CORONAVIRUS

Iowa bars, restaurants 'on the precipice of collapse'

Only 45 percent expect to rehire all employees

A new Iowa Restaurant Association survey finds 58 percent of options. Above, a sign on the front door of the Iowa Chop H
A new Iowa Restaurant Association survey finds 58 percent of options. Above, a sign on the front door of the Iowa Chop House in Iowa City says the restaurant is closed in keeping with the state's mandate to shutter restaurants and bars to seating patrons. Iowa Chop House offers curbside pickup and delivery. (Andy Abeyta/The Gazette)

Iowa’s bars and restaurants are taking a massive economic hit from mandated closures attempting to halt the spread of COVID-19, a new study finds — to the tune of some $310 million in April alone.

Ninety-five percent of restaurant operators report their total dollar sales volume is down from this time last year, according to the Iowa Restaurant Association. On average, restaurant operators reported a 75 percent decline.

Bar owners fared far worse, with 92 percent completely closed, resulting in an 89 percent decline in bar sales over the same period in 2019.

When compared with 2019, survey results indicated Iowa’s restaurant and food service industry will lose more than $310 million in sales this month.

The study found 87 percent of Iowa’s bars and restaurants have laid off, furloughed or terminated jobs for employees in the past 30 days. While just under 40,000 Iowa hospitality industry employees have filed for unemployment, the industry estimates that more than 66,000 have been laid off or furloughed since the beginning of the coronavirus outbreak in Iowa in March.

Employment continues to look grim after bars and restaurants reopen, with only 45 percent expecting to rehire all employees.

“Iowa’s hospitality industry is on the precipice of collapse,” said Jessica Dunker, president and CEO of the Iowa Restaurant Association, in a statement from the association.

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“We desperately need to find a path to responsibly open our doors, even if it’s a graduated, rolling reopen strategy that includes social-distancing measures.

“The longer these on-premise service suspensions are extended, the more operators we will permanently lose.”

The Iowa study found that 58 percent of restaurants, bars and other hospitality venues that offer food are trying to use carryout, drive-through and delivery. However, for most it’s not profitable, simply covering the costs of maintaining a small number of employees and paying rent.

The majority of bars — 77 percent — have not attempted to take advantage of the relaxed rules, citing reasons ranging from “unable to compete with retail prices” to “can’t sell enough mixed drinks to make it profitable.”

Should the mandated closures be extended to July 1, the study said 26 percent of bars and restaurants do not expect to reopen.

Many of the 70 percent of bar and restaurant operators who have business disruption insurance are encountering denial of their claims. Only 1 percent of those that have filed claims have received a benefit payout.

Forty-six percent have been told by their insurance agent that even though they have a business disruption policy, they should not file a claim because it will be denied.

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