US restaurants concerned over sales losses due to capacity constraints

A survey of 2,500 US consumers conducted this month found that three-quarters planned to avoid restaurants or dine out less frequently, according to Wall Street firm Cowen

Though dining rooms across the US are reopening and some customers are returning, restaurants have expressed concern regarding sales losses because of capacity constraints imposed to contain the new coronavirus.

According to the Wall Street Journal, restaurants are trying to figure out how to run at a fraction of that capacity.

"This business model is fundamentally altered," said John Cywinski, president of Applebee's, which was on the path to opening new stores for the first time in years before the crisis hit. Across the restaurant industry, he said, "There will be a likely contraction as a result of this."

Even as restaurants reopen, many Americans say they do not feel comfortable going out to eat yet. A survey of 2,500 US consumers conducted this month found that three-quarters planned to avoid restaurants or dine out less frequently, according to Wall Street firm Cowen.

Margaret Ganong, a 63-year-old translator from Seattle, said that she is too concerned about being exposed to the virus to linger in a restaurant. She does not like the idea of being served by a masked waiter.

Ganong plans to stick to cooking at home with her husband.

"The vibe of a restaurant will be a bit grim for the foreseeable future," she added.

Some casual-dining chains, such as Brinker International Inc.'s Chili's and Cheesecake Factory Inc., built up to-go businesses during the crisis and say they can come closer to breaking even with fewer diners at their restaurants this year.

One Denny's Corp. franchisee is closing 15 restaurants in New York and laying off 520 workers, according to a notice provided to the state this month.

Meanwhile, an owner of 49 IHOP restaurants in four states cited stay-at-home mandates in its bankruptcy filing this month, Wall Street Journal reported.

A spokeswoman for Dine Brands Global Inc., parent company to Applebee's and IHOP, said that the company sent notices terminating the owner's franchise agreements last month.

Independent restaurants face even greater challenges than sit-down chains because they tend to have less room to cordon off customers and fewer seats to remove.

Camilla Marcus, owner of West-bourne in Manhattan, said that she does not know how to make the restaurant's 1,500-square-feet of communal seating work under capacity restraints.

She is among the owners who formed an association-- the Independent Restaurant Coalition -- to lobby Congress for a dedicated $120 billion fund for restaurants and for fixes to federal loans meant to keep businesses afloat during the pandemic.

"Everything we have created to date is gone. It's bleak," Marcus said.