Covid-19 and Consumer Future Restaurant Intentions

COVID-19 and Consumer Future Restaurant Intentions

May 2020

Abstract

Purpose: This study seeks to understand future intent of restaurant consumers in the wake of COVID-19 restrictions. As the United States, and countries across the globe, start the process of reopening it is important for scholars and practitioners to have insight into what the landscape will look like as consumers reenter the marketplace.

Design/methodology/approach: A 28 paired-question, purposeful survey instrument, to select social media groups with high affinity for restaurant dining. The respondents (N=345) were also encouraged to snowball the survey to other groups. The respondents were asked a series paired questions that sought to understand pre and post COVID-19 behavioral intention.

Findings: The main results suggest three important findings: respondents report a drop in future restaurant intention (-50%+); there is a significant change in future restaurant type intention, with fine dining increasing (+8%) and other categories decreasing by between 44% (Buffet type) and 4% (Food trucks); a plurality (45.87% either “strongly agree” or “agree”) of respondents indicated they would not return to dine-in restaurants until a vaccine was available.

Research limitations/implications: This research has implications for both scholars and practitioners as global economies seek to reopen. Scholars need to further extend this to more generalizable samples. Restaurant managers should be prepared for significant drops in consumer intent by making adjustments to consumer fears.
Originality/value: This work provides unique insight into current consumer thinking. While other surveys have looked at the restaurant industry, this research is different as it focuses on the consumer and their actual fears and future intentions.

Introduction

With many states considering lifting shelter in place restrictions many are questioning what will happen to the restaurant industry. This paper looks at survey responses asking about past, current, and future, consumer intention regarding restaurant patronage. In addition to the main survey other emerging research is considered including two other recent surveys which include several results that are of interest to this study.

While the United States federal government, and many state governors, seeks to re-open the nation’s economy as quickly as possible, the popular press and viral videos show the risks of the COVID-19 virus transmitting from an index patient to others in a busy restaurant. In the video a pretend index patient had a fluorescent substance rubbed on his hands before participating in a buffet style restaurant experience. After the entire dining experience was over, the lights were turned out and a black light was turned on revealing that the fluorescent substance had found its way onto the almost every person in the restaurant, with the guests showing evidence of the substance on their hands, faces, utensils, plates, and checks (Japan Broadcasting Corporation, 2020; Johnson, 2020). Articles in the popular press are extremely bleak in their outlook for the restaurant industry. A recent CNN article, entitled Restaurants will need a miracle to survive this, the author points out that studies by The Beard Foundation and The Independent Restaurant Coalition suggest that as many as 80% of restaurants in the United States will not survive following the losses incurred as a result of the COVID-19 restrictions on dine-in restaurants (Dey, 2020). The largest contributors to these anticipated failures are rent, taxes, payroll, and many of the respondents reported having taken on $50,000, or more, in new debt. Those same respondents are also worried that there will be a slow return of customers, further hampering the ability to increase cash flows (Coley, 2020).

Researchers at The Harvard Business School and The Booth School of Business at The University of Chicago conducted a survey of the retail industry, including food and beverage, which showed that 54% of restaurants were closed at the time of their survey in mid April of 2020. This finding suggested that 46% of restaurants were still opened, but that percentage alone does not tell the full story. They also reported that only 25% of restaurant employees were still employed when compared to January 2020, which suggests a full 75% of restaurant workers had been let go, or laid off (Bartik, et al., 2020). The discrepancy is likely to be due to the many restaurants that are technically open but are providing limited take-out and curbside pick-up service. The general public has been eagerly trying to help restaurants survive through the purchasing of gift certificates but it may be unwise at this time to count on future revenues to make up for current losses as this may leave restaurant owners on the hook for the underlying value of the gift certificates which are strictly regulated by states (Williamson, 2020).

In short, the restaurant industry is in a quandary, and while there are surveys of operators addressing questions of cash on hand, current expenses, and more, the most pertinent question is: will the customers return to dine-in establishments in the near future? This research presents a first exploration of customer post-COVID intention to return.

Literature Review