As the response to the Covid-19 pandemic moves into its sixth month, we are getting a better feel for the challenges facing the Delaware labor market.
The extent of the damage could be seen in a report from the Delaware Restaurant Association in its recently released state of the industry report.
The report notes that a whopping eight in ten restaurants anticipate running. at a loss in the next six months, with sales down 60 percent between mid-March and July. It adds up to $700 million in lost sales.
The industry remains on track to see 20 to 30 percent of restaurants closing permanently due to shutdowns and a limited reopening.
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Granted, we will see some new players in an industry often driven more by passion than sound financial judgment. Even when times were good, 60 percent of restaurants failed in their first year.
The Covid-19 world has also led many long-time owners who have worked 60-hour weeks to retire, even if they had sufficient resources to ride out the storm.
An important but often forgotten player in the hospitality industry is lodging.
The numbers here were not good in July with all three counties seeing occupancy ratings down by double digits, with New Castle County well below the industry break-even point. Higher local lodging taxes have not raised much revenue and increase losses, since a soft market does not give the owners room to raise rates.
Sussex County occupancy may be close to the break-even point. That’s nothing to write home about in a seasonal market. Anecdotal evidence does point to more people spending time at the beach later in the summer as school openings are pushed back and classes move online.
The monthly unemployment report for July did show signs of improvement, with the jobless rate dropping by a couple of percentage points to about 10 and a half percent. The hospitality industry added about 4,000 jobs.
The hospitality job losses have been double the rate of the figure of education and health care, the category with the second-highest loss number.
However, monthly figures don’t show the full picture. The hospitality industry has many part-time positions and a server holding down two or three gigs may be down to one. The $600 a week unemployment benefit that expired in July also played a role.
Other issues, including child care and concerns among those with pre-existing conditions going back to work enter into the picture, hence the sizable number of help-wanted posts and uncertainty about the road ahead. – Doug Rainey, chief content officer.