At least half of the more than 40,000 Chinese restaurants in the U.S. will have to declare bankruptcy if they continue to suffer from a reduced business.
That is the warning of Chen Shanzhuang, general counsel of the U.S.-China Restaurant Alliance.
Banquet-type Chinese restaurant business is miserable
Chen had an interview with U.S.-based Chinese language media World Journal in the 2022 National Restaurant Association last Sunday, May 22.
In the interview, Chen said that the epidemic had imposed a harsh blow on the Chinese restaurants in the states. Before the pandemic struck, some large restaurants had hundreds of employees. However, many restaurants have shrunk the banquet-type order since the epidemic, with large-scale gatherings disappearing. As such, the small-scale, small gatherings order could not help shoulder the cost of operation.
Chen owns 12 restaurants himself. He said that the pandemic in the U.S. has not disappeared. People are still afraid to catch the virus and reinfect family members.
Chen said that, in a nutshell, the Chinese restaurant business in New York has only recovered by about half, and customers are still hesitant to eat out.
In the past, he would receive about 500 banquet-type orders just in May, but he could not obtain that many for the whole half of this year.
Chinese-Americans more cautious about epidemic prevention, Chinese restaurants can’t recover
Chen said that the Chinese are more cautious about the epidemic, so the Chinese restaurant industry, serving mainly Chinese customers, faces the most pressure.
On the other hand, restaurants serving other ethnic groups have relatively stable customer flow.
Chen said, among the 12 Chinese restaurants he owns, the takeaway services with non-ethnic groups as the primary customers fare better than Chinese hot pot restaurants, large Chinese banquet restaurants, etc.
Chef’s salaries have increased by 40%, but he still could not find anyone.
Labor shortage is also a headache for the industry.
Chen said that 15 dollars per hour are enough to ensure a big crowd of candidates. But now, 20 dollars per hour is still not enough to find one.
He cites New York as an example where the average monthly salary of a chef is about 3,500 dollars. No one even applies now, even with a salary increase of 40% to 4,800 dollars.
Chen said that it is becoming more and more difficult to find workers in Chinese restaurants. Besides, since the epidemic, many people have switched to easier jobs with higher salaries and better benefits. Those are cannabis store clerks, farm packers, and online car-hailing drivers.
Chen complained that the pandemic had delivered a massive blow to the Chinese food industry. He pointed out that his U.S.-China Restaurant Alliance had about 6,000 members pre-pandemic. Now, its membership has dropped by 50%, to about 3,000.
Hev added that his restaurant chain had accumulated losses of 45 million dollars within the last two years. Before, there was government relief aid, but now he complains that the epidemic will not end, and his restaurant sees no future.
Customer spending halved as stock market slumps
The World Journal said the epidemic has severely damaged the catering industry, worsened by the recent losing streak in the stock market—the longest since 2001. As a result, the average spending of each customer in the restaurant has almost halved.
Chen said that, besides manpower, price, and the general situation affecting the Chinese restaurant industry, Chinese restaurants rely on heavy discount strategies to grab a limited pool of customers. Unfortunately, this desperate strategy has pushed the industry from bad to worse.
Chen also gives out a gloomy guess. There are currently more than 40,000 Chinese restaurants in the United States. If the restaurant business cannot recover to 70% of the pre-epidemic level in May and June next year, half of them will be closed down.