During the pandemic, many restaurants were forced to serve at limited capacity or even shut down altogether due to government restrictions. Some restaurants were only able to open for takeout or only serve outdoor dining. Because of this, many restaurants took a serious financial hit throughout the pandemic that they are still recovering from today.
A Rocky Road to Recovery
When government restrictions were reduced or fully lifted, restaurants still had a rock road ahead before they could recover from the pandemic. For many restaurants, their regular crowds did not immediately come back. While there were many people eager to return to social gatherings in places like restaurants, others were hesitant to return.
Returning to full capacity was also not simple for many restaurants who were required to enhance their cleanliness and sanitation measures to promote the safety of their business. Adding social distancing barriers between tables or extra sanitation stations within the restaurant added additional costs to restaurants who were already taking a financial hit from the pandemic.
Persistent Operational Challenges
Even today, restaurants are still suffering from the impact of the pandemic. Not only did restaurants shut down during the pandemic, but supply chains did as well. Ingredients, goods, and other supplies needed to run a restaurant increased in cost from continuing inflation as even supply chains tried to recover from the pandemic. Restaurants needed to raise their prices, change their menus, or find other ways to cut back on costs of business operations as they continued to recover.
Supply Chain Disruptions
Supply chain disruptions during the pandemic impacted business operations across industries. Many supply chains were entirely shut down for months because of COVID-19 restrictions on both a federal and local level. This meant that businesses who relied on these supply chains were unable to receive goods needed to run their own operations. Disruptions in supply chains created a domino effect across entire industries, including at restaurants.
Both during and after the pandemic, restaurants experienced many staffing challenges. During the pandemic, restaurants whose business operations were reduced or halted due to government restrictions had to determine how to keep employees on payroll.
Thanks to the CARES Act, the Employee Retention Credit was formed to incentivize restaurants to keep employees on payroll throughout the pandemic. Through the Employee Retention Credit (ERTC), restaurants could earn up to $21,000 per employee that they paid qualified wages to during the 2020 or 2021 tax year. ERTC for restaurants is still available to qualifying businesses who have not yet applied.
Another pressing issue for restaurants that continued beyond the pandemic was a labor shortage. Because of stimulus checks and other financial relief for those hit financially by the pandemic, less workers felt incentivized to return to work. Thanks to programs like the ERTC, restaurants were incentivized to keep their employees on staff. Had they not kept employees on payroll, they may have struggled to find replacements after the pandemic restrictions were lifted.
Navigating the Path Forward
While there are still challenges ahead for restaurants in the post-pandemic world, there is hope for navigating the path forward. Widely available vaccines and dropped rates in new COVID-19 cases gave both the government and general public new confidence to return to the normal world. Three years after the pandemic lockdowns began, the COVID-19 Public Health Emergency was declared over on a federal level as of May 11, 2023. With new public confidence with social gatherings and incentives like the Employee Retention Credit still available, restaurants have new hope for a bright, successful future.