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Covid neither neighborhood nor innovation friendly

Boak & Bailey’s news and nuggets Saturday served as a reminder that UK beer drinkers are stuck in a grim cycle. My Twitter and Instagram feeds, full of snaps of people gathered with friends (but not too many friends) at bars and brewery tasting rooms, suggest things are better here. Has the worst really past? There are reasons to believe it hasn’t.

Story No. 1 from the Wall Street Journal this past weekend: “McDonald’s, Chipotle and Domino’s Are Booming During Coronavirus While Your Neighborhood Restaurant Struggles.” The subhead: “A health crisis is creating a divide in the restaurant world. Big, well-capitalized chains are thriving while small independents struggle to keep their kitchens open.”

Story No. 2: “Covid Is Crushing Small Businesses. That’s Bad News for American Innovation.”

(These stories are behind the Journal’s paywall. I tracked them down in print, which is one more thing that’s not as easy as it was at the beginning of the year.)

Restaurants come and go. About 60,000 open in an average year, according to the National Restaurant Association, and 50,000 close. But this year it will be much worse. The association predicts 100,000 restaurants will close during 2020. Employment at restaurants and bars has dropped by 2.3 million jobs from a total of more than 12 million before the pandemic, according to the Labor Department.

The chain-restaurants-versus-corner-diners dynamic does not compare exactly to well-capitalized-breweries-versus-corner-breweries one, but it seems like the view in January 2021 will be much different than the one in January 2000.

The second story suggests that when economic power resides in fewer hands then innovation and entrepreneurship suffer. “In 1989 businesses with fewer than 100 employees accounted for 40% of the workers employed by all U.S. firms, according to the Census Bureau. Newly released data show that as of 2018 that had fallen to 33%,” according to WSJ. “Now it is almost certainly even lower. Small-business transaction data collected by software and business-services provider Womply show that about 1 in 5 businesses that were open in January have stopped transacting entirely.”

The numbers for small breweries do not look as terrifying as they did initially, but as Tomme Arthur suggested on the Drink Beer, Think Beer podcast, “We’re still in an if-when function here and frankly, on a business level, we’re not out of it yet.

“For me, the scary part is I don’t think we’ve seen the level of closings that were forecast, and I still think there are a lot of closings that could come out of this—and I feel like there are some pretty key players who aren’t going to make it as well.”

The second story suggests that when economic power resides in fewer hands then innovation and entrepreneurship suffer. “In 1989 businesses with fewer than 100 employees accounted for 40% of the workers employed by all U.S. firms, according to the Census Bureau. Newly released data show that as of 2018 that had fallen to 33%,” according to WSJ.

“Now it is almost certainly even lower. Small-business transaction data collected by software and business-services provider Womply show that about 1 in 5 businesses that were open in January have stopped transacting entirely.”

The story implies that it might be January 2022, or later, before we understand the final impact. “The challenges that small businesses are now facing could cast a pall over the U.S. economy for years to come.”

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