COVID-19 and restaurant demand: early effects of the pandemic and stay-at-home orders

Abstract

Purpose: This paper aims to evaluate the early effects of the pandemic of coronavirus disease 2019 (COVID-19) and accompanying stay-at-home orders on restaurant demand in US counties. Design/methodology/approach: The following two sets of daily restaurant demand data were collected for each US county: foot traffic data and card transaction data. A two-way fixed-effects panel data model was used to estimate daily restaurant demand from February 1 to April 30, 2020. Findings: Results show that a 1% increase in daily new COVID-19 cases led to a 0.0556% decrease in daily restaurant demand, while stay-at-home orders were collectively associated with a 3.25% drop in demand. The extent of these declines varied across counties; ethnicity, political ideology, eat-in habits and restaurant diversity were found to moderate the effects of the COVID-19 pandemic and stay-at-home orders. Practical implications: These results characterize the regional restaurant industry’s resilience to COVID-19 and identify particularly vulnerable areas that may require pubic policies and managerial strategies for intervention. Originality/value: This study represents a pioneering attempt to investigate the economic impact of COVID-19 on restaurant businesses.