By YOURI KEMP
Tribune Business Editor
Restaurants will simply be unable to survive if the loss of 60 percent of their sales persists amid continuing COVID-19 restrictions, one operator told Tribune Business.
Mario Cash, the Burger King franchise’s operations manager, told this newspaper it was impossible to stay in business indefinitely with just half their normal top-line sales volumes.
“We’re all losing money. How long can any of us survive?” Mr Cash asked. “As a model, restaurant profit margins are generally between a five percent and a 12 percent margin. In the United State, restaurants at 12 percent is good, and in the Caribbean if you get seven percent you’re good.
“So if you lose 20 percent of your business, you will not even turn a profit; you can’t break-even. So when you lose 50 percent to 60 percent of your sales, your top line revenue, you are definitely running some serious deficits every single month. There is no model for restaurants that can survive on 50 percent, none. It does not exist.”
While fast food franchises have been able to continue offering drive-through services, and others pick-up, delivery and curb-side service, patrons are still forbidden by the COVID-19 emergency powers orders to enter such establishments and order/purchase food.
And, while the prime minister permitted fast food restaurants, takeaways and drive-throughs, plus those offering curbside and delivery services, to open from 6am to 7pm yesterday and on the upcoming Labour Day holiday, they have also lost significant sales over the past two-and-a-half months to the weekend lockdowns.
Mr Cash added: “No business can run on 80 percent of their business, so when you lose 60 percent of your business there is no way you can survive. How long can you run $100,000 or $200,000 deficits every single month? You are paying out and you are not taking any single thing in. For restaurants it’s just not there. It’s tough.”
Mr Cash added that food costs are very high, and the changeover to non-plastic utensils to accommodate the non-reusable plastic ban had already added to overall industry operating costs.
Revealing that Burger King has no plans make anybody redundant, he said: “I have been paying a lot of attention to what they are doing with regard to opening up in the United States, and I have been looking at the states that have already opened up”.
Mr Cash warned, however, that those restaurants were still not receiving 40 percent of their normal business, and said: “Are the customers going to come? So what the US is seeing is that while you may open, the demand that you think is there is not there. So they are at 40 percent of where they were; they are not even getting half.
“All of the states have opened up in part in some form. It is difficult to project because restaurants depend on a thriving economy and people with disposable cash. So if unemployment is high and everything is going haywire, and even though we are serving food, people would rather cook at home and save a penny.”