Quote:
Originally Posted by park123
If most places went bankrupt, new places would just pop up in their stead within a few years. That's secretly what a lot of policy makers think. Who cares if restaurants go bankrupt, there will just be new ones opening in their place.
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The problem with this is that most new non-corporate restaurants are opened by restaurateurs who have already been successful. For every true startup restaurant there are probably a dozen new restaurants that are the second or third location of something that already has a formula that works. All those restaurateurs have had their seed capital wiped out. The ones that make it through the pandemic will be insanely busy on the other side but it will probably take them several years to recover financially. Restaurants tend to make money slowly in good times and lose it quickly in bad. Banks don't generally finance independent restaurants because they fail at a high rate and have almost no assets that hold enough value to be worth selling at bankruptcy.
One of the downstream consequences of this is that cities have been using growing restaurant sectors to compensate for the shrinking of brick and mortar retail. In most cities commercial property is assessed at a much higher rate than residential so if a collapse of the restaurant industry leads to falling commercial property values that could blow a hole in a lot of city budgets.