The restaurant industry is in the midst of a complete and utter collapse unlike anything we’ve ever seen before.
If you ask Google how many restaurants there are in the United States, it will tell you that there are 660,755, even though that number is a few years old.
But for the purposes of this article, that’s a pretty good guess. Americans love to eat out, and restaurant workers are some of the hardest working people in the country.
So it’s incredibly sad to see more and more restaurants constantly going down.
In some cases, restaurants that have served their communities for decades decide to close their doors for good.
For example, over the weekend, Sammy’s Roumanian Steakhouse in New York announced that it had finally reached the end of the road …
Iconic New York City restaurant, Sammy’s Roumanian Steakhouse, has closed its iconic basement doors as the coronavirus pandemic continues to cripple the restaurant industry.
The Lower East Side fixture was famous for its latke spreads, chopped liver and vodka bottles frozen in blocks of ice and was known as a noisy party spot frequented by celebrities.
Unfortunately, Sammy is far from the only one.
In fact, in a recent article he wrote for Fox Business, Adam Piper lamented the fact that more than 100,000 American restaurants went bankrupt during this pandemic …
State and local governments have used the coronavirus pandemic as a license to steal freedom and opportunity in pursuit of unprecedented omnipotence. Unreasonable, unnecessary and hypocritical actions have forced over 100,000 restaurants to close and endanger countless others.
And according to Bloomberg, the actual number of dead restaurants is now over 110,000 …
More than 110,000 restaurants have closed permanently or long-term across the country as the industry grapples with the devastating effects of the Covid-19 pandemic.
Just think about it.
More than one in six restaurants in the United States has already disappeared, and the National Restaurant Association warns that there will be more carnage in the months to come because the industry is in “economic free fall” …
“The restaurant industry just can’t wait for relief any longer,” said Sean Kennedy, executive vice president of public affairs for the association, in a letter to Congress. “What these results clearly show is that more than 500,000 restaurants of all types of businesses – franchisees, chains and independents – are in free fall economically.”
This is what an economic depression looks like.
With tens of thousands of empty restaurants and tens of thousands more paying no rent, the stage is set for a commercial real estate disaster of unprecedented scale and scale.
Of course, there are millions of square feet of office and retail space that is not currently productive either. In a recent article, Lee Adler called this looming commercial real estate nightmare a “monster in the room”…
I think if there is anything that illustrates the problem of the head in the sand of the banks, it is it. Commercial real estate financing (CRE). There is a monster in the room. All this empty space. No longer produces income.
For now, the big financial institutions are doing their best to hide their future losses, but according to Adler for some sectors, losses will simply be inevitable…
Multifamily will cut their hair but survive. I guess the industry, while overvalued and overvalued, will produce enough revenue to get by. Office and retail? Kiss him goodbye. It is done. More than. Damn.
Unfortunately, he’s right on target.
The upcoming commercial real estate crisis will make the subprime mortgage collapse of 2008 and 2009 look like a Sunday picnic.
And the longer this pandemic continues, the greater the losses will eventually become.
For residential real estate, the big story is that hordes of Americans are fleeing both coasts and moving to smaller communities in the middle of the country.
So while house prices are dropping dramatically in major cities on the East Coast and West Coast, they are rising rapidly in cities like Pittsburgh, Boise, and Austin …
Smaller metropolitan markets like Pittsburgh, Cleveland, Cincinnati, Indianapolis, Kansas City, Boise, Idaho, Austin, Texas and Memphis, Tennessee are currently experiencing some of the biggest price increases in the country, according to the Federal Housing Finance Agency. Prices in these cities are now at least 10% higher than a year earlier.
And as I said yesterday, we are starting to see hyperinflation for high end properties in rural and suburban areas of the country.
Just recently a friend sold a house not too far from us for a price that almost made me lose my eyes. I literally couldn’t believe the insanely high price they were able to get, but that’s what happens in a hyperinflationary environment.
2020 may have been a “personal financial disaster” for 55% of all Americans, but thanks to the hyperinflation of the stock market, the rich have more money to invest in high-end real estate than ever before.
Sadly, all of this wild money feeling will not be able to prevent the upcoming commercial real estate crash.
No matter what their money, many Americans are just too scared of COVID to eat out right now, and it will remain so for the foreseeable future.
And we’re going to continue to see more Americans emigrate from major cities on both coasts, and more businesses in these central urban areas will continue to fail.
As the commercial real estate crash unfolds, many financial institutions simply cannot do it without government help.
So will the federal government bail them out?
You never know, but every dollar the federal government borrows and spends only makes our problems worse in the long run.
All the dominoes are starting to fall and we are still in the very first chapters of this economic collapse.
Unfortunately, most Americans still don’t understand what’s going on, and most of them have no idea that economic conditions are going to get worse anytime soon.
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