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We’ve Been Told That 75 Percent of Restaurants Will Close. But Where Did That Number Come From?

The figure has been reported dozens of times since March 18

A sign posted in a restaurant window informing customers that the restaurant is closed. Shutterstock

If you love restaurants — or are just a sentient being on planet Earth — you’ve probably heard that 75 percent of independent restaurants will close by the time the COVID-19 pandemic is over. It’s a figure that has been reported dozens of times since March 18, when Tom Colicchio, the chef, TV star, and political activist, floated it to the Washington Post. At some point, the statistic became part of the Wikipedia entry entitled “Impact of the COVID-19 pandemic on the restaurant industry in the United States” — which, as much as anything in our digital age, makes it true.

But the 75 percent figure was “a finger in the air,” Colicchio admits. “It wasn’t based on data. It was based on the fact that I know what the margins are like in the business and how hard it’s going to be to sustain. I don’t know who has the wherewithal. I don’t.”

All statistics, of course, are based on a series of assumptions. And Colicchio does have a deep knowledge of the restaurant business. But since the panicked early days of the pandemic, other estimates have emerged. A James Beard Foundation survey of restaurant owners, for example, reported that more than 38 percent of its respondents had closed their restaurants temporarily, and potentially permanently. The Golden Gate Restaurant Association has prophesied that 50 percent of restaurants will close in San Francisco. Colicchio himself has since revised his own figure: it’s now somewhere between 40 percent and 50 percent.

Surveys, like the one from James Beard, are probably more reliable than gut feelings. But the truth is there is no solid number. How many restaurants make it to the other side of the pandemic doesn’t depend on any numbers we can marshal, like how many days worth of a cash buffer a restaurant has (on average, 16), or the number of restaurants that achieve that hallowed 10 percent profit (just 29 percent). Rather, it depends on how and where the virus spreads, when we finally get a vaccine and enough of it to vaccinate everyone.

Because even the most well-capitalized restaurant group can’t afford to be closed for the holidays. As Colicchio, who owns five restaurants in New York, explains, “I break even in the first quarter, do okay in the second, lose money in the third quarter when everyone escapes Manhattan for the summer, and in the fourth quarter we make money. If that fourth quarter doesn’t turn around, it’s hard to see how you get through another year.”

There’s also the question of what exactly closing means. Should we consider the beloved Chicago restaurant Fat Rice “closed” now that it’s transformed itself into a meal kit/grocery store for the foreseeable future? What about Comedor in Austin, Texas, which is following a similar path with its Assembly Kitchen? If states decide to legalize cocktail delivery permanently, many bars and restaurants may find that the old ways aren’t as appealing. “I’d say 100 percent of the restaurants that reopen are going to be different than what they were,” says restaurant consultant Clark Wolf. “The not-so-dirty little secret is that we already were on our way to having redefined the entire model, which has been broken for a while.”

Does a precise number for this grim parlor game even matter? Colicchio’s statistic has done its job, raising the alarm for policymakers and the public about just how devastated the post-pandemic restaurant industry might be. Even if the final number is (just) 30 percent, or 15 percent, it’s still a tragedy, one that the government still needs to step in to mitigate.

The attempt to pin down an exact figure is more about the need for some sense of order or control in a world turned upside down: If we know 75 percent of restaurants are going to close, we can start making plans again. But as Wolf cautions, there is no simple answer. “Americans love simple answers,” Wolf says. “We love listicles. But this is not a listicle moment.”