By Christopher Pitts
- Restaurants have begun to issue “dining bonds” which work like discounted gift cards
- The number of African-American-owned restaurants surged to 49% between 2007-2012
Before the coronavirus pandemic, Black and brown restaurant owners were on the rise. In order to combat COVID-19, many restaurants have begun to issue “dining bonds”, which work like discounted gift cards that can be purchased now and redeemed for a higher value no earlier than a specified later date to stay afloat. This might prove to be a viable strategy for Black owned restaurant businesses considering Black purchasing power reaches over $1 trillion annually.
Why This Matters: Let’s break down exactly how dining bonds work; a restaurant would sell a $100 certificate for $75, however the customer wouldn’t be able to redeem it for 30 days. In buying this dining bond, the customer bears the risk that the restaurant might go out of business, and as a result, businesses are asking consumers to view the bond as a donation. This could be a good way to save your favorite creole or soul food restaurant. Customers must contact the individual restaurants to purchase the bonds, as they all have different methods for selling them.
How dining bonds work; a restaurant would sell a $100 certificate for $75, however the customer wouldn’t be able to redeem it for 30 days
Remember things were all good just a few months ago when the number of Hispanic-owned restaurant businesses surged to 51% between 2007 – 2012, while African-American-owned restaurants shot up 49% during the same period. Both were above their corresponding growth rates in the overall economy. Now restaurants are losing more than half of their revenue as a result of closures, and social distancing policies. The National Restaurant Association estimated last week the entire industry would lose $225 billion in the coming three months and shed five to seven million employees.
Situational Awareness: The rise of COVID-19 might prove to be a major setback for minority restaurant ownership. In order to remain stable many restaurateurs will have to get creative, or perhaps apply for loans from local banks to stay in business. Unfortunately, the minority community is still having trouble accessing loan capital, meaning that many of these restaurants might face permanent closure at a faster rate than their white counterparts.
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