2020 Closures and Bankruptcies
2020 Closures and Bankruptcies
Unlike the financial crisis of 2008, the pandemic year of 2020 withstood layoffs, closings and a crippling unemployment year by upholding IRA contributions for many. PSCA (Plan Council of America) reported more than 90 percent of employers maintained their contributions during this difficult year (https://www.psca.org/sites/psca.org/files/Research/2020/401k%20Fall%20Snapshot_FINAL.pdf). Although organizations with less than 50 employees were forced to suspend or reduce their employer matched contributions. However, many companies did not fair well this year.
We saw many small companies that didn’t apply for the Payroll Protection Program offered by the Federal government. When asked “Why not?” one small restaurateur told us (translated), “My English is not good, and we were afraid to fill out the forms incorrectly.” Other small retail stores and restaurants we spoke to felt that the loan programs and grants would only be approved for the larger establishments. They were too busy trying not to go under.
At one local outdoor mall near our office, we were told that 35% of the retail stores had closed due to the pandemic. According to MoneyWise (https://moneywise.com/a/chains-closing-the-most-stores-in-2020) more than 9,000 retail stores closed in 2019 but more than three times that number are expected to close permanently in 2020. Think big retailers with hundreds if not thousands of locations such as GNC, Pier 1 Imports and others. Some companies will go dark for good while others will attempt a reboot in 2021. Behemoths such as Bed Bath and Beyond will shutter more than fifty stores this year with the hopes of rebounding for next year. It is hard to imagine shopping without the likes of these iconic and favored establishments.
Restaurants were hard hit as well. According to CNBC, 60% of restaurants fail within the first year and more than 80% don’t see their 5th year anniversary. Yet for the chain restaurants who received big payouts (or not), many will shutter their kitchens due to the 2020 pandemic. Among those who have fallen and filed for Chapter 11: NPC International Inc. (Pizza Hut and Wendy’s), California Pizza Kitchen, Chuck E. Cheese, and IHOP are a sampling. And others have yet to file for bankruptcy but have closed hundreds of locations including but not limited to: McDonald’s (200 closing), Le Pain Quotidien (98 closing), Starbucks (400 closing and 300 pickup locations opening), and Dunkin’ (800 closing).
We grieve our favorite establishments and have empathy for those who were employed there. We look forward to 2021 as a better year filled with hope, dignity and civility in the United States and abroad. We salute those who have remained afloat through sheer will power, grit and resolve.
Photo credit by Tim Mossholder (Santa Maria CA) @timmossholder
