package. The program effectively picked up the tab for payroll for eligible businesses, but it expired in August and has not been reupped.
The prospects for relief legislation are murky. Both Republicans and Democrats favor more aid for industries, but talks have foundered on the question of aid to states and cities. It is possible that Congress leaves before the election without passing a bill.
Most immediately, perhaps, the airline industry faces mass layoffs in October without help.
Airline executives visited the White House Thursday to plead for an extension of aid. The CARES Act provided the industry $25 billion in aid as long as no workers were furloughed before Oct. 1. With that deadline less than two weeks away, roughly 30,000 airline jobs are currently at risk.
The airlines’ dependence on the federal government is near-complete, as their customers are not coming back any time soon. Daily traveler throughput is still off last years’ levels by about two-thirds, according to Transportation Security Administration data.
“The whole travel ecosystem is really in a catastrophic position,” said Tori Emerson Barnes, the executive vice president of public affairs and policy at the U.S. Travel Association.
“Without the ability to drive demand like we need to, we need Congress to help,” she said.
