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Restaurants 'Can't Survive' With 60% Sales Devastation

By YOURI KEMP

Tribune Business Editor

ykemp@tribunemedia.net

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.”

Comments

Islangal1 1 month ago

With the high unemployment rate that will surely ensue after the lockdown, will people still be able to afford to buy fast food as they did before?

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ThisIsOurs 1 month ago

Some people weren't affected at all over the past 3 months and are walking straight past all the dead canaries as they clock out of their shift at the coal mine

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JokeyJack 1 month ago

Mr. Cash has many good points. Another point is that restaurants in the U.S. (and I assume here too once we put in place some more silly rules) - are being forced to "social distance" and only so many people are allowed inside at a time.

That puts a clamp on whatever demand even exists. Knowing that there is a decreased demand, it is silly to artificially reduce it.

The virus is over. 90% of people are probably already infected - got infected long time, had a sneeze and were done with it.

It's like we spoke to the virus and said "Don't worry Mr. Corona sir, you don't have to kill us - we will do that for you ourselves. Rest easy."

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Porcupine 1 month ago

I see why you call yourself Jokey.

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ThisIsOurs 1 month ago

Alot of what you say is true. The problem is we dont know which of us were infected or if its 50, 60 or 90%. Was it the ones who were in close proximity to elderly or other at risk individuals? Or do those people still face a post Stalingrad-light infection risk? That's the biggest question. Are our at risk people at risk?

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Porcupine 1 month ago

Mr. Cash is right on all accounts. ThisisOurs has it right. This is merely one of many canaries which we will be passing by the next few months and years. Some will be starving. Some will hardly notice. Which one will our government be?

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The_Oracle 1 month ago

I understand the initial reaction, possibly over-reaction. But at some point you back up and adjust, retain the sensible, discard the pointless. Not so with this bunch. Keep driving towards the cliff. compounding error on error, especially in the written orders. Kinda like burning down the village to keep it safe from the attacker. The ban on face mask import is ludicrous. They are called N95 because they filter 95% of particulate matter. Medical N95's also filter fluids. Cotton masks do not. Calling mask making an industry is incongruous. I applaud the makers no doubt, and the face shield makers, but if we are all required to wear them it should be any and all masks domestic or imported are good to go. We would need 400,000 masks made eventually, and them some. Has the government looked at the import quantities for N95 paper masks for 2017, 2018? 2019? domestic cotton mask production will not replace that use.

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thps 1 month ago

Hey Oracle. I think the ban is on non-medical grade masks. So N95s can be brought in.

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moncurcool 1 month ago

How much of these fast food restaurants are adding to our issue of obesity and health issues?

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thps 1 month ago

Interesting point.

There are many health issues are out there that are being ignored.

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