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News Article

What may happen if restaurants shut down again

By Sofía Hanna | Fri, 12/04/2020 - 18:50

The uncertainty that comes along with COVID-19 has been especially difficult for the restaurant, bar and food industry. There is the possibility that restaurants may close, leading to more problems and growing concerns.  

During a virtual conference hosted by the National Chamber of the Restaurant and Seasoned Food Industry (Canirac), Francisco Fernández, president of Canirac, pointed out that if the industry goes through another shutdown, it could be catastrophic for the many sectors involved.  "When this happened, we had resources and an income. Nevertheless, from one day to the next those resources went to zero and expenses had to be paid, making this the perfect formula to go bankrupt. If these measures take effect for three months, establishments will surely close and there will be a loss of jobs," reported Expansión.

Expansion also mentioned that there is no official number of businesses that could be affected. Nevertheless, the approximate number of restaurants that had to close is about 90 thousand. If taken into consideration the amounts of jobs this lockdown implies, considering the ones involved directly (2.1 million) and indirectly (3.5 million), then it becomes a matter of high importance.

Many restaurants have survived by providing delivery services, such as Rappi or Uber Eats. However, this model is more likely to turn in positive profits by handling a "dark kitchen," which, as referred in a previous MBN article, is kitchen-only spaces that only cook food for people who order it to-go. Not every restaurant can do that sort of downsizing in terms of space and staff, but it is a reality that the home delivery category saw the fastest growth during the last months.

One industry that has kept growing despite the pandemic is the fast-food sector. According to a previous MBN article, in Mexico, the fast-food industry is estimated to be worth MX$ 203 billion (US$ 9.5 billion).  

This means to the restaurant industry that there is an option to keep the business going. However, the infrastructure and competition it implies makes the transition difficult and not that profitable in some cases. An example from this last statement is the "Sin Delantal" case in which they announced that due to intense competition in the food delivery industry, they are saying goodbye to the Mexican market, reported MBN.  

Another issue discussed during the Digital Canirac Conference was the infrastructure issue. Enrique Tellez, President of Real Estate Development Association (ADI), said the restaurant industry is one of their most relevant partners, added to a list of other industries that also had to seize operations and expansions that have cost over MX$120 million (US$6,071,340) and that this new possibility of shutting down could mean this uncertainty will continue, reported Expansión. 

Another whole issue is the bars, nightclubs, and canteens, that as mentioned before in an MBN article, there are problems because the measures between bars and restaurants are different. They do not have the same infrastructure or logistics, so it stops being an option.

The data used in this article was sourced from:  
Expansión, MBN
Sofía Hanna Sofía Hanna Junior Journalist and Industry Analyst