ASORE: COVID-19 pandemic has Puerto Rico restaurants on the brink
Puerto Rico’s restaurant industry saw a 68.2% drop in sales between April and January 2020, when activity plummeted to $50 million from $157 million, “Proyecciones 2021,” a study commissioned by the Puerto Rico Restaurants Association (ASORE, in Spanish) showed.
During those months, the island’s government established a series of restrictions, including an almost full lockdown, to curb the spread of the COVID-19 virus, when the pandemic was declared.
However, during the months after the lockdown, when protection measures were eased, restaurant sales leveled off, but the industry closed 2020 with monthly average sales that were 4% below the same period in 2019, according to the study produced by Inteligencia Económica.
The study confirmed that at present, 55.1% of small businesses are in “bad” shape, as opposed to 38.9% of larger establishments.
The report also found that 47% of small businesses reported losses of more than 50%. To offset the losses, the restaurants opted to cut back hours and employees to keep their businesses afloat, the study showed.
Meanwhile, online sales, even in the midst of the pandemic, “do not represent a significant segment of the business,” the study showed.
If the pandemic continues, the small restaurants confirmed that to survive, 19.8% of them would file for bankruptcy protection, 56.2% would cut back hours, 55.1% said they would reduce their workforce, and 31% would consolidate operations.
Puerto Rico’s restaurant sector employs more than 60,000 people, and has been the most affected by the pandemic, with a record number of bankruptcies, closings and lay-offs, ASORE said.
“Faced with this extraordinary situation, it was imperative that we learn more about the current state of the restaurant industry, which has suffered so much from the pandemic,” the trade group’s President, José Vázquez, said.
“It was also an opportune moment to measure the future outlook for businesses. Much has been said about the impact on the sector. With this report, it’s clear where we are and what the expectations are for the future,” he said.
Vázquez also stressed that the industry is in “an increasingly precarious situation,” even with the aid announced by the federal government.
He said Puerto Rico restaurants have not received CARES Act rescue funding, which includes an allocation of between $400 million and $500 million for the most affected business sectors. Meanwhile, the US Small Business Administration has announced the availability of $28.6 billion in direct relief funds to restaurants and other hard-hit food establishments that have experienced economic distress and significant operational losses due to the COVID-19 pandemic.
But this allocation worries ASORE because it does not cover the needs of restaurants in all US jurisdictions and its territories, Vázquez said.
“All sectors have received some type of relief mechanism except restaurants. The local government has prioritized other industries to disburse the aid. At ASORE we’re committed to guiding the effort at the local level and we invite the government to also extend a helping hand to restaurants,” said Vázquez.
The “Proyecciones 2021” report entailed polling 88 participants, including sector owners, operators, management and employees across 762 establishments from quick-service and fine-dining restaurants to bakeries.