If you’ve read any recent dispatches from states that have begun to reopen their economies, you might be under the impression that restaurants are quickly filling back up as diners cast away concerns about the coronavirus for the sake of a meal out. Here’s how the Washington Post, for instance, recently described the packed scene at a luxury development in Alpharetta, Georgia, a suburb of Atlanta. “Along Avalon Boulevard, people were clustering at restaurants for their first dinners out, and at one of them, every table inside and outside was full, and people with done hair and done nails gathered hip to hip at the entrance to put in their names.”
These sorts of vignettes make it seem like the reopening process is turning into a mad rush. If you’re worried about public health, they give you something to tear your hair out over. If you’re rooting for a quick business recovery, they give you reason for hope.
But these stories are also misleading, at least if you believe the real-time industry data that are available right now, which suggest that customers are only gradually returning to dining rooms. They also point to a long, gloomy slog ahead for restaurants, one that many probably won’t survive.
How full are restaurants in states that have allowed them to reopen? Overall, not very, at least according to OpenTable, which tracks how many people eat in every day at a sample of 20,000 establishments that use the booking platform. In the dozen states1 where foot traffic has recovered most, the number of diners on Saturday was still down by between 84 percent (in Georgia) and 65 percent (in Oklahoma), compared with the same day a year ago. That includes people who reserved online, by phone, or just walked in for dinner.2
Part of the reason restaurants are still relatively empty is that state and local governments are capping the number of customers they can serve at a time for the sake of social distancing. In turn, many restaurants have decided it still isn’t worthwhile to reopen because they’re unsure it will be profitable. In most of the 12 early-bird states, between 18 percent to 25 percent of restaurants remain shuttered, according to the marketing software firm Womply. The notable exception is Tennessee, where only 11 percent are totally closed.
Womply’s figures come from a database of credit and debit card transactions at millions of small businesses, including 48,000 restaurants. It considers an establishment “closed” if it hasn’t processed any payments in at least three days. In other words, these restaurants are entirely shut down. They aren’t welcoming diners. They aren’t selling takeout. At about a quarter of restaurants in places like Georgia, the lights are just off, even if the rent is still due.
And what about restaurants that are open in these states? They do seem to be serving more people with each passing day—at least if you judge by the number of credit card transactions they’re processing. But there are big gaps between states. In Nebraska, the restaurants are charging 15 percent fewer customers than on March 1, according to Womply. But in Georgia, they’re charging 32 percent fewer, and in Florida they’re charging 39 percent fewer. And keep in mind, those numbers include all the takeout orders restaurants are filling, as well as customers who dine in.4
That brings us back to the question of how many people are actually dining in at restaurants that have opened their doors. To answer it, we can use numbers from Toast, a point-of-sale software vendor that has been publishing data from about 13,000 of its customers, including both full-service and fast food establishments. First, overall sales within its network are still down by 44.2 percent, year over year—and that only includes restaurants that are actually recording sales.
Second, on-premises orders currently make up about 57 percent of sales, when normally it’s closer to 85 percent. If you do a little bit of arithmetic, you can work out that restaurants in these states are doing just over one-third of the dine-in business they were before. Even that number is probably high, since Toast’s “on-premises” figures include orders for pickup, just not delivery (hence why they never dropped below 30 percent during the lockdowns). But it at least gives you a sense of the low ceiling we’re talking about.5
This is all actually good news, if you’re primarily worried that people are going to behave irresponsibly in states that have already reopened. The numbers paint a picture of restaurants gradually welcoming diners back, rather than one of packed tables full of people swapping from Bloody Marys and virus-infected respiratory droplets over brunch. While it’s fair to say that states like Texas probably reopened too early given the ongoing public health risks, at least the wild crowds of those newspaper anecdotes don’t seem to be the norm.
But the data also suggest that restaurants are facing a pretty rotten future. There’s a widespread fear in the industry that, even if dining spots manage to reopen, many simply won’t make it through the period of strict social distancing rules and empty tables ahead. A few days back, the CEO of OpenTable predicted that around a quarter of the industry would eventually go out of business—a mass extinction event that will reshape neighborhoods and weigh on the overall economy. The numbers we’re seeing now from places like Georgia, Texas, and Nebraska suggest those fears may not be so over-the-top. Even in Utah and South Carolina, the states where restaurant revenues have recovered the most, according to Toast, they’re still down 27 percent and 29 percent, respectively, which will be unsustainable.6 Unless the federal government takes more steps to support small businesses over the coming months, a lot of them are not going to survive the grand reopening.
1Why 12? Honestly, I wanted to include Georgia, since it’s the poster child for states that have decided to reopen early, and so I added the 11 others where dining traffic has picked up faster, according to OpenTable.
2People tend to assume that OpenTable’s data only cover expensive destination restaurants, but as one of its executives recently noted on Twitter, its sample also covers some mass-market chains like TGI Fridays.
3In general, Womply appears to be one of the better sources of real-time economic data on small businesses available to analysts at the moment. The researchers at Harvard University’s Opportunity Insights project have incorporated them into their own economic tracker, for instance.
4 These numbers are based on a seven-day moving average, because raw daily transaction numbers bounce up and down too much over the course of a week to be useful.
5 Assume, for simplicity’s sake, that the average restaurants had $100 in revenue a year ago, and $85 of that was takeout. Currently, it has $55.80 in revenue and $31.58 are from dine-in customers, or 37 percent of the previous total.
6 The company’s data suggest that revenues at Idaho restaurants have actually increased, year over year, but a spokesman told me that’s likely a quirk of a small sample size in that state.