“Catastrophic” — The State of Restaurant Wine Sales

In a press release that outlined the state of depletions (sales from wholesalers to restaurants/retailers) over the past 12 months ending in September, SipSource analyst Dale Stratton described on-premise (restaurant/bar) alcohol sales this way:

“The situation in the on-premise is nothing short of catastrophic and continues to get worse every day.”

It’s possible that Stratton was understating the situations for restaurants and bars. This is particularly the case as many states engage in a second round of shutdowns of restaurants and bars as COVID cases rise.

In July, Yelp reported that 60% of the 26,000 restaurants on its platform that had temporarily closed will never open again. In October, New York State Comptroller reported that within six months 33% to 50% of restaurants open prior to the pandemic could close by April of next year. Both these predictions were made prior to the recent huge increase in COVID cases and the second round of restaurant/bar shutdowns that are now being put in place across the country.

All of this goes a long way toward underlining Stratton’s assessment of restaurant wine sales as “catastrophic”. It strikes me that America’s restaurants and bars are playing pass blocker to COVID’s blitz while the rest of us are being forced to scramble. The offensive line never gets the credit it deserves.

If any economic sector has been hit harder during the pandemic than restaurants, I’m not sure what it is. Perhaps airlines, cruise lines, or movie theaters. But it also highlights an important mission that states must now consider: Do we immediately provide industry-specific aid to try to keep restaurants from failing? And/or when the vaccines are distributed and the pandemic wanes, should states find some method for providing aid to surviving restaurants for the role we’ve asked them to play. For many restaurants no longer in business, the effort will be too late. But this is no reason not to extend tax relief or some other method of compensating these hardest-hit businesses after taking the biggest hits.

Meanwhile, the National Restaurant Association is urging state governors to not engage in a second round of restaurant shutdowns and offering up evidence that the risk of transmission in a restaurant setting is far lower than the shutdown orders appear to assume.

Just because folks cannot or won’t drink their alcohol in an on-premise setting during the pandemic does not mean they have given up drinking. Rather, statistics suggest they are largely doing their alcohol consumption in their homes. Retail and grocery store and online sales of alcohol have increased significantly since February. This makes sense, but it doesn’t help the restaurants that are devastated by states’ actions to control the spread of the virus.

The question for lawmakers is simple. Do we allow a huge swath of restaurants across the country to simply disappear in the wake of COVID and state’s restaurant shutdown orders or do we act to aid these institutions?

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  1. Joel Goldberg - November 19, 2020

    Tom, while I concur with your support for restaurants, here in Michigan we face a lawsuit by the state restaurant association to void the three week ban on indoor dining, in order to help contain the pandemic’s explosive growth. I don’t want to see my favorite restaurants close, either — a couple of them already have — but if we’ve learned anything this year, it’s that reliance on “personal responsibility” doesn’t work. Restaurants do need help, but we need to reject any single group that puts its own economic interests ahead of the public welfare.

  2. Tom Wark - November 19, 2020

    Joel,

    I’m merely wanting to demonstrate that it is restaurants that have been asked to take the worst hit and we ought to recognize that and try to help them. As for lawsuits, I’m not the right person to ask associations not to file suit when they believe the law is on their side. Though I understand your point.

  3. Moe Powers - November 19, 2020

    Joel/Tom,

    I thoroughly enjoy civil discourse, thank you.

  4. Uffe - November 20, 2020

    What I do hope is another PPP coming.
    The only reason why many of us still have our front door open.
    We managed to keep half of our employees at least on part time basis.
    These are folks that need their jobs to pay rent and daily expenses.
    They can’t work from home like most people been able to do.
    We been operating with 20 percent of normal business and worked towards 50 percent but the new lock down and we are back to 30 percent.
    Meanwhile our basic cost like rent, utilities and insurance/fees have not changed.

  5. Tom Wark - November 20, 2020

    Uffe,

    Unfortunately, I don’t see them getting to that anytime soon. I suspect that down the road, a good deal of relief will be asked of the state governments. Hang in there.

  6. MAURICE WEDELL - November 21, 2020

    While restaurants are bearing the brunt of the fight, big box stores, grocery stores and other large retailers continue to allow unlimited customers into their stores without temperature checks or much of anything else, a much more fair solutions and perhaps more effective that what has been implemented would be to curtail their operations to curbside pickup only and not allow in store shopping, clearly in Los Angeles, where there has been virtually no inside dining for the past six months and yet there is a surge of infections, a policy of banning indoor dining has had questionable result, but during the indoor dining ban the restaurant industry has been devastated.

  7. Tom Wark - November 21, 2020

    Maurice,

    You make a good point. I’ve not looked around so I don’t know if it exists, but I’ve not seen any studies that definitively show high rates of infection from restaurants. Occasionally you see reports of large events at clubs or weddings or whatnot that have resulted in large infection rates, but I’ve not see the same for restaurants.

  8. MAURICE WEDELL - November 21, 2020

    i just don’t understand how big box stores etc are exempt from scrutiny when their customers stand shoulder to shoulder trying to to get just one more roll of toilet paper, no testing and no social distancing until you get in line, and then you put your items on the same conveyor that the prior customer just used and that has not be sanitized, restaurants it seems have become the scapegoat for everyone to blame for the unchecked spread of the disease.

  9. Kim Martin - November 23, 2020

    COVID has exposed and widened many fractures in the restaurant wine world. I am a wholesale wine sales rep in Dallas/Ft. Worth Texas and, yes, the sales to restaurants and country clubs has taken a catastrophic dive. We lost 5 high-end accounts due to permanent closure. More tenuous are the restaurants that have been trying to hang on with 50% to 75% dining occupancy, but have lost 100% of the business traveler private dining that had accounted for anywhere from 40% to 80% of their business. One of my best accounts is running close to $750K behind in revenue. Without large parties during the week, they are only restocking the BTG wines they get from the big wholesalers. If they sell out of one of their higher end wines, they are simply not restocking and selling something else from the list. I’ve been out for dinner where it took 5 tries to get an in-stock bottle. Now we have corporate accountants dictating pricing maximums that cut out my products forever. I think the losses we’ve seen so far are only the tip of a huge iceberg. More closures are on the horizon, especially for fine dining. My advice to my boutique winemakers is to pivot to online sales and wine clubs.


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