Current Issues in Tourism

ISSN: 1368-3500 (Print) 1747-7603 (Online) Journal homepage: https://www.tandfonline.com/loi/rcit20

COVID-19 cripples global restaurant and

hospitality industry

Kaitano Dube, Godwell Nhamo & David Chikodzi

To cite this article: Kaitano Dube, Godwell Nhamo & David Chikodzi (2020): COVID-19 cripples
global restaurant and hospitality industry, Current Issues in Tourism

To link to this article: https://doi.org/10.1080/13683500.2020.1773416

Published online: 04 Jun 2020.

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CURRENT ISSUES IN TOURISM
https://doi.org/10.1080/13683500.2020.1773416

RESEARCH LETTER

COVID-19 cripples global restaurant and hospitality industry

a b
Kaitano Dube , Godwell Nhamo and David Chikodzib
a
Hospitality Tourism and PR Management, Vaal University of Technology, Vanderbijlpark, South Africa; bExxaro Chair
in Business and Climate Change, Institute for Corporate Citizenship, Unisa, South Africa

ABSTRACT ARTICLE HISTORY

The restaurant and hospitality industries are crucial socio-economic Received 30 April 2020
sectors that contribute immensely to the global economy. However, Accepted 18 May 2020
these sectors are vulnerable and sensitive to natural hazards such as the
KEYWORDS
COVID-19 pandemic and any resultant economic downturns. This study Hospitality industry; COVID-
investigates the impact of COVID-19 on the global restaurant industry 19; restaurants; tourism
using data from OpenTable and other sources. The study found that sit- industry; coronavirus
in guests dropped to zero in many countries as governments across the
world instituted social distancing initiatives, movement restrictions and
lockdowns. COVID-19 also led to an unprecedented loss of employment
and revenue, resulting in millions of jobs and billions of dollars in
potential revenue lost. The work recommends extra-ordinary financial
and other support measures for the sector. It further recommends a raft
of safety and health protocols as the industry gradually reopens.

Introduction and research design

The hospitality industry is an essential sector of the tourism industry. It employs millions ofpersons
and contributes hundreds of billion dollars to the global economy, owing to the popularity of fine
dining and fast foodoutlets. Unfortunately, the hospitality and tourism sector is vulnerable to the
increasing frequency, and severity of natural disastersand pandemics, which often result in substan-
tial financial loses (Hall, 2010; Kim, Lee, & Tang, 2020). There were fears that given the demands for
social distancing, the restaurant industry was one of the worst affectedindustries by the COVID-19
pandemic (Gössling, Scott, & Hall, 2020). In this study, we seek to decipher the impact of COVID-19
on the global restaurant industry. We make use of data from OpenTable, an online restaurant reser-
vation company, which is a sister company to Booking.com. Data used show year-over-year sited
dinners at restaurants on the OpenTable network across all channels (online, phone, and walk-in
reservations). For year-over-year comparisons by day, we use the same day of the week from the
same week in the previous year. The sample only includes countries with more than 50 restaurants
on the OpenTable platform, and most restaurants sampled are from Australia, the USA, Canada,
Germany, Ireland, Mexico, and the United Kingdom. The above countries account for the total of
the 60,000-restaurant network. In the USA the restaurant industry in 2020 was estimated to reach
$899 billion in Sales Revenue (National Restaurant Association, 2020), in Canada the estimated
value of the industry in 2019 was $93 billion (Restaurants Canada, 2019). In Australia, the industry
is valued at about 24.3 billion in 2017 (Sydney Commercial Kitchens, 2017). In Germany, the restau-
rant industry in 2018 was estimated to be €180 billion (Germany Trade & Invest, 2018) while in Britain
the hospitality industry was worth £86bn in 2017 (Ignite Economics, 2018).

CONTACT Kaitano Dube dubekaitano@gmail.com

© 2020 Informa UK Limited, trading as Taylor & Francis Group
2 K. DUBE ET AL.

Results and discussions

The study shows that the restaurants that utilize the OpenTable platform were negatively affected by
COVID-19 pandemic, which led to a total disappearance of sit-in guests. This was so given that most
governments across the world instituted social distancing initiatives, movement restrictions and lock-
downs to try and curb the spread of the COVID-19. While a somewhat normal trend was observed mid
to end of February 2020, dovetailing around +/−0 and signifying same levels as last year, March 2020
was characterized by severe declines in sit-in customers. By the time the World Health Organisation
(WHO) declared the COVID-19 a pandemic on 11 March 2020, most restaurants were operating at
between −10% and −20% (Figure 1) compared to previous years. In most countries, apart from Aus-
tralia, Germany and Mexico, there was a marked decline in sit-in bookings. By the 18th of March 2020,
most states had recorded sit-in declines of about 90%. This was a stage only reached around the 23rd
of March 2020 by Australia and Mexico.
While some restaurants were able to operate and provide a delivery system, in other countries and
states there was a total closure of restaurants. Countries that have been under strict lockdowns
include Australia, Britain and within the USA states such as Washington, California, New Mexico,
New York and Minnesota amongst a few others went under state lockdown between 19 and 25
March with a stay at home orders. As of 15 May, about half of all the USA states had maintained a
ban on dine-in restaurants. This plunged most restaurants into a liquidity crisis, and possible perma-
nent closure if the pandemic persisted longer. The National Restaurant Association of America esti-
mates in April 2020 set the costs of sustaining the sector at about $242 billion. Due to lower operation
capacity, most fine dining and family restaurants had either laid off staff or furloughed above 80% of
their staff as a cost-containment measure. Since the industry disruptions by COVID-19, the Private

Figure 1. State of the global restaurant industry in the era of COVID-19.

Source: Authors, data from the OpenTable (2020).
 CURRENT ISSUES IN TOURISM 3

Sector Job Quality Index (JQI) estimates that about 10.8 million employees, working in bars and res-
taurants were going to lose their jobs (JQI, 2020).
Given the constraints on the industry, there is an urgent need to provide stimulus and relief
through various concessions such as grants, tax breaks and debt repayment breaks amongst
others. In addition, as more states and countries partially open up lockdowns, restaurants need to
redesign sitting arrangements and operations in a manner that offers some measure of security
and a sense of safety to customers. Such measures include the use of contactless menu board,
payment system, routine sanitization of tables, screening of dinners, offering discounts and institute
promotions to drive and generate more customers. In countries where there has been a total shut-
down, there might be a need to investigate the prospects of allowing restaurants to offer takeaways
or deliveries to reduce the impact of the pandemic on the industry’s viability. Attention should also be
paid to the tourism and hospitality industry employees who are in the crossfire to alleviate suffering
and loss of families and properties. To date, the USA, as the world’s largest economy has provided the
most extensive relief packages through the CARES Act to the tune of $2 trillion which is aimed at pro-
viding liquidity relief to various sectors of the economy including the tourism industry and its
employees who are the worst affected. Nonetheless, the industry complained that conditions
attached to the relief fund made it difficult for the industry to remain viable. In a letter that was
written to the federal government, the sector representative National Restaurant Association indicated
that the CARES Act’s funding conditions such as that it tends to focus on retaining employees even at a
time when there were no jobs for the workers to perform. There were also complaints about the
funding period being too short to provide needed financial relief. The restaurant industry appealed
for more flexibility on what they can spend the money on and recalibration of the loan period.
According to Hall et al. (2020), the impact of COVID-19 is going to be uneven in both space and
time. As such, there is need for each destination, tourism sector and subsector to have customized
measures aimed at conducting business under the new normal. We argue that business and desti-
nations that will thrive post-COVID-19 are those that will show care for customers and employees,
plan to compete in a new world and preserve and optimize liquidity during and post-COVID19.
The study also argues that shareholders and private capital can go a long way in providing much-
needed relief outside of government support. Stimulus and relief packages must be tailored to
ensure market liquidity and protection of vulnerable labour. The focus must be on small to
medium enterprises which form the bulk of the tourism industry that is facing imminent collapse
as they might not have enough access to capital injection as large corporates. Restaurants may
also need to quickly organize themselves into local, national, and global certification programme
(s) on COVID-19 compliance in terms of health, safety and hygiene protocols. Lastly, opportunities
for mergers, acquisitions and re-sizing or downsizing exist. The industry should be on the lookout
for such, including developing co-created value with other stakeholders in the value chains that
include bringing in local communities as shareholders.

Disclosure statement
No potential conflict of interest was reported by the author(s).

ORCID
Kaitano Dube http://orcid.org/0000-0002-7482-3945
Godwell Nhamo http://orcid.org/0000-0001-5465-2168

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