Pandemic-induced closures have walloped the restaurant industry since mid-March, and the CEO of TGI Fridays tells Yahoo Finance that another round of government stimulus is “absolutely critical.”
“People are dropping like flies around here,” said Ray Blanchette. “The dominos are falling every single week, and it seems like we’re left to our own devices here.”
The latest to fall was Ruby Tuesdays. The 48-year-old fast casual chain filed for bankruptcy this week. It joins the parent company of Chuck E. Cheese and California Pizza Kitchen into Chapter 11 during the pandemic.
A survey released by the National Restaurant Association last month found that 100,000 U.S. restaurants, or nearly 1 in every 6 restaurants, have closed on a permanent or long-term basis, leaving roughly 3 million people out of work.
“As the second-largest employer in the country, when you look at a 7.9% unemployment, you’re not going to fix that without a robust restaurant industry,” said Blancehette.
Mixed stimulus message
The White House has sent mixed signals this week about the status of stimulus talks. President Trump signaled he would support a bill that addresses certain areas of the economy, including $25 billion in aid for the airline industry. Despite the president’s renewed interest in striking a deal, Senate Majority Leader Mitch McConnell warns that any stimulus package will likely have to wait until after the Nov. 3 election. On Friday the White House said it would offer a $1.8 trillion stimulus proposal.
“We’re 10 times the size of the airline industry, and to be sort of of overlooked like this is very upsetting,” said Blanchette.
At the height of the pandemic, TGI Friday’s laid off 80% of its 18,000 workers as its 870 restaurants worldwide temporarily shut down. Blanchette said funds from the government’s first CARES Act helped the restaurant chain bring back many of those workers and quadruple its payroll.
Like many restaurants, TGI Fridays has been forced to offer outside seating to comply with CDC guidelines and continue operating during the pandemic, but the coming of colder temperatures during the fall is “terrifying” for Blanchette and his workers.
“Why the government can’t get off their hands here and get something done when it obviously helps is beyond me,” he said.
TGI Fridays was poised to return to the public market this past spring via a SPAC merger with Allegro Merger Corp., but that deal has since been scrapped.
“Obviously our timing was about as bad as you could hope for,” said Blanchette. “I mean, we were literally going to go public in March, March 30 was the deadline on the SPAC. Obviously, that is not our priority today, our priority is focused on our team.”
Alexis Christoforous is co-host of the Yahoo Finance show “The First Trade.” Follow her on Twitter @AlexisTVNews.