COVID-19’s Impact on the Restaurant Industry

Abstract

The restaurant industry contributed to the creation of wealth and employment until the end of 2019, when it reached maximum values. However, with the COVID-19 pandemic in early 2020, this sector suffered a very serious economic and employment crisis. The analysis of this situation is imperative to mitigate the consequences for the restaurant industry and to prevent impacts in future crises. The main purpose of the present study is to compare the years 2019 and 2020, analyzing the profitability, payroll costs, headcount, and indebtedness of the restaurants, to verify the COVID-19 pandemic’s impact in Spain and Portugal. Quantitative research was applied, where a descriptive analysis and hypothesis testing were conducted. SABI database was the secondary data source used in this research. The results show that the COVID-19 pandemic has had an impact on profitability, efficiency, and indebtedness in the restaurant industry, being a generalized situation in both countries, in all regions except for Ceuta. The results also confirm the importance of this study for managers and academics since all the variables under study worsened with the COVID-19 pandemic. This study represents a contribution to managers and stakeholders in the restaurant sector by allowing the comparative evaluation of each restaurant with the average of the variables by location and the definition of proactive strategies. Practical implications are proposed to mitigate the effect not only of COVID-19 but also of other pandemics or economic crises that may arise in the future, preparing managers and stakeholders to adapt to change and promoting the financial sustainability of the restaurant industry. It is recommended to increase the disclosure of statistical indicators and financial ratios of free access, which allows the improvement of the analysis of different variables that are important for professionals in the restaurant industry.

Restaurants’ Solvency in Portugal during COVID-19

“…A quantitative methodology was adopted to obtain the findings of this research, as in the study by Yang and Koh (2022), Galstian et al (2017), Gomes et al (2022), and Lucas and Ramires (2022).…”

“…All the remaining variables maintain the average value. Some information with outliers included can be consulted in Gomes et al (2022).…”

“…The impact of solvency ratios, indebtedness ratios, and profitability ratios are often studied together (Mohammed et al 2019;Brîndescu-Olariu 2016;Sholaeman et al 2021;Gomes et al 2022). The calculation of these ratios helps to improve the financial transparency of companies (Mohammed et al 2019).…”

“…Location affects the variables frequently (Gomes et al 2022). In several studies, the authors studied how location affected the liquidity of hotels (Lima Santos et al 2021a); this determinant also affects hotel costs (Touritaa et al 2019).…”

Sustainable practices in restaurants: customers’ perceptions of Brazil and other countries

“…The sustainable practices that participants mostly observe in the restaurants they visit in Brazil and other countries (Figure 3) are the implementation of health protocols for customers, such as social distancing, personal hygiene, use of masks, use of gloves, use of alcohol gel, hand washing (8,7% and 7,8%, respectively). The restaurant sector has been severely affected by the COVID-19 Pandemic in terms of profitability, efficiency and indebtedness (Gomes et al, 2022). Besides, the sector coped with the imposed restrictions by establishing specific health protocols in order to prevent the spread of the coronavirus disease.…”