Chick-fil-A, Starbucks, Arby's Among Eateries That Took a Hit in DC Area During Shutdown, Which Cost US Economy $11 Billion

Even fast-food restaurants, known for using deals and lower prices to attract customers, experienced a drop-off in business during the partial shutdown

What to Know

  • The Congressional Budget Office estimates the government shutdown cost the economy $11 billion
  • Traffic to fine-dining restaurants in the D.C., area dropped by 33 percent during the 35-day shutdown as federal workers miss paycheck
  • Even fast-food chains in the area see foot traffic decline by 23 percent during the time period

President Donald Trump said he isn't happy with the tentative border wall deal Congress announced Tuesday. But restaurants won't be happy if there's another government shutdown.

If Democrats and Republicans don't reach a final deal by the end of day Friday, another shutdown could once again put pressure on Washington, D.C.-area businesses in an industry that's already struggling with higher labor and commodity costs.

The Congressional Budget Office, a nonpartisan agency, estimated that the 35-day shutdown in December and January, the longest in U.S. history, cost the economy $11 billion, with $3 billion permanently lost.

That $3 billion includes lost revenue for restaurants as tourists skipped trips to the nation's capital to visit the Smithsonian museums and 800,000 federal employees missed paychecks and cashed in on deals and free meals from local eateries instead. Chick-fil-A, Starbucks and Arby's were among national restaurant chains to see a sharp drop in foot traffic, according to a new report.

Foot traffic falls
Gravy Analytics, a Dulles, Virginia-based firm, used anonymous location mobile data to analyze foot traffic to D.C.-area restaurants during the 35-day government shutdown.

Traffic to fine-dining restaurants in the area dropped by about 33 percent compared with the same time period last year, founder and CEO Jeff White told CNBC.

"When we look at it, the more discretionary the item, across the board in our data, the more of a precipitous hit it took," White said.

Founding Farmers, a usually busy restaurant with locations in D.C., Maryland and Virginia, saw sales decline by 15 to 30 percent, co-founder Dan Simons told CNBC.

Even fast-food restaurants, known for using deals and lower prices to attract customers, experienced a drop-off in business during the partial shutdown. Gravy Analytics found that the entire category saw foot traffic decline by 23 percent, while nationwide it increased by 2 percent compared with the same time last year.

Chick-fil-A takes a hit
Of the 12 fast-food restaurants it tracked, Chick-fil-A was the most affected by the shutdown. D.C.-area traffic dropped by 34 percent, while nationwide traffic increased by 9 percent. Starbucks and Arby's were the only other chains that saw foot traffic differences of more than 25 percent between D.C. and nationwide locations.

Most fast-food chains that still saw traffic increase year-over-year in D.C., such as Dunkin' and Yum Brands' KFC and Taco Bell, still trailed far behind higher nationwide traffic growth.

Dairy Queen sees boost
Dairy Queen, best known for its Blizzards ice cream treats, was the only fast-food chain that bucked the trend, according to the Gravy Analytics report. The Berkshire Hathaway subsidiary saw D.C.-area traffic increase by 4 percent during the time period, but nationwide it dropped by 1 percent. External factors, such as D.C.'s unseasonably warm weather during the shutdown, could explain those results.

But it seems most D.C. restaurants have returned to business as usual after the shutdown ended.

Simons said that Founding Farmers' revenue has returned to its usual level for this time of year. However, he still has been giving several families of federal workers free meals as they struggle to get back on their feet after missing weeks of paychecks and falling behind on bills.

Fast-casual chain &pizza gave away more than 30,000 pizzas to federal workers during the shutdown and hasn't seen the same post-shutdown drag on sales.

"I would say that our business, although it's not completely insulated, we have had an outpouring from the community given all of the effort that we put forward during the first shutdown," pizza CEO and co-founder Michael Lastoria said in an interview, adding that the price of the chain's pizza is relatively affordable.

The pizza chain began preparing to restart the free pizza program last week, in case of a second shutdown, Lastoria said.

This story first appeared on More from CNBC:

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