Microsoft Word - Senior Honors Project- KS.doc

The Effect of COVID-19 on the Restaurant Industry

A project completed in partial fulfillment of the

requirements for the Honors Program

Kennedy Schlabach

April 26, 2022

Business Administration

Ohio Dominican University

Approved by Honors Project Review Committee:

Dean Taylor, MBA, Project Advisor

John Grant, Ph.D., Reviewer

Arlene Ramkissoon, D.B.A., Reviewer, Honors Committee

Accepted by:

John M. Marazita, PhD

Director, ODU Honors Program

Abstract

When COVID-19 emerged on the scene, every aspect of our world was affected. All industries

were hit by the effects of COVID-19, but some more than others. With their dependence on in-

person models, the restaurant industry had some of the biggest changes to make. This qualitative

research study examines the responses and actions that certain restaurants took in order to remain

in business. Through a combination of primary and secondary research, feedback from 80

participants were compared and summarized for future use. The purpose of this study is to

review the details of fielding the research project, provide discussion and analysis of the results,

and identify potential implications for the restaurant industry as they move on from the

pandemic. The response from restaurants made it clear that the industry was not prepared for an

event of this magnitude. The findings of this study will help the industry improve their response

to any similar events in the foreseeable future.

Introduction

March 11, 2020, was a day that changed all our lives forever. The day that the World

Health Organization (WHO) officially declared coronavirus a pandemic (Dube et al., 2020;

Jackson et al., 2021; Sirsat, 2021; Song et al., 2021). Unprepared and lacking knowledge of what

they were about to face, people around the world waited for answers but were left with none. No

one knew what was going to happen or what the next steps looked like. As hospitalizations

increased and lives were taken by the rapidly spreading disease, people all over the world

wondered if there was any end in sight. Responses ranged from shutting down businesses

completely, to forced mask mandates, closing of schools, and improvised business models in

order to survive for the time being.

COVID-19 has had a huge impact on the world we live in today. There were negatives

that came out of the pandemic, but also positives. The purpose of this study is to focus

specifically on the impact COVID-19 had on the restaurant industry. Examining the steps that

were taken by restaurants to stay in business during the pandemic may help the restaurant and

other industries better prepare for the future.

It seemed that every business had a different response to the onset of COVID-19 in the

United Sates. Not everyone was able to stay in business during the outbreak of the virus. Many

were forced to shut down and some didn’t have funds to reopen. Others modified their hours or

the manner in that they interacted with their customers to stay in business, maintain employment

for their staff, and/or simply serve their communities. The focus of this paper will be on dining-

in establishments with the intent to learn about how they responded to the pandemic, what they

did to continue to operate successfully, and what they learned from the experience in terms of

what they would have done differently, or how they can be better prepared for the next

significant influence on their business.

As their ability to serve customers on an in-person basis was reduced or taken away,

many were forced to pivot their business model to curbside or delivery service, plus a significant

new focus on the upside potential for online ordering. Looking back, was there anything they

would have done differently, or are they doing even better than before the pandemic? We’ll see

how these restaurants survived and what their new normal is going to look like. Examining the

adjustments they have had to make and how they responded to the pandemic will give useful

insights and experience to take away when moving forward.

Literature Review

As coronavirus was introduced to the world, it became clear that the restaurant industry

was going to be one of the most affected. The businesses that make up this part of the industry

rely on people leaving their homes to come and dine-in. As fear of social contact spread, and the

amount that chose to dine-in decreased, their businesses became significantly affected (Souza et

al., 2022). The drop in numbers affected a lot of these businesses and many had to adjust their

business model to meet with the changing market demand.

The restaurant and hospitality industries are some of the biggest contributors to the global

economy, but they are also one of the most vulnerable sectors. According to the National

Restaurant Association, in 2021, the restaurant industry sales totaled $799 billion, which was $65

billion below the pre-pandemic levels in 2019. Also mentioned, was the drop in employees

within the industry from 15.5 million to 14.5 million. This dramatic drop in revenue and

employees forced 90,000+ restaurants to temporarily or permanently close (National Restaurant

Association, n.d.). The effect of COVID-19 was seen across all kinds of restaurants. Some were

hit harder than others, but the effect was still seen around the world.

Economies were disrupted, jobs were lost, and many businesses were forced to close. A

conflict with food supply chains even proved to have an effect across the world as trade

restrictions were enforced, borders were closed, and different preventative measures were put in

place (Souza et al., 2022). The effect was seen worldwide, and every country was affected. In the

United States, in 2020 during the height of the pandemic, a $240 billion reduction in sales from

the previous pre-pandemic year was seen, around 110,000 restaurants were forced to close either

temporarily or permanently, and around 8 million employees had been laid off (Souza et al.,

2022). Similarly, in Brazil from March 2020 to July 2021, roughly 300,00 restaurants closed, and

1.2 million workers were laid off. It is estimated that 30% of those restaurants may not ever re-

open (Souza et al., 2022). Restaurants reacted in a way that could help them short-term, but long

term is where the impacts on their economic growth will show (Madhav et al., 2017). When one

country experiences any type of shock in their economy, it soon spreads to others because of the

increased globalization and financial links that are around the world (Lee & McKibbin, 2004)

In a study that looked at data from OpenTable, an “online restaurant reservation

company”, the negative effect of COVID-19 is shown (Dube et al, 2020). Countries with more

than 50 restaurants on the platform were used and comparisons were made between their

reservations during the pandemic, and prior. It is evident the role that restrictions, lockdowns,

and social distancing had on the decline of guests that chose to dine-in. After the World Health

Organization (WHO) declared the coronavirus outbreak a pandemic on March 11, 2020, states

who recorded their dine-ins saw a decline of 90% by March 18th. With levels still extremely low

throughout the summer of 2020 many restaurants had to shut down temporarily, lay off staff, or

furlough them for the time being.

Another big effect that came from COVID-19 was the mask mandate. In Ohio, the

statewide order, issued by Governor DeWine on July 23, 2020, required all individuals to wear a

facial covering when out in public at all times (Ohio Government, 2020). It was not until June of

2021 that the mandate was lifted in Ohio. For restaurants, this meant that all staff and employees

were required to wear masks as well as customers when they were not in the act of eating or

drinking. Having this mandate in place added to the reasons that a consumer may choose to go

through a drive-thru, order ahead for curbside, or utilize a third-party delivery service instead of

dining in at a restaurant.

Restaurants Response to COVID-19

The enforcement of new rules and restrictions has played a big role in the success that

restaurants have had moving forward. In order to survive, they had to think fast about how they

could stay in business. New business models were adopted, and operations were remodeled to

adjust to the “new normal”. Examples of new practices included changing menu items to the

consumer demand, offering items that were readily available, contactless menus and payment,

shifting employee roles, moving dining room setup, online ordering, third-party delivery and

food services (Dube et al., 2020; Souza et al., 2022), and to-go cocktails (Norris et al., 2021).

What worked for one restaurant might not work for another. There was not one specific practice

that saved each restaurant as many relied on innovation and creativity to keep them in business.

The ones that were successful were open to change and willing to do whatever it takes. If one

practice was not working, they switched to another. In an article by Norris et al., (2021) they

state that, “those who failed to change, failed” (p. 146 ); concluding the idea that the restaurants

biggest tool in responding to the pandemic was their ability to innovate and adjust to the

changing market. Restaurants were forced to get creative to bring in revenue to not only remain

open, but also employ their workers.

With the fear of COVID-19 many people began to stay in the safety of their own home.

This meant that the amount of people that were dining out severely decreased. Food delivery

services were turned to but still, restaurants that relied on their customers to dine-in were hit

hard. Compared to before the pandemic, 68% of U.S consumers are now more likely to order

their food online, and 53% of consumers believe delivery systems to be “essential to their

lifestyle” (Souza et al., 2022). Having food delivered or picking it up curbside provides a lower

chance of spreading COVID-19, which is why the trend saw a dramatic increase during the

pandemic (Zahra, 2021).

Government Assistance. One thing that was seen across the nation was the role that

assistance from the government played in keeping certain restaurants in business. Without help

from the government many restaurants would not still be open today. Stay-at-home orders and

the general fear of COVID-19 made it difficult for restaurant owners to keep their employees and

stay in business. Many lacked the funds but with help from the national and state governments

they were able to innovate and find a way.

The Paycheck Protection Program (PPP) was one of the ways that the government

assisted restaurants. According to the U.S. Small Business Administration (n.d.-a), it was “an

SBA-backed loan that helped businesses keep their workforce employed during the COVID-19

crisis”. It provided an incentive for restaurants to keep their employees on payroll. By

distributing funds, it allowed businesses to cover payroll and different costs that come with

operating a restaurant. There were two PPP loans offered and if certain criteria were met then the

loans could be forgiven (U.S. Small Business Administration, n.d.-a). Up until May 31, 2021,

when PPP ended, $789,776,462,485 worth of loans was given out between 11,427,757 different

applications. And as of February 20, 2022, $695,581,269,282 of that amount has been forgiven

(U.S. Small Business Administration, n.d.-a). These loans gave restaurants the ability to keep

their staff and cover different expenses that came with staying in business. Without their normal

flow of income several businesses relied on help from other sources.

Another form of government assistance came with the Restaurant Revitalization Fund

(RRF). This “program provided emergency assistance for eligible restaurants, bars, and other

qualifying businesses impacted by COVID-19” (U.S. Small Business Administration, n.d.-b).

According to the SBA, it gave restaurants funding to help cover revenue loss that came with the

pandemic. If eligible, restaurants could receive up to $10 million with no more than $5 million

per physical location.

Dark Kitchens. One trend that we saw before the pandemic that significantly grew

during the outbreak was the “dark kitchen” business model (Souza et al., 2022). Also known as

ghost and delivery-only kitchens, this model gave restaurants and other brands the opportunity to

receive and prepare orders directly under one roof (Business Insights: Global, n.d.-a). The

purpose of a dark kitchen is to save time and money in producing delivery-only food. Instead of

orders being made at the restaurant, a separate kitchen or facility is used to fulfill the requests

(Business Insights: Global, n.d.-a). With the growing demand for online ordering and delivery/

pickup, many restaurants began to buy into this model and start to incorporate it into their

businesses. The growth of these “dark kitchens” directly correlated with the fact that most of

these restaurants lost their option of indoor dining. They had to find other ways to position

themselves in the market that was being severely affected by COVID-19.

Several different characters were involved in the production of dark kitchens. Including

“leading national and international restaurant chains, independent restaurant operators,

companies that develop and franchise virtual restaurant brands, infrastructure and service

providers, and third-party delivery services” (Business Insights: Global, n.d.-a). They all play an

important part in what a dark kitchen is trying to accomplish. Not every dark kitchen is the same

as some involve more than the traditional dine-in restaurants that consumers can visit any day.

Certain kitchens may only offer brands that exist online and there have even been instances

where traditional restaurants have utilized their kitchen in fulfilling delivery orders that are for

other brands (Business Insights: Global, n.d.-a; Business Insights: Global, n.d.-b). Examples of

traditional restaurants that have utilized the dark kitchen business model include Red Lobster,

Chili’s Grill & Bar, Outback Steakhouse, Bonefish Grill, and Carrabba’s Italian Grill (Business

Insights: Global, n.d.-a).

This business model has many advantages that make it easy for restaurants to operate. To

begin with, the limited human interaction that takes place is a big reason for the growth during

the pandemic. The less interaction, the safer customers feel. Along with safety, it also saved

money in employing fewer workers (Business Insights: Global, n.d.-a; Souza et al., 2022). In the

dark kitchens article by Business Insights: Global, they refer to an October 2020 Restaurant Dive

article by Kelso, that discusses how a single employee working in a dark kitchen can prepare 60

delivery orders compared to a typical restaurant preparing 15-20 orders. The efficiency and

savings of the model made it easy for restaurants to implement it within their business. Another

advantage is the ability “to capture customer data” which is then able to be used for any future

marketing (Business Insights: Global, n.d.-a). Since dark kitchens operate exclusively through

online channels it enables them to reach a targeted audience. Offers can be personalized through

marketing and consumers are targeted based on their preferences (Business Insights: Global,

n.d.-a) Around the world, we have seen a growth in mobile devices, Internet access, and social

media. Everyone seems to be online, and this has given restaurants and businesses all over the

world the ability to reach more people and engage with exactly who they are trying to reach.

Already, we have seen the growth that dark kitchens have made over the past few years.

In August of 2019, an analysis provided by Allied Market Research, showed globally that these

kitchens reached $43.1 billion worth of revenues. Then, considering the compound annual

growth of 12 percent, it is projected that those revenues reach $71.4 billion by 2027. With these

growing trends of online ordering and preferences of consumers, many observers believe that the

dark kitchen business model will continue to grow. The time and money that these kitchens save

restaurant operators is too good to pass up. Many restaurants were able to stay open with the help

of these kitchens and the delivery systems that were a part of it. Dark kitchens will continue to

pop up around the country and the rest of the world as businesses try to figure out what life looks

like post-pandemic.

Trends During/ After that Stayed

COVID took away human interaction, which in turn, fueled innovation and the use of

digital technology (Zahra, 2021; Souza et al., 2022). Many industries relied on technology when

trying to survive COVID, including the restaurant industry, because it reduced person-to-person

contact (Souza et al, 2022). They found that consumers found the online ordering process quick,

easy, and efficient. As more and more people chose to stay home, the online ordering process

made it possible for consumers to support their favorite restaurants, as well as stay safe during

the pandemic. Along with online ordering, digital technology also assisted restaurants through

contactless QR menus and payment, tracking of automated inventory management software, and

online table reservation platforms (Dube et al., 2020; Souza et al, 2022). These trends have made

business operations run smoother and more efficient and are ones that the restaurant industry will

utilize moving forward.

Throughout the pandemic a big emphasis was placed on hygiene and cleanliness (Sirsat,

2021; Souza et al., 2022). Trends that were seen during the pandemic, and also that we’ll

continue to see after include: increase of sanitizer dispensers around the restaurants, emphasis on

hand washing, more frequent cleanings of surfaces in between customers, physical separation,

improved food quality, and appropriate ventilation (Souza et al., 2022). Restaurants did

everything they could to make their customers and employees feel safe. People paid more

attention to their personal hygiene and their contact with others. Moving forward, as more and

more people begin to leave their homes, restaurants will continue to enforce different measures

to ensure that consumers' expectations of food quality is met. It is evident that even as we enter

post-pandemic time, restaurants will keep up with the practices and trends that came with

COVID-19 in order to increase their credibility with their consumers (Souza et al., 2022).

One of the most important things that came out of COVID, specifically for the restaurant

industry, is the knowledge that was gained about having a proper response plan. The “pre-

existing trends” that were in place did not prepare the world for this pandemic (Souza et al.,

2022). They were unprepared for anything like this, and they realized quickly that COVID came

with no certainties or guarantees. Post pandemic will look a little different as restaurants and

other businesses take the necessary steps and precautions to prepare for any similar future events.

New standards and practices will be adopted to ensure that the restaurant industry is not as

affected to these extremes as they were during the COVID-19 pandemic. This will look different

for everyone since there is no right or wrong answer to the approach that should be taken. What

works for one might not work for the other. Specifically, contingency plans will be needed so

that people can be prepared and ready for what is next, and they should also be updated yearly to

adjust to changing demands and operations (Norris et al., 2021).

There have been a number of positives that have come out of the pandemic for the

restaurant industry. Including increased demand for deliveries and pickups (Norris et al., 2021;

Sirsat, 2021; Souza et al., 2022) and the innovation of other new practices that were needed in

order to stay in business. Restaurants transformed their business models in order to meet new

demands in a changing market. The decisions made and steps that were taken during the

pandemic will serve as a very useful learning tool for similar events that may take place in the

future. The future cannot be predicted, but with an event of this magnitude taking place, it is

important to learn from it and be prepared (Norris et al., 2021).

Methodology

This study looked at how restaurants, specifically dine-in, responded to the pandemic.

Seeing the steps that they took to stay in business will give useful insight for the future. Drive-

thru models require less physical contact and can operate without customers dining-in, so a focus

was placed on the part of the industry that was affected the most. To complete this study, a

combination of research on the restaurant industry during the pandemic, primary research from a

questionnaire that restaurants completed, and results from different surveys that the Ohio

Restaurant Association had their members complete were analyzed. Through this research and

findings that were collected from several different sources, suggestions for how to handle and

better prepare for future events were introduced. The information gathered showed how different

restaurants around the state of Ohio were affected by COVID-19. With different demands, new

trends were seen among restaurants and the ones that embraced them survived, and the ones that

did not innovate, failed. Some restaurants had an easier time adjusting than others and it showed

within their operations.

The primary questionnaire was generated through Google Forms so that it would be

easily accessible for participants (see Appendix for full questionnaire). It consisted of 22

questions with a mix of both multiple choice and short answer responses. Total time that it took

to complete it was about 10 minutes. Questions included information about the demographics of

the restaurant, what their business model looked like pre- COVID, issues they faced, changes

they made in response to the pandemic, and how they were able to survive. Participants of the

survey were acquired through the Ohio Restaurant Association (ORA). After reaching out to

President & CEO of the ORA, John Barker, a relationship was formed with him and his team.

The primary questionnaire was distributed by John Barker’s team to all the members of the

ORA. With the restaurant's consent, feedback was collected that they provided and then

comparisons were made with the surveys that the ORA administered, along with other research

that was relevant to the effect that COVID-19 had on the restaurant industry.

Questionnaire Results

After distributing the questionnaire there were only 10 restaurants that had taken the time

to complete it. With the small scope of restaurants that replied there was less information

collected, but it showed to be just as valuable. Majority of the responses came from restaurant

owners, but other personnel participated as well, as shown in Figure 1. The restaurants that were

seen in the study categorized themselves compared to the rest of the market. Majority said that

they are a medium/average restaurant and before COVID they employed around 20 employees

(Figure 2 & 3). This number did not change much after the height of the pandemic as majority of

the restaurants in the study still employed around 11-20 employees (Figure 4).

Figure 1

Figure 2

Figure 3

Figure 4

Then, restaurants provided what their business models included before COVID, and now

what it looks like today. The biggest change seen between Figure 5 and Figure 6 is the increase

in services provided. Pickup, curbside service, and delivery services all saw an increase over the

course of the pandemic. Restaurants had to expand their business and provide other services

since their main source of revenue was not available.

Figure 5

Figure 6

In questions 10 and 11 of the questionnaire, the state of the restaurants is discussed. Half

of the restaurants were growing significantly with the other half either growing slightly or

remaining flat before COVID-19. Then, when asked about the state of the business today, there

was less growing than before and more declining was seen. 40% of restaurants were either

growing slightly or declining slightly, another 30% remained flat, and the remaining 30% were

still growing significantly.

Another multiple-choice question involved the response that restaurants were seeing from

their customers during the pandemic. The attitudes of most customers played a big role in the

success of a restaurant. In most cases, restaurants could not control the mandates and restrictions

that were being put in place. Even though customers were frustrated, they oftentimes still

supported in any way they could. A select few would give restaurants problems, but most knew

the struggles of operating a restaurant at the time and wanted to help. The results of their

attitudes are shown in Figure 9.

Figure 9

Note. Option 5 states: In the beginning understanding as times/years went on frustrated

Option 6 states: Some were very understanding while others were jerks

During the pandemic restaurants encountered several different roadblocks and issues that

affected their business. As seen in Figure 10, one of the biggest issues that restaurants in the

study reported was labor shortages. These shortages gave restaurants the most problems and even

today, labor shortages are still one of the main problems that restaurants face. The next biggest

issue that restaurants faced was shortage of supplies. With different restrictions in place many

supply chains and trade relationships were disrupted, and goods were not able to make it to their

recipient. This is one of the reasons that restaurants had to innovate and modify their menus to

accommodate for what ingredients were available.

Figure 10

Note. Option 4 reads: Dining-in (people not leaving their homes.

Option 7 reads: Implementing the CDC requirements.

In order to adjust their business throughout the pandemic to meet the changing demand of

their market, restaurants had to implement different features. According to Figure 11, some of

the most popular changes that were implemented within the restaurants in the study were

shortened hours, higher prices, and curbside pickup. If these changes were working for them then

restaurants chose to keep them in place.

Figure 11

Note. Option 8 reads: Employee health checks before coming into the building.

Option 9 reads: Close the grill section of the menu when I do not have staff.

Then, some of the short answer questions within the questionnaire made it possible to

really see how certain restaurants were affected and what they thought of the restaurant industry

during the pandemic. Several trends that were seen among the restaurants in the study included

labor shortages, adjusting to third party options, online ordering, and utilizing the PPP loans. In

addition to these trends, there were some general thoughts that these restaurants shared about the

pandemic. One example being the ability to innovate and adapt to the changing demands was

crucial for restaurants. They understood that they had to be patient and prepared for anything, but

also be willing to adjust quickly. Another common theme that was brought up in the responses

was the causes of the labor shortages. Many restaurants felt that because of the unemployment

money the government was giving out, it severely discouraged their employees attitude to get

back to work. Even with restaurants starting to go back to normal they continue to face the issue

of bringing back all their employees. In addition to employees being unmotivated to come back,

these restaurants also saw their employees leaving their jobs with them for a higher paying

corporate job. These corporate jobs could afford to battle the labor shortage by increasing pay,

but independent operators could not. As much as restaurants can change their business model to

fit the changing demand, if they do not have employees then they will not be able to run their

business. Additionally, the theme of labor shortages was seen in question 22 of the questionnaire,

when restaurants were asked how they felt about the restaurant industry. Some believed that if

there is a shortage, and restaurants cannot get enough workers, the industry will not see a growth.

They have high hopes for the industry but believe that labor shortages can play a big part in

hindering that. Concerning the industry, these restaurants also believe and understand that it will

never go back to exactly how things were before. People talk about a “new normal”, because that

is what we are facing now. There is no going back to exactly how things were before.

Comparison with Ohio Restaurant Association Surveys

The monthly surveys from the Ohio Restaurant Association were collected in 2021, from

May through November. These surveys consisted of multiple-choice questions that were aimed

at comparing what the restaurant looked like before COVID and what they look like now. As

well as questions that evaluated how they were handling the effects of COVID and the actions

that they were taking to stay in business. These surveys received an average of 80 responses

(Ohio Restaurant Association, 2021).

Looking at these surveys that the Ohio Restaurant Association (ORA) provided, several

similarities were seen with the primary questionnaire. To begin with, throughout the seven

months a constant pattern was seen that was similar to the questionnaire. It was that restaurants

were continuing to face issues dealing with labor shortages. The responses in November were the

same as they were in May, with labor shortages being their biggest concern. When asked about

steps that would help to deal with staffing/workforce issues, almost 90% of responses were that

the weekly $300 benefits from federal unemployment needed to stop. These benefits were

discouraging their workers to come back to work, and restaurants could not afford to up their

paycheck. Eventually, the Federal Pandemic Unemployment Compensation (FPUC) stopped on

June 26, 2021, according to the Department of Job and Family Services (2022), but the damage

was still done. Restaurants needed workers at the height of the pandemic, and for some, the

shortage destroyed their business. After the FPUC benefits stopped in June, labor shortages

continued to be the biggest issue. The monthly responses in the survey showed that the steps that

were believed to help the most would be state enforcement of search-for-work requirements and

increased pay. Without either of these, many restaurants did not know how or when their

restaurant would get back on track. Between the questionnaire and the survey, we can see how

much of an effect the labor shortages were really having on the restaurant industry.

Another similarity seen was the use of government assistance to keep their restaurant in

business. As soon as grants and funds were available the restaurants that were eligible were

taking advantage of them. These assistance programs saved several restaurants and allowed them

to keep their business open.

Lastly, the hardships that these restaurants have had to go through is evident within their

feedback that they provided. Their industry was one of the hardest hit by the pandemic and still,

they are trying to do everything they can to not only keep their doors open, but also give their

employees a job. The battle to reach a “new normal” is still being fought with restaurants

continuing to do whatever they can. In May of 2021, of the 86 responses that were given, 51 of

them stated that they believed they would get to break even sales by the end of the year. Fast

forward to October of that same year, and only 35 responses were still confident that they would

reach break-even sales. The shift in belief shows how unstable this market can be. There are

many different factors that can affect a restaurants performance and still, they must be prepared

for them all.

Discussion and Analysis of Results

The collection of the primary research made it possible to see just how affected

restaurants around the world were, specifically Ohio, by COVID-19. With the different surveys

that were examined, different patterns and main themes were seen. Many restaurants faced the

same problems as others but reacted in different ways. The pre-pandemic information that was

collected gave a comparison that can be used when looking at the current state of the industry.

As restaurants and businesses begin to get back to their normal, the feedback received in these

questionnaires shows us that there is still a long way to go. New practices and features were

created that are here to stay, but still the effect is seen with all the jobs and businesses that were

lost. The key findings of the study include:

• Restaurants were not prepared for this pandemic.

• The quicker restaurants changed and adapted to different demands, the more

successful they were.

• Labor shortages had one of the biggest effects on restaurants.

• Many different trends that were introduced within the industry are here to stay.

• A response contingency plan is needed.

Limitations

Obviously, this study did not include every dine-in restaurant in the state of Ohio.

Restaurants who were not a part of the Ohio Restaurant Association were not reached out to and

given the chance to provide their feedback. The ORA consists of restaurants from across the state

of Ohio, all with different features and abilities. There was a range of different types of

restaurants but some of the smaller, family-owned restaurants that were most likely hit hard by

the pandemic may not have been included in the data. All the feedback that was collected came

from restaurants that are still operating. It did not include the restaurants that have closed

because of the pandemic. Their feedback on what transpired within their business would be a

useful tool for future events. That research could show what steps were taken that did not work

and could help others better prepare for the future.

Another limitation was the location of the restaurant. The location may have influenced

how they were able to perform during the pandemic. Mandates and restrictions differed across

the state and had a big impact on the daily functions of restaurants. More populated areas were

seen to enforce mandates, such as the mask mandate, for longer than less populated areas. This

was seen with Columbus as they continued to enforce the mask mandate for vaccinated and

unvaccinated people until March 7, 2022. After Ohio lifted the mandate on June 2, 2021,

Columbus reinstated it on September 13 following the outbreak of the delta variant (The City of

Columbus, 2021). It was not until March of 2022 that Columbus saw a total break from the

mandate. Having this extended time may have influenced consumers' attitude towards dining-

out.

Recommendations

The COVID-19 pandemic took the world by surprise and many industries were not

prepared. Based on the information that was collected and data that was analyzed in this study,

certain recommendations can be given, should a similar situation arise again.

It was obvious that restaurants were not prepared for an event like this, because there was

no uniform response. All restaurants did whatever they could to stay in business, and in most

cases, that looked different for everyone. The varying responses made it hard for some

restaurants to find what worked best for them, and many closed their businesses as a result. For

future planning it is crucial to have some type of plan in place that can be a uniform reference.

Even with the uncertainty of the future it is still going to be important to take into account the

possibility of certain events happening.

Also, the different trends that were introduced are what is going to keep the restaurant

industry growing. Moving forward restaurants must be ready and welcoming of change in order

to meet the shifting demand of the market. Owners must be adaptive enough to notice what is

working and what is not. A big part of the industry getting back to their “new normal” is that

restaurants are willing to change their model to accommodate for the consumers demands.

Innovative technology and expanding platforms of media are what is going to keep certain trends

growing, so restaurants must take advantage of their resources.

Lastly, with labor shortages being one of the biggest issues to come out of the pandemic

restaurants must put an emphasis on retaining their employees. This means that owners must

invest in the development of the employees within their business and work to maintain a positive

relationship. A mutual agreement of trust and respect will strengthen that relationship and

increase the chance that employees will stay on board with the restaurant. Ensuring a positive

company culture will only make it harder for employees to leave, and easier to come back to

work.

Conclusion

In conclusion, COVID-19 has affected all parts of our world and introduced a “new

normal” for many people. Specifically, the restaurant industry has shown to be one of the most

affected and is still trying to recover. Jobs and businesses were lost, and owners had to think

quickly about ways they could transform their businesses to stay open. For many, if they were

willing to innovate and change with the market then they survived. But that was not the case for

everyone. The guidelines and restrictions proved to be too much for some, and many restaurants

were forced to shut their doors.

In 2015, Bill Gates stated that the only good thing to come from Ebola is that hopefully it

serves as a wakeup call (Gates, 2015). He said that we must be prepared for future epidemics

because they will probably spread more effectively than Ebola. As we have seen over the past

two to three years, the coronavirus disease has spread more rapidly than anyone could have ever

imagined. Without a crisis of this magnitude happening in earlier years, the world could not plan

and prepare effectively (Sujata, 2021), and they are still trying to recover from the effects of the

disease. This lack of preparation and planning hurt many different industries. There was

uncertainty that came with COVID-19, and many did not know what next steps should be taken.

If there would have been any type of response plan in place would the restaurant industry look

any different? A question no one can answer but one that can help us for the future. By looking

at what took place during the pandemic it is evident how some type of contingency plan is

needed. With further research and questioning we can learn from this event and use it to improve

our response for any similar future events.

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Appendix

The Effect of COVID-19 on the Restaurant Industry Questionnaire

1. What is your role within the restaurant?

a. Owner

b. Wait staff / server

c. Chef

d. Reception / Seating

e. Other (specify)

3. How would you describe the size of your restaurant relative to others in the Columbus market?

a. Small

b. Medium / Average

c. Large

4. How many employees did your restaurant employ prior to Covid?

a. 2-10

b. 11-20

c. 20-30

d. Over 30

5. How many restaurants does your restaurant employ today?

a. 2-10

b. 11-20

c. 20-30

d. Over 30

6. What elements did your business model include prior to Covid?

a. Dine-in

b. Pickup

c. Curbside service

d. Delivery service (Grub Hub / Door Dash)

e. Other (specify)

7. What elements does your business model include today?

a. Dine-in

b. Pickup

c. Curbside service

d. Delivery service (Grub Hub / Door Dash)

e. Other (specify)

8. Roughly, how many customers enjoyed your restaurant each week prior to Covid?

9. What were your normal hours of operation pre-Covid?

10. How would you describe the state of your business pre-Covid?

a. Flat

b. Growing Slightly

c. Growing Significantly

d. Declining Slightly

11. How would you describe the state of your business today?

a. Flat

b. Growing Slightly

c. Growing Significantly

d. Declining Slightly

12. As Covid hit, how did you find out about the virus?

a. New report

b. Official communication

c. Social Media

d. Other (Specify)

13. Describe the initial changes your business model went through after the initial lock-down

was announced by Governor DeWine? Layoffs/ hours/ shutdown/ etc.

12. What role did the government assistance funds play in your strategy, and how did you utilize

them in the early stages?

13. How did your customers respond to the changes you made in your business model? (Change

in hours/ mask mandates/ dine-in/ prices/ curfew/ etc.) Check all that apply.

a. Frustrated

b. Took their business elsewhere

c. Understanding

d. Supported in any way they could

e. Other (specify)

14. What was the impact that Covid had on your employees? Layoffs/ hours/ wages/ etc.

15. What would you consider the most important steps that your restaurant took during Covid to

survive the situation?

16. What was the biggest roadblock/ most difficult situation or issue that you encountered

during the crisis? Check all that apply.

a. Labor shortages

b. Higher expenses

c. Mask mandates

d. Dining-in (people not leaving their home)

e. Shortage of supplies

f. Enforced curfew

g. Implementing the CDC requirements

h. Other (specify)

17. What major changes have you implemented that remain in place as we (hopefully) near the

end of the Covid crisis?

a. Curbside pickup

b. Delivery services

c. Shortened hours

d. Extended hours

e. Condensed menu

f. Higher prices

g. Lower prices

h. Other (specify)

19. What would you consider your most important piece of learning from the Covid

experience?

20. What recommendations would you give to other restaurant organizations to help them

“weather the storm” based on your experience?

21. Any other issues / information / thoughts / perceptions that you would like to share about

anything related to your Covid experience?

22. How do you feel about the future of the restaurant industry today?