The 'vast majority of restaurants cannot open profitably' under Georgia's new safety guidelines according to the entrepreneur who helped write those guidelines

Kevin C. Cox/Getty ImagesThe majority of restaurants in the Georgia Restaurant Association plan to remain closed, Peabody said.
  • Georgia is letting restaurants reopen on Monday, April 27. But that may be way too soon for most restaurateurs.
  • Business Insider spoke with Bo Peabody, a restaurant owner and entrepreneur who helped create Georgia’s new guidelines for opening restaurants. Peabody is also the cofounder of the reservation app Seated.
  • Peabody said that “the vast majority of restaurants cannot open profitably” within the guidelines he created with the state’s task force.
  • Most restaurants will likely remain closed on Monday, Peabody said, and the ones that reopen aren’t necessarily going to follow the guidelines, which aren’t legally mandated.
  • Visit Business Insider’s homepage for more stories.

The state of Georgia is allowing non-essential businesses, including restaurants, to open back up on Monday, April 27. But just because restaurants can reopen doesn’t mean that many will choose to do so – and if they do, few will likely turn a profit.

Business Insider spoke with Bo Peabody, a restaurateur and the cofounder of reservation app Seated, who was on the task force that Georgia assembled to create safety guidelines for restaurants as they reopen. Those guidelines outline new safety measures for restaurants, including asking guests to sanitize their hands upon entering, using cashless payments when possible, and reducing the capacity of restaurants.

Peabody said that of the restaurateurs in the Georgia Restaurant Association he spoke to, the majority planned to remain closed. He also plans to keep his restaurant, Mezze, closed for the time being.

“I think the vast majority of restaurants cannot open profitably with these guidelines in place,” Peabody said.

Restaurants run on narrow profit margins, meaning they typically need to be at least 75% full in order to be profitable. However, the new guidelines co-written by Peabody recommend spaced-out seating at around 50% capacity. They also make it difficult to fully staff a restaurant, as keeping six feet of social distance can be a challenge in many kitchens.

Another potential deterrent for restaurateurs considering whether to open is how that changes their relationships with their landlords. While closed, Peabody said, restaurateurs have a stronger bargaining position for reducing or skipping rent payments. However, once they open back up, that conversation with their landlord “becomes a lot harder.”

Even when restaurants open, it’s unlikely that they will immediately see customers flocking to their doors. Many Georgia residents expressed their hesitation to go out when the shutdown ends. Some feel it’s much too early, including restaurant owners.

As for the operators that do plan to open on Monday, Peabody said they may have one of two reasons for doing so.

First, the guidelines aren’t legally mandated. “I was surprised that the governor didn’t make some of these things statutory,” Peabody said. “I think that you’ll see a lot of operators, not necessarily in Atlanta, but outside of Atlanta, are going to open and just go about business as usual. And their view is going to be that people who are comfortable coming will come and people who aren’t won’t. That’s because there’s no liability. “

Secondly, Peabody said, those who open on Monday may not have financial reasons for doing so. One Atlanta restaurateur with many locations plans to open “just because he wants to practice,” Peabody said. Trials runs may be a big incentive for operators with multiple locations to open up down the line. While it’s unlikely that operators will profit by opening, opening up during a period with fewer customers could allow them to test out new systems.

If you’re a restaurant owner or a retailer in Georgia, we’d love to know what your plans are. Reach out to us at [email protected]

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