Covid-19 vs the Restaurant Industry: Who Will Win the Fight?

New York City is one of the major tourist destinations in the world. It is home to a large number of full-service restaurants which account for around $51.6 billion in sales in 2018 – a major resource for the tourism industry (National Restaurant Association). The Covid 19 pandemic has negatively impacted full-service restaurants all over the world, but especially in New York City which was hit hard in 2020. The restaurant industry plays a major cultural and economic role in this city, for locals, tourists, and suppliers. These relationships were disturbed, cutting off revenue and life for restaurants. The East Village is a tourist hotspot in New York City, with an abundance of full-service restaurants. Restaurants play a vital role in the local culture as well as the tourism industry in the East Village. This has led us to research the impact of COVID-19 on full-service restaurants in East Village.

New York City was one of the cities most impacted by Covid 19 in the US. As of May 10th, 2021, there had been 937,338 reported cases and 32,836 deaths in the city (New York Times). The Covid 19 pandemic continues to rattle the hospitality industry. Due to lockdowns and regulations against indoor gatherings, restaurants have shuttered and have left many people unemployed. According to The National Restaurant Association, industry sales in 2020 were down $240 billion from expected levels. Full-service restaurants, where customers sit down and the food is served by wait staff, have been particularly hard-hit.

According to the National Restaurant Association, New York City’s restaurant industry had 23,500 establishments in 2019 and employed around 317,800 people in the workforce prior to the pandemic. From those employed in the restaurant industry, 77% percent are employed in full-series restaurants.

Graph 1 above shows the revenue of full-service restaurants in New York City growing steadily from 2012 to 2019 before the first covid cases started to show up in the United States. Then, by the end of December 2020, when there were around 452,690 total positive cases in New York City, revenue was down by almost $11 billion. New York was one of the states that had the fastest growing rate of positive cases during the peak of the pandemic. However, by the start of 2021, the graph shows that the industry starts to recover.

Graph two shows the employment rate of limited-service vs full-service restaurants in NYC from 2000-2021. Employment was on a steady incline for both restaurant types. The graph clearly depicts the sudden drop in March 2020 of employment for both full and limited service restaurants. The full service restaurants declined from 166,690 employees in February 2020, to 27,000 in April 2020. As NYC has slowly been reopening, the employment rate has started going back up, with a small decline in January 2021. It seems like limited service restaurants did not suffer as bad as full service restaurants with employment. This could be due to limited service restaurants being able to open sooner because they don't have as many regulations to follow concerning capacity and social distancing of tables for sit down guests.

• Due to all the new restrictions and due to all the pressure restaurants are experiencing, there have been various changes that the City has implemented and that restaurants have adapted to in order to recover from the pandemic.
• On September 25, 2020, Andrew Cuomo the Mayor of New York announced that the Open Streets: Restaurants program would extend and that it would be year-long and permanent. This means that restaurants will now have extended seating available that they didn’t have before(Office of the New York State Comptroller).
• Since the start of the pandemic, various restaurants started offering delivery and takeout, which they have never done before; even some of the finest and exclusive restaurants have resorted to delivery and takeout services. Some of these restaurants will now continue to offer delivery and takeout services even after the pandemic is over. Other restaurants decided to operate as specialty food markets by offering food and ingredients not available at local stores. Other restaurants also started offering do-it-yourself kits for easy meals like pizza or tacos, or even some gourmet meals that were easy to prepare (Office of the New York State Comptroller).
• Since there have been various changes to sanitary standards and business practices, there has been a significant increase in credit card payments (Office of the New York State Comptroller). Various restaurants who didn’t offer credit card payment or contactless payment are now offering them.

When the pandemic hit NYC in March 2020, people stopped going outside and going to crowded spaces. Since restaurants stimulate contact between people, they are sites of contagion. On March 20th, 2020, NY Governor Cuomo issued the New York State on PAUSE, the executive order 202.6 to shut down 100% of non-essential business and the state went into lockdown (New York State). Even when the lockdown ended in June 2020 and phase 1 of reopening began, people were still afraid to dine in restaurants. Strict policies were put in place to create a guideline for restaurants to reopen. These included curfews, sanitation, and capacity guidelines. Now, policies towards restaurants and dining are becoming more flexible and are allowing people to return to dining comfortably and safely. Below is a list as of March 11th, 2021, of the guidelines for restaurants to be open from the New York Governor website.

Using Google and OpenTable, we compiled a list of 323 full-service restaurants in the East Village. We then investigated which of these restaurants are currently open, which are temporarily closed, and which are permanently closed. From the 323 restaurants on our list, 220 are open, 23 are temporarily closed, and 103 are permanently closed. Regarding employment, from the 319,000 people working in the city’s restaurant industry in February of 2020, that number went down to 91,000, which means around 71.5% of people lost their jobs (National Restaurant Association). Take into consideration that our list of restaurants might have been missing a couple more restaurants, which of those more may be closed as well.

We talked with Jose, the manager of Greek Village Taverna, a restaurant located in the East Village, just a couple blocks south from Union Square. We asked him a couple of questions regarding the restaurant and how they dealt with the pandemic.

Jose explained that thankfully, when the city went into lockdown and restaurants were not allowed to open for dine-in services, they were able to stay open for delivery and take-out. They were one of the lucky restaurants that didn’t have to close at all during the pandemic. However, Jose said that there was one point during the beginning of the pandemic where they barely had any orders.

When restaurants were allowed to reopen for outdoor seating, Village Taverna set up this marvelous outdoor seating that you can see in the image on the right. According to Jose, they never had outdoor seating before, but it is now one of their greatest hits. Jose believes that they will keep their outdoor seating for the summer if no new policies or rules come around.

Although outdoor seating brought back customers to the restaurant, Jose says that the movement in the restaurant and the neighborhood itself has changed completely. According to Jose, around 60% of their regular customers left the city during the pandemic and haven’t returned. Although they are starting to receive multiple customers again as indoor dining returns and the seating capacity has expanded , the neighborhood and restaurant haven’t completely regained the busy and lively environment that they used to have before the pandemic

On September 25, 2020, Andrew Cuomo the Mayor of New York announced that the Open Streets: Restaurants program would extend and that it would be year-long and permanent. This means that restaurants will now have extended seating available that they didn’t have before(Office of the New York State Comptroller).

Since the start of the pandemic, various restaurants started offering delivery and takeout, which they have never done before; even some of the finest and exclusive restaurants have resorted to delivery and takeout services. Some of these restaurants will now continue to offer delivery and takeout services even after the pandemic is over. Other restaurants decided to operate as specialty food markets by offering food and ingredients not available at local stores. Other restaurants also started offering do-it-yourself kits for easy meals like pizza or tacos, or even some gourmet meals that were easy to prepare (Office of the New York State Comptroller).

Since there have been various changes to sanitary standards and business practices, there has been a significant increase in credit card payments (Office of the New York State Comptroller). Various restaurants who didn’t offer credit card payment or contactless payment are now offering them.

As the covid numbers get smaller and the city begins to reopen, the National Restaurant Association’s numbers are starting to give the industry hope again. The National Restaurant Association’s Restaurant Performance Index (RPI), a “monthly composite index that tracks the health of and outlook for the U.S restaurant industry,” moved from 100.1 in February to 105.1 in March. In addition, the Current Situation Index, which “measures the current trends in four industry indicators,” went up from 95.4 in February to 104.4 in March - a 9.4% increase. Lastly, the Expectations Index, which “measures restaurant operators’ six-month outlook for four industry indicators,” stood at .9% more than the previous month, leaving it at 105.7. It is safe to say the industry outlook is improving, as 7 in 10 restaurant operators expect their economic conditions to get better over the next six months (National Restaurant Association).

This also gives the New York City restaurant industry hope, which again, is one the cities where this industry contributes to the most. Image four shows how it is predicted for the industry revenue of full-service restaurants to go back into a steady incline the next few years, and even surpass the 2019 revenue. In addition, by the end of August of 2020, the number of employees in the restaurant industry rose from 91,000 to 174,000 (National Restaurant Association).