If the restaurant industry had an official sportsbook, the most popular wager would be the over-under on restaurant closures.  

The Monitor has been the "chicken little" of the restaurant industry for many years, calling out an overbuilt industry and suggesting it might lose as much as 20-25% of its store base during a deep recession. Okay, I’ll admit this was an attention-getting line and was always dismissed by the bulls. But, these were the facts: We were late in the economic cycle and restaurants were struggling with rising labor costs and mediocre traffic. High rents and intransigent landlords were a problem long before Covid-19, but that didn't stop money from flowing in to open even more restaurants. They were due to get hammered. 

Now comes the meteor that is the coronavirus and it slams broadside into the restaurant industry. (Full disclosure: I stole the meteor analogy from CR3's Gene Baldwin). The virus shutdowns are far worse than a recession, because they hit all at once.  

So how many restaurants are going to close? 

OpenTable said last month that one in four restaurants were doomed due to the coronavirus. That's the over number here—with approximately 160,000 restaurants closing. Take that one with a grain of salt, folks, primarily because OpenTable is a reservation system for full-service restaurants, the upper-end ones that have been annihilated.

The National Restaurant Association predicted 15% of restaurants would close, but that was when they were arguing for more Paycheck Protection flexibility. Hopefully, relaxation of the PPP rules will keep more restaurants from meeting their maker. 

Barclay's analyst, Jeff Bernstein, has done the most exhaustive analysis to date on closures by studying unit counts in various restaurant segments and making assumptions about temporary closures turning into permanent ones. He estimates that approximately 10% of the 650,000 restaurants in the U.S. will close, roughly 65,000 restaurants and $53 billion in revenue lost. 

Bernstein sees independents heavily weighted in casual and fine-dining, and like most restaurant watchers, predicts the most trouble in those segments. By examining temporary closures, Bernstein concludes the coffee/bakery segment, steakhouses and Italian full-service dining businesses are most at risk of closing permanently. He points out there are 32% of the approximately 100,000 coffee and bakery establishments, 16% of steakhouses and 11% of Italian full-service restaurants, closed right now.  

Bernstein predicts fewer closures in the QSR segments, with burgers and Mexican food outperforming during the shutdowns. Let’s add chicken and pizza and wings as solid performers, too, at a small risk of closing. 

Restaurant consultant Larry Reinstein thinks the closure rate might be closer to OpenTable’s over than Bernstein’s under. He sees some of the sandwich brands, such as Potbelly and Subway, vulnerable. Buffets, bar and grills, fine dining establishments and family dining restaurants are also on Reinstein’s radar as a potential for higher closure rates.

"More restaurants will reopen than we think with all this stimulus, but watch what happens in 2021 when restaurants are dealing with real revenue and real costs," said Reinstein.

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