Will the Restaurant Industry Survive The Pandemic?
A look at the restaurant industry in the U.S. in the midst of COVID-19.
In the last two years, I have had the chance to live in three top destinations for food lovers: New York City, Paris, and Bogota. Whether it’s a croissant in Paris, a pizza slice in New York City, or an Ajiaco in Bogota, exploring the culinary delights of the city is always at the top of my list. Sadly, the pandemic turned things upside down in a matter of weeks and an everyday plan of grabbing a coffee with friends at a local coffee shop or going out for lunch with my family became a distant memory. Not long after the outbreak of the pandemic, many successful restaurant owners saw their lifelong dreams falling apart.
My family and I have been trying to support local restaurants by ordering deliveries and takeouts whenever we can. However, as much as we are keen on supporting the restaurant industry, we are hesitant to sit at a restaurant anytime soon. Hearing that restaurants I used to go to have closed or have had to layoff workers to survive motivated me to learn more about the state of the industry, assess the prospects for recovery, and get a grasp of the market’s response to the reopening of restaurants.
I used publicly available data from OpenTable and The New York Times to make a thorough analysis of the state of the restaurant industry in the U.S. The objectives of this study are to provide restaurant owners and stakeholders with a clear and insightful view of where the industry is headed and motivate consumers to find ways to support the industry.
What is the extent of the impact of the pandemic on the industry?
The first data set from OpenTable is a year-over-year comparison of the number of seated diners in the U.S. The sample population includes only metros or states with more than 50 restaurants in the OpenTable network for 2019 and 2020. The year-over-year comparison means that if, for instance, the number of seated diners at a restaurant on a given date in 2019 and 2020 were the same, we would get a value of 0%. Before March, the percentage of seated diners was fluctuating around zero, meaning the number of diners in 2020 was greater than or equal to that of 2019. However, in the first half of March, the number of seated diners plummeted to -100% across the country. The line plot above illustrates the dramatic plunge in customers — for almost two months the industry was completely inactive.
Evaluating each state individually we see that the number of seated diners plunges to -100% across all states around March 15th, which coincides with the outbreak of the pandemic in the U.S. However, the timing of the resurgence of the number of seated diners varies across the states. A few states like Texas and Florida reopened at the beginning of May, while others like New York, District of Columbia, and Washington, reopened later down the road and at a more moderate rate.
Is recovery starting to take shape?
We use a second data set from OpenTable including data from only restaurants that have chosen to reopen. In this case, if there were the same number of seated diners at a restaurant in 2019 and 2020, we would get a value of 100%. Before mid-May, there is no available data, indicating that most restaurants were closed until then. Throughout May and July, there is a gradual increase in the number of seated diners, however, the curve is far from reaching pre-pandemic numbers.
How fast is the number of reopened restaurant seated diners growing?
For the rest of the analysis, we focus on eight states: Texas, Florida, New Jersey, California, New York, Illinois, Pennsylvania, and Massachusetts. We computed the week-over-week percentage change in the number of seated diners in each state and plotted the average. The number of reopened restaurant seated diners compared to last year has remained below 50–60% across all eight states. There hasn’t been significant growth in seated diners over time, with week-over-week percentage changes not exceeding 2% and even falling to -1%.
How have the markets responded to different reopening policies and COVID-19 curves across the U.S.?
We used data from The New York Times to plot the curve of daily COVID-19 cases against the curve of seated diners over time for each of the eight states and grouped them into three categories corresponding to the behavior of the infection curve.
Firstly, New York and New Jersey were the states with the most dramatic and earliest peaks in COVID-19 cases amongst the eight states studied in this analysis and the ones with the latest resurgence of the number of seated diners. The restaurant industry was not reactivated until the infection curve had flattened and the percentage of seated diners has remained well below -60%, suggesting there will be a slow recovery.
Secondly, the curves of COVID-19 cases for the states of California, Texas, and Florida are quite similar: a moderately flat curve until around June followed by a dramatic incline. The restaurant industry had an early reactivation in Florida and Texas, where the number of seated diners started to rise at the beginning of May — at least a month earlier than most states — and reached peaks of -10%. However, as an apparent surge of COVID-19 cases appeared across these three states in late June, the restaurant industry seems to be slowing down once again.
Lastly, Illinois', Massachusetts', and Pennsylvania’s curves have remained relatively flat since the outbreak of the pandemic until today. The number of seated diners started to rise at the beginning of June, which seemed to be a prudent time for restaurants to reopen. Currently, there seems to be an upward trend in the curve of seated diners, reaching values of around -50%. These three states, which haven’t had the dramatic peaks of states like New York and New Jersey, seem to be recovering at a faster rate.
Will the industry ever go back to "normal"?
It seems like states that rushed into reactivating the economy and returning to a "normal" life are seeing the consequences of their policies reflected in the recent surge of reported cases of COVID-19 — apparently causing the recovery of the restaurant industry in these states to slow down. On the other hand, the states that have managed to flatten the curve and contain the spread of the virus seem to be on track for economic recovery. Although the restaurant industry is far from reaching pre-pandemic numbers, an upward trend is visible in the states where the virus is under control.
We all dream of those days when we had to line up to get a seat at our favorite restaurant and no masks or social distancing were required. If we want to save the industry, not only should we support our local restaurants but also take care of ourselves and others by taking preventing measures such as wearing a mask to contain the spread of the virus and ensure we are able to enjoy a night out at a restaurant or bar sooner rather than later.
What are you doing to support your local restaurants and contain the spread of the virus?
The source code and data files of this study can be found on GitHub: https://github.com/manuelarod/restaurant-industry-amidst-covid19
