Impact of the 2019–20 coronavirus pandemic on the food industry
This article is about a current pandemic where information can change quickly or be unreliable. The latest page updates may not reflect the most up-to-date information. (Learn how and when to remove this template message)
The 2019–20 coronavirus pandemic affects the global food industry as governments close down restaurants and bars to slow the spread of the virus. Across the world, restaurants' daily traffic dropped precipitously compared to the same period in 2019. Closures of restaurants caused a ripple effect among related industries such as food production, liquor, wine, and beer production, food and beverage shipping, fishing, and farming.
The issues were particularly disruptive in industrialized areas where large proportions of entire categories of food are typically imported using just-in-time logistics.
Global food security expert Peter Alexander of the University of Edinburgh said that the free-market, just-in-time logistical systems common in industrialized areas are very good at dealing with disruptions in one place or sudden shortages of one commodity but are more vulnerable to systemic shock because there is no slack in the system and no supply reserves to fall back on.
In many places there was panic buying with resulting shortages. There were some supply chain disruptions for some products; for instance, many hand pumps for hand sanitizer bottles are imported into the US from China and were in shorter supply. For most food products in the US normal resupply happened, but panic buying causing empty shelves contributed to consumers' impulse to stock up and hoard. A US food retail trade group advised retailers to accelerate ordering and consider rationing in order to prevent empty shelves. Food retailers were "among the most affected by the coronavirus, but one of the few businesses that might actually benefit," at least in the short term according to Cheddar. Some areas saw price gouging.
On March 23, 2020, the Brazilian Association of Bars and Restaurants (Abrasel) reported that more than 3 million workers could lose their jobs over the next 40 days.
Starbucks, KFC, Pizza Hut, and McDonald's had closed restaurants in Wuhan or Hubei by January 27. Because the closings came just before the Lunar New Year celebrations, they came "at probably the worst time for China," according to Jude Blanchette, head of China studies at the Center for Strategic and International Studies. The Lunar New Year as of 2020 was considered China's single most important economic event, with 2019 spending of US$150 billion. The service sector in 2020 represented 52% of China's economy.
By March 24 Starbucks had reopened 95% of the 2000 restaurants that had closed, including some in Wuhan. Starbucks announced it expected a $400 million or more in lowered revenues for the fiscal second quarter because of the China closures.
According to Eater, "The whole French food chain may become less individual and more corporate as only big restaurant groups like Alain Ducasse and major industrial food producers survive."
According to Eater, restaurants in Budapest depend heavily on tourism, and will likely not survive.
According to Eater, much of Italy's artisanal food production depends heavily on tourism, both directly and indirectly via restaurants, and may not survive.
In New Zealand on March 25, 2020 butcher shops were declared non-essential businesses by the government. According to the 2017 version of the New Zealand Pandemic Plan, Retail Meat New Zealand and other organizations will coordinate with the government to maintain essential food supplies to point of sale.
Select outlets of fast food and restaurant chains across Luzon remained operational during the Luzon enhanced community quarantine. The outlets that remained open continue to accept take out and delivery orders. Food delivery services such as GrabFood and FoodPanda temporarily halted but eventually resumed operations in Luzon during the quarantine period.
According to Eater, in the restaurant industry in Sweden "there is a feeling of utter despair" but also high levels of camaraderie among restaurateurs, who are trying out new ideas in an attempt to survive.
UK Prime Minister Boris Johnson on March 16 recommended the public stay away from bars, clubs, and restaurants. The restaurant industry is the UK's third-largest employer. A relief package for workers was announced March 20 but funds would not be available until the end of April.
According to The Guardian, restaurants "scrambled to reinvent themselves" by pivoting their business models to adapt to the realities of government restrictions. Restaurants became "takeaways, bottle shops, delicatessens. Others [were] selling hampers, fresh meal-kits or offering cookery courses."
Nearly half of the UK food supply is imported.
Multiple suppliers to restaurants switched to direct-to-consumer models.
The 2020 coronavirus pandemic impacted the US restaurant industry via government closures, resulting in layoffs of workers and loss of income for restaurants and owners. It impacted retail groceries with panic buying noted as early as March 2 in some areas.
According to NPR's Yuki Noguchi, "Just about every restaurant nationwide has been hit hard at once, making this disaster unique." Industry experts warned that many small businesses would not be able to recover from closures without help from the government. Impact on the greater economy was as of March 17 expected to be large as Americans have in recent years spent more at restaurants than at grocery stores. Lester Jones, chief economist of the National Beer Wholesalers Association, said “This is a very significant and traumatic event for the restaurants, bars, taverns and the industry in general." Chris Swonger, CED of the Distilled Spirits Council of the United States, said "The impact on our industry is going to be really, really difficult. It's going to be a real challenge economically for not only the distillers of the United States, but certainly small businesses, restaurants, and bars." Sean Kennedy of the National Restaurant Association on March 19 called the closures a "perfect storm" for the industry, saying the three primary challenges for restaurateurs are short-term access to cash, medium and long-term access to credit, and tax relief when the closures are ended. An investor in two New York City restaurants told the New York Post:
This situation is apocalyptic for the restaurant business. How sad would the city be if the only places that survived were chains? It makes me depressed to even think about it.”— Mark Amadei
The New York Times on March 20 reported that industry analysts were predicting that two-thirds of restaurants would not survive, and as many as 75% of independents. On March 26, 11 percent of restaurants anticipated permanently closing within the next 30 days.
The US restaurant industry was projected at $899 billion in sales for 2020 by the National Restaurant Association, the main trade association for the industry in the United States. An estimated 99% of companies in the industry are family-owned small businesses with fewer than 50 employees. The industry as a whole as of February 2020 employed more than 15 million people, representing 10% of the workforce directly. It is the nation's second largest private employer and the third largest employer overall. It indirectly employed close to another 10% when dependent businesses such as food producers, trucking, and delivery services were factored in, according to Ohio restaurateur Britney Ruby Miller. In Delaware and Massachusetts, one in ten workers is employed in the restaurant industry. In North Carolina, 11% of workers are employed by the industry. In Texas, 12% of workers were employed by the industry as of 2016.
Industry experts on March 18 forecasted $225 billion in direct losses and a full economic impact of $675 billion because of additional revenues generated elsewhere in the economy when customers patronize restaurants.
In a February 28 story about how restaurants could prepare for the possibility of a pandemic, Restaurant Business quoted Roslyn Stone, COO of a firm that provides crisis response for restaurants, who said "The prospect of a global pandemic has already put a spotlight on restaurants and the tendency for employees to come in sick. Though more chains have started giving employees sick time as the supply of labor has tightened, it’s increasingly important for companies to change their culture to ensure employees aren't working while sick."
A March 3 story in Nation's Restaurant News characterized the industry as being braced for impact from the virus.
On Sunday, March 15, Ohio Governor Mike DeWine and Ohio Health Department director Amy Acton ordered the closure of all bars and restaurants to help slow the spread of the virus, saying the government "encouraged restaurants to offer carryout or delivery service, but they would not be allowed to have people congregating in the businesses." DeWine said he'd made the decision "after being contacted by citizens around the state sharing photos and stories of crowded bars Saturday night, despite warnings of social distancing and the governor’s edict limiting crowds to no larger than 100 people." The city of Los Angeles closed all restaurants and bars later that evening and New York City announced all restaurants and bars would close by the following Tuesday, both cities also allowing exceptions for takeout and delivery.
The next day, Illinois, New Jersey, New York state, Connecticut, Kentucky, Pennsylvania, Maryland and Washington DC followed suit. On March 18, the National Restaurant Association asked the federal government to provide relief to restaurants and restaurant workers. By March 21, at least 25 states had closed restaurants and bars. By March 22, the number had risen to 38. In other states, major cities had closed bars and restaurants to sit-down diners and limited to takeout orders and delivery.
Industry fallout and reactionsEdit
The partial rather than full closings of restaurants meant that the closings failed to trigger business interruption insurance for many restaurants; other policies had clauses excluding coverage in the case of epidemics, action by civil authority, or requiring restaurants to have physical damage to property. Many employees were laid off, and more employees lacked sick leave in the sector compared to similar sectors. The New York Times characterized the closures as affecting "all strata of the industry, from the owners and their celebrity chefs to the waiters and waitresses, bar-backs and busboys, who effectively are facing layoffs and may be unable to pay their rent."
Multiple state and local governments offered relief packages for workers and restaurants. US President Trump met via phone on March 19 with leaders of chain restaurant companies, but no independent restaurateurs were included. Participants included Domino's Pizza, McDonald's, Wendy's, Yum Brands and Darden Restaurants and representatives from the International Franchise Association and the National Retail Federation.
- "See how much business U.S. restaurants are losing because of the coronavirus". cbsnews.com. Retrieved 2020-03-22.
- Somvichian-Clausen, Austa (2020-03-20). "How NYC's restaurant industry is surviving amid coronavirus closures". TheHill. Retrieved 2020-03-22.
- Mali, Meghashyam (2020-03-17). "Restaurant industry reeling under coronavirus". TheHill. Retrieved 2020-03-22.
- Bloom, Jonty (2020-03-26). "How are food supply networks coping with coronavirus?". BBC News. Retrieved 2020-03-26.
- "How Is the Grocery Supply Chain Responding to Coronavirus?". www.fmi.org. Retrieved 2020-03-28.
- Repko, Melissa (2020-03-02). "How grocery stores are trying to prevent 'panic buying' as coronavirus causes stockpiling, emptying shelves". CNBC. Retrieved 2020-03-28.
- "Grocers, Retailers Gear Up for Coronavirus as Demand Spikes". Cheddar. Retrieved 2020-03-28.
- "How Food Scenes Around the World Are Coping Amid Coronavirus". Eater. 2020-03-20. Retrieved 2020-03-24.
- Pham, Sherisse (27 January 2020). "How the coronavirus is already hurting global business". CNN. Retrieved 2020-03-22.
- Stankiewicz, Kevin (2020-03-24). "Starbucks CEO: Our experience tracking coronavirus in China shows US on 'very similar' path". CNBC. Retrieved 2020-03-25.
- "Starbucks commits to paying all workers for 30 days — even if they don't go to work during coronavirus". cbsnews.com. Retrieved 2020-03-25.
- Mar. 22, Jonathan Maze on; 2020. "Vapiano says coronavirus might push it into bankruptcy". Restaurant Business. Retrieved 2020-03-23.
- "Coronavirus impact: Restaurant body seeks financial bailout package". @businessline. 23 March 2020. Retrieved 2020-03-23.
- globalmeatnews.com. "New Zealand butcher shops deemed 'non-essential'". globalmeatnews.com. Retrieved 2020-03-30.
- "New Zealand Influenza Pandemic Plan A framework for action" (pdf). New Zealand Government Ministry of Health. p. 38. Retrieved March 30, 2020.
Representatives of the FMCG sector will coordinate during a pandemic event to maintain essential food and grocery supplies to point of sale. Coordinating organisations include, but are not limited to, the New Zealand Food and Grocery Council, the New Zealand Retailers Association, Retail Meat New Zealand, Fonterra, the New Zealand Fruit and Vegetable Growers Federation, Progressive Enterprises, Foodstuffs, Colgate Palmolive and Goodman Fielder.
- "Where to Order Food for Take Out and Delivery Amidst Enhanced Community Quarantine". Philippine Primer. 19 March 2020. Retrieved 26 March 2020.
- Rayner, Jay (2020-03-22). "Chefs and restaurateurs fear they may go under after coronavirus closures". The Observer. ISSN 0029-7712. Retrieved 2020-03-22.
- Naylor, Tony (2020-03-22). "How restaurants are scrambling to reinvent themselves in the wake of coronavirus | Tony Naylor". The Guardian. ISSN 0261-3077. Retrieved 2020-03-22.
- Hanbury, Mary. "McDonald's is closing all of its restaurants in the UK as the coronavirus pandemic rages on". Business Insider. Retrieved 2020-03-23.
- "Greggs to close all stores to prevent virus spread". BBC News. 2020-03-23. Retrieved 2020-03-29.
- globalmeatnews.com. "UK meat businesses adapting to tackle coronavirus situation". globalmeatnews.com. Retrieved 2020-03-30.
- Noguchi, Yuki (22 March 2020). "Closed All At Once: Restaurant Industry Faces Collapse". NPR.org. Retrieved 2020-03-22.
- "Food And Beverage Industry Hit Hard By Coronavirus Outbreak". NPR.org. Retrieved 2020-03-22.
- Keil, Jennifer Gould (2020-03-23). "NYC restaurants stop offering takeout due to coronavirus crisis". New York Post. Retrieved 2020-03-23.
- Severson, Kim; Yaffe-Bellany, David (2020-03-20). "Independent Restaurants Brace for the Unknown". The New York Times. ISSN 0362-4331. Retrieved 2020-03-23.
- Trump Says Restaurants Will Make a Comeback, Just Maybe With New Owners
- Brownfield, Andy (20 March 2020). "Cincinnati restaurants ask feds for coronavirus bailout". login.research.cincinnatilibrary.org. Retrieved 2020-03-22.
- Ramirez, Elva. "The Restaurant Industry Needs A Coronavirus Bailout. Will They Get It?". Forbes. Retrieved 2020-03-22.
- "Restaurant industry reeling from coronavirus". MSNBC.com. Retrieved 2020-03-22.
- Ciolino, Nick. "Coronavirus in Delaware: Fallout from closing restaurants and bars". delawarepublic.org. Retrieved 2020-03-22.
- "The Massachusetts Restaurant Industry at a Glance" (PDF). Massachusetts Restaurant Association.
- "NC restaurant association launches health plan aiming to help hundreds of thousands of workers". bizjournals.com. Retrieved 2020-03-22.
- "Restaurant Industry In Texas". txresto.com. Retrieved 2020-03-22.
- Gangitano, Alex (2020-03-18). "Restaurant industry estimates $225B in losses from coronavirus". TheHill. Retrieved 2020-03-22.
- Maze, Jonathan; Feb. 28, Heather Lalley on; 2020. "How restaurants can prepare for a coronavirus pandemic". Restaurant Business. Retrieved 2020-03-22.
- "Restaurant industry braces for coronavirus impact". Nation's Restaurant News. 2020-03-03. Retrieved 2020-03-22.
- Conradis, Brandon (March 15, 2020). "Illinois, Ohio closing all bars, restaurants in response to coronavirus". thehill.com.
- "37 confirmed cases of coronavirus in Ohio; 361 under investigation". WBNS-10TV Columbus, Ohio | Columbus News, Weather & Sports. 15 March 2020. Archived from the original on 18 March 2020. Retrieved 16 March 2020.
- "Coronavirus: Governor orders Ohio bars, restaurants to shut down". The Columbus Dispatch. 15 March 2020. Archived from the original on 16 March 2020. Retrieved 15 March 2020.
- "LIST: States that have closed restaurants and bars to dine-in customers". KFOR.com. 2020-03-16. Retrieved 2020-03-22.
- Kang, Matthew (2020-03-15). "LA Mayor Eric Garcetti orders closure of restaurants and bars, allowing only takeout and delivery". Eater LA. Retrieved 2020-03-22.
- Witte, Griff; Zezima, Katie (16 March 2020). "Ohio Gov. Mike DeWine's coronavirus response has become a national guide to the crisis". Washington Post. Retrieved 22 March 2020.
- "Natl Rest. Association COVID Response Ltr". National Restaurant Association. 18 March 2020. Retrieved 22 March 2020.
- Taylor, Luke (2020-03-21). "When coronavirus is behind us, will you still think of restaurant and bar workers?". Vox. Retrieved 2020-03-22.
- "Assoc-State-Covid19-Resources" (PDF). National Restaurant Association. Retrieved 22 March 2020.
- "Chart: How coronavirus is devastating the restaurant business". 16 March 2020. Archived from the original on 19 March 2020. Retrieved 19 March 2020.
- Sedacca, Matthew (2020-03-20). "Why Are Insurance Companies Denying Restaurant Claims in Wake of Pandemic?". Eater. Retrieved 2020-03-24.
- "Coronavirus exposes sick leave gap for retail, restaurant workers". Press Enterprise. 17 March 2020. Archived from the original on 18 March 2020. Retrieved 20 March 2020.
- Sick leave National Bureau of Economic Research
- Wilson, Michael; Nierenberg, Amelia (2020-03-16). "'We're Completely Lost': Coronavirus Hits N.Y. Restaurants". The New York Times. ISSN 0362-4331. Retrieved 2020-03-22.
- Adams, Erika (2020-03-19). "NYC's Top Restaurant Groups Band Together to Petition for Government Relief". Eater NY. Retrieved 2020-03-22.