There’s been broad confusion about the “phases of reopening” the U.S. economy. The White House created a recommended three-phase plan back in April, yet it specifies that it is ultimately up to each governor to determine what works best for their state’s situation and level of COVID-19 spread. Places like New Jersey, New York, and Washington have opted to implement a four-phase reopening plan. Further complicating matters, some states (like New York) are doing a phased reopening based on the readiness of particular regions of the state.
“High-risk” industries permitted to open in later phases
Regardless of which state you live and work in, and which phase of reopening you’re in, you can be sure that almost all small to medium-sized business (SMB) owners have been taxed by the challenges presented by COVID-19. But because they are considered especially high-risk for the spread of the virus, businesses in some industries will only be permitted to begin opening their doors again in the final phase of reopening. Among them:
The Department of Labor has concluded that dentists, dental hygienists, and dental assistants have the highest exposure to the disease, ranking alongside respiratory therapy technicians and oral surgeons. The instruments used by dental practices create aerosol clouds that can hold germs for up to three hours, increasing the odds of exposure for staff if a patient has the coronavirus.
Some dentists are adding a COVID-19 surcharge to help cover the cost of upgraded personal protective equipment (PPE) that they say is essential for keeping employees safe during the pandemic. Fees in early June have ranged from a one-time $10 fee to $150 for dental surgery.
A Pittsburgh dental organization that serves hundreds of practices in 15 states is piloting a program to offer Covid-19 tests to patients ahead of scheduled procedures.
Fitness centers and gyms
Fitness centers and gyms have been hard-hit by COVID-19 restrictions. They are not considered essential businesses by federal, state, and local governments, and as a result, many fitness chains closed locations temporarily. Two of the nation’s largest chains, Gold’s Gym and 24-Hour Fitness, have both filed for bankruptcy protection in recent months.
Some companies turned to livestreaming and online platforms to keep their memberships engaged and fit. Relatedly, Peloton reported a 66 percent increase in revenue during the 1Q versus year-ago. The company signed up 1.1 million people to digital-only free trials in March and April and has a backlog of bike deliveries.
Requirements for reopening fitness centers and gyms vary dramatically by state and include temperature checks and masks for workers, limited occupancy, and mandatory distancing between machines/exercisers. State restrictions also vary on allowing access to pools, locker rooms, saunas, showers, and group classes. State-specific mandates create problems for fitness chains with multiple locations in different states.
Hair salons and barbershops
All states have taken steps toward reopening hair salons and barbershops. Some salons report that they experienced a flood of business upon reopening, but that demand has since tapered off. This may signal a significant portion of the overall client base doesn’t yet feel safe enough to return to salons.
Guidelines for opening may include wearing gloves and masks, only one person allowed in per appointment (including children), limiting services to brief ones like haircuts, spacing work stations six feet apart, sanitizing stations and equipment after each customer, and providing hand sanitizer or alcohol wipes. Blow drying may also be limited or eliminated. Some worry blow dryers could spread droplets that carry coronavirus.
Adhering to new distancing guidelines can decrease salon capacity. Time-consuming sanitizing efforts between clients can also reduce the potential volume of business. As a result, salons may need to renegotiate rent/lease terms with landlords since some pay rent based on a percentage of their profit.
Research company MoffettNathanson predicts that revenues from movie ticket sales will fall 52 percent year over year to $5.5 billion in 2020. AMC, the world’s largest movie theater chain, said in early June that it has “substantial doubt” it can remain in business. That company’s revenue fell 22 percent year over year during Q1, and Q2 results are expected to be even worse, according to company officials.
AMC expects to be “fully open globally in July,” and says it can still be profitable at 25 percent capacity. Many states are restricting movie theater attendance to only 25 percent capacity per showing, with a gradual increase to 50 percent over time, depending on the trajectory of coronavirus cases.
On the other hand, drive-in theaters, which have been in decline for decades, have seen significant revenue growth since the beginning of the coronavirus outbreak. Drive-in theaters have made adjustments because of the outbreak, like requiring movie goers to wear masks if they leave their car, selling tickets that reserve two spaces instead of one, and offering new apps for ordering concessions from a car.
More than 300 drive-in theaters are currently operating across the US, down from about 4,000 in 1958.
Restaurants and bars (for on-premises dining)
Full-service restaurants, including The Cheesecake Factory, Fleming’s Prime Steakhouse and Wine Bar and Bonefish Grill, saw comps fall between 13 and 14 percent during the 1Q and 39 to 46 percent drops during March 2020, reflecting the late quarter table service bans. The US restaurant industry expects losses totaling $240 billion through the end of 2020, according to the National Restaurant Association (NRA), assuming a gradual reopening of the economy in June.
States across the country began to allow on-premises dining and bars to reopen in June with health and safety restrictions and reduced capacity to minimize the spread of COVID-19. Soon after, establishments in Florida and Texas voluntarily closed after employees or patrons tested positive for the virus. The sudden onset of cases calls into question the ability for restaurants and bars to operate safely, even with restrictions.
New York Mayor Bill de Blasio was open to the possibility of closing low-traffic streets to expand outdoor space for restaurants and bars. Owners are concerned that opening at less than capacity to comply with social distancing rules is not realistic. Some bars are waiting until they can open at full or near-full capacity because of space constraints. Sports bars are concerned about reopening because customer traffic depends on the return of major sports, which are still on hold.
Hurry up and wait?
Business owners in myriad industries are eager to reopen their doors and return to some degree of normalcy. However, as COVID-19 cases begin to dramatically increase in numerous states that took an early-reopening approach, there is growing uncertainty around fully opening those businesses that fall into the final phases.
In states with active outbreaks, will (and should) the final phases of reopening be pushed out due to the uptick in cases? Is it financially worthwhile for a SMB owner to open their doors if their number of customers is severely restricted? These are just a few of the many questions that struggling business owners are asking themselves right now.
>> All of the industry-related information in this post was pulled from our free Vertical IQ COVID-19 webpage. Learn more about how various industries are being impacted by COVID-19.
Photo credit: Erik McLean on Unsplash