“I think that retail capacity will be reduced, relocated, and repurposed,” said Daniel O’Connor, a veteran retail adviser and visiting executive at the Harvard Business School. Reduced means that thousands of restaurants will go out of business. “Flat out, I’m telling you a lot of today’s restaurant locations are going to become gyms,” O’Connor said. Relocated means that many restaurants that hang on will recognize in the next few months that they can’t survive in expensive downtown areas. They’ll look to open new locations in the suburbs, or shift their business to a food truck.
“Repurposed means the restaurant of 2010 isn’t going to be the restaurant of 2025,” O’Connor said. “The pandemic is going to accelerate the shift to contactless delivery of meals, groceries, and products of all kinds.” As more restaurants recognize that they cannot make rent by filling hygienically spaced seats, they will become, simply, for-profit kitchens—a place where food is prepared but less commonly eaten.
Once again, this shift was already happening slowly, but is being accelerated by the pandemic. Last year I wrote that given the growth of so-called “off premise” dining, 2020 would likely be the first year that American restaurants made more than half of their revenue from delivery, drive-through, and takeout. Nobody could have predicted that this milestone would be reached due to the absolute zeroing-out of on-premise dining.