Impact of COVID-19 on Restaurants

Restaurants walloped by COVID-19 have suffered a silent epidemic of financial woes among an unlikely segment: Franchise eateries.

The pandemic’s impact on the food industry has been well chronicled, with many having to shutter, drastically cut staffing and hours, or resort to other desperate measures just to stay afloat. However, some experts say franchises — third-party operators licensed by larger brands — are just as vulnerable to closure and operational struggles, like food and labor shortages.

A staggering 20,000 franchisees nationwide closed in 2020, and employment in the sector plunged by 11.2% to 7.5 million last year, according to data from the International Franchise Association (IFA).

That represented a loss of approximately 940,000 jobs across food and leisure establishments in an industry that generated $680 billion worth of output to the U.S. economy, the IFA estimates. Still, franchise jobs are expected to jump by over 10% this year to nearly 8.3 million as the recovery continues.