According to new projections, a third of the nation’s restaurants could be shuttered by the start of the new year.
The closures are predicted to bring the restaurant industry’s steady growth to a halt for the first time in two decades, according to restaurant consultants Aaron Allen & Associates, which placed the number of possible closures at more than 230,000 in an interview with Bloomberg News.
Locally, Chamber of Commerce President Paul Little said he expects “a significant number” of restaurants to close in Pasadena by 2021.
“It’s going to kind of sneak up on us,” Little told Pasadena Now. “It’s not like we’re just going to get out of bed on Monday morning and realize that a third of the restaurants in the country are closed. It’s going to sneak up on us over the next few months, but come 2021 there will be a significant number of closures.”
According to information included in Monday’s City Council agenda, receipts from casual dining restaurants were down 18 percent, slightly better than the 19 percent statewide drop from January to March, when Gov. Gavin Newsom’s lockdown order closed dining rooms near the end of the first quarter of the year.
Pasadena has already seen several restaurants close, including Lincoln’s, Du Pars, Club 98 and Kabuki Japanese Restaurant in Old Pasadena.
Kabuki’s East Pasadena location on Foothill Boulevard remains open for take-out and delivery.
“I think it’s a pretty accurate number,” said Brad Salisbury, owner of El Cholo restaurant and a former president of the California Restaurant Association.
“I think what’s happening right now is that so many restaurants got PPP money, and they’re living off of that,” he said. When that’s exhausted, “you’re going to have employees out of cash flow. I think it could be a whole other story.”
According to an impact study conducted by Yelp, the coronavirus pandemic has slammed restaurants which once again have been forced to shut down indoor operations as the virus surges.
“The restaurant industry now reflects the highest total business closures, recently surpassing retail,” Yelp wrote. “As of July 10, there have been 26,160 total restaurant closures.”
According to the National Restaurant Association, 3 percent of operators surveyed said they permanently closed their restaurants in June.
The city has taken a number of steps to help local restaurants, including on-street dining, publishing an online dining guide, and providing seed money for a grant program to assist small, street-level, storefront retail businesses, including restaurants.
Last month, the City Council passed an ordinance capping fees for third-party delivery services, such as Grubhub and Doordash.
Despite those steps, Salisbury is worried that in the end rent will be the downfall of many local mom and pop restaurants.
“Landlords can only wait so long,” he said. “So it’s going to be an interesting January 2021. This will all manifest itself.”
If restaurants do begin closing, Little fears that the past crush of eateries hoping to find a place in Pasadena won’t develop after the pandemic.
“The conventional wisdom here was always, ‘Well, a restaurant is closing in Pasadena, somebody else is going to take their place.’ That’s not necessarily going to happen anymore,” Little said.