Minnesota’s Economic News — W/E 10/15/21
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Just recently, Explore Minnesota released a survey conducted on businesses in the Hospitality Sector during the late part of 2020. The survey, which was done in partnership with Hospitality Minnesota and the Minneapolis Fed, focused on how well businesses fared in light of the Covid-19 restrictions that characterized the hospitality industry in the third quarter. Unsurprisingly, the findings indicate that businesses did not fare well financially.
Nearly 80% of respondents reported lower fall revenue, and more than 80% also reported lower fall customer traffic. Even larger portions of respondents expect lower winter revenue and customer traffic.
Food/drink establishments reported the worst business activity levels, while resorts and campgrounds reported the best, though best is relative and, in this case, still bad.
Geographically, the metro and southern Minnesota regions reported the worst business levels, followed by central Minnesota. Northeast and northwest Minnesota reported similar levels of the best results among regions. Again, best is relative.
What stands out in this survey is how badly affected bars and restaurants were due to Covid-19 restrictions. Bars and restaurants usually face a slow winter. However, in 2020, all throughout fall and beginning of winter, bars and restaurants operated with either a limited indoor dining capacity or a complete ban on dining limited only to take out. For instance, a complete ban on restaurant and bar dining ban was in effect starting Mid-November 2020 through the beginning of January this year. In fact, the survey was conducted in mid-December when restaurants and bars were closed.
It is not surprising to see that out of all surveyed businesses, food/drink establishments faced the most difficulty with at least 60% reporting declining revenue. However other places like resorts and campgrounds, probably due to their nature of being outside activities, experienced some gain.
In regards to solvency, roughly 50% of all businesses said they could not stay in business beyond 6 months if operating conditions persisted. Similarly, food/drink establishments had the worst outlook out of most respondents. However, the number was as high as 80% for food/drink establishments.
Currently, Governor Walz has loosed restrictions on indoor dining. However, as I wrote on Tuesday, these changes do not do a lot to inspire hope in some restaurant owners. This is because for some establishments, operating at 50%, indoor capacity is not profitable. And additionally, many are not sure how long the new rules will be in effect before they are changed.