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Omicron lowers sales and threatens bankruptcy for US restaurants

Chris Coombs applied for federal Restaurant Revitalization Fund money last year but did not receive any before the program ended. Since Omicron hit the industry, he and other restaurant owners, along with some lawmakers, have wanted Congress to replenish the fund.David L. Ryan/Globe Staff

US restaurants stayed afloat during the pandemic thanks to outdoor heaters, elaborate patio spaces, and to-go drinks. But the creative workarounds weren’t enough to stem the losses from the recent Omicron-fueled surge of COVID cases.

Sales decreased at 98 percent of restaurants across the country in December, according to a poll of 1,169 restaurants conducted by the Independent Restaurant Coalition. Sales dropped by at least half at 58 percent of those surveyed, while 80 percent of restaurant owners said omicron impacted their operating hours.

The sharp hit to restaurants nationwide demonstrates the pandemic's continuing blow to the industry, despite national efforts to avoid economic pitfalls from shutdowns this winter.


The impact is particularly challenging for businesses that didn't get funding from the Restaurant Revitalization Fund, a $28.6 billion federal effort to rescue struggling businesses that was part of the American Rescue Fund. Four out of five businesses that did not receive grants said they were in danger of permanently closing in 2022.

The fund provided as much as $5 million per location for restaurant owners -- or as much as $10 million per business -- who could demonstrate their businesses experienced significant financial distress during the pandemic.

Restaurateur Dwayne Allen, owner of The Breadfuit in Phoenix, Arizona, said the pandemic forced him to shut down in-restaurant dining in March 2020. For the past two years, he worked to keep the business afloat by introducing catering, take-out, pop-ups and community partnerships. He applied for an RRF grant, but did not receive one. Now, Allen said the efforts to keep the restaurant afloat brought him into tens of thousands of dollars of debt, and he's losing hope of ever reopening the restaurant without external financial support.

In addition to a drop in sales, restaurants also struggled with staffing shortages and increased costs due to rising wages. Nearly half of restaurants that did not receive pandemic relief said they were forced to lay off staff because of the surge in cases, compared to a third of those who did receive funding.


Nearly half of restaurants also said that the cost and availability of COVID tests impacted their ability to do business.