Despite trimming jobs and minimizing operations as COVID-19 spread earlier this year, large U.S. companies now say that’s not enough.
As the virus has reemerged leading to business shutdowns for a second time, furloughs are becoming permanent, and production has been put off. As a result, thoughts of a recovery anytime soon have been put on hold, The Wall Street Journal (WSJ) reported.
“We cannot defy gravity and continue with the business model we had before the pandemic,” Pret A Manger CEO Pano Christou told the newspaper.
On Friday, Pret A Manger reported an 87 percent drop in U.S. sales and revealed plans to close nearly 20 stores, WSJ reported. The London-based, international sandwich shop chain is just one of many retailers and service delivery providers that once considered the impacts of the pandemic to be temporary. Now, Christou said, it could last years.
New York magazine publisher and operator of several news websites, Vox Media, plans to lay off 6 percent of its workforce.
“It’s becoming increasingly clear that the second half of the year will not rebound anywhere near our pre-COVID forecasts,” Vox Media CEO Jim Bankoff wrote in a memo to staff, WSJ reported. “Furthermore, as cases rise tragically across the country and many of our elected leaders avoid decisive action, we have very limited visibility into the timing or strength of a recovery.”
Other businesses have been able to pivot.
Chipotle Mexican Grill has hired 8,000 workers since May at reformatted stores where customers can place orders online and then pick up their food at drive-thru windows. At least 60 percent of the restaurant chain’s new locations will have drive-thrus, WSJ reported
“We’re seeing stalling demand growth at this point,” Delta CEO Ed Bastian told WSJ. Leisure traffic could take two years or more to recover, assuming a vaccine or treatment becomes widely available.
This, despite a PYMNTS survey in June that found nearly half of Americans, 50 percent, want to travel domestically, while 20 percent hope to resume global travel.
Philadelphia Federal Reserve President Patrick Harker said last week that the rise in coronavirus cases across the country will likely dampen the economy and the impact could be twofold in its damage.
“There’s both the direct economic impact of businesses having to close down,” Harker said. “But I also worry about the psychological impact on consumer confidence.”
Last week, she said the road to recovery for the U.S. economy won’t be an easy one. The recent steps toward recovery were largely due to aid from the CARES Act, including the Paycheck Protection Program (PPP), the $600 weekly extra unemployment benefits and one-time $1,200 stimulus checks.