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Consumers likely to cut back on restaurants in a coronavirus pandemic

A Technomic survey reveals that Americans are paying close attention to the topic, even as they are uncertain about what to do.
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Consumers are likely to leave the house less and cut back on restaurant visits amid mounting fears of a coronavirus pandemic.

In a survey released Thursday by Restaurant Business sister company Technomic, 32% said they plan to eat at restaurants less often out of concern about the virus’s spread. More than half said they plan to avoid crowds.

At the same time, however, consumers remain uncertain about the virus and what they should do even as they are paying considerable attention to the topic. Two-thirds of consumers in the survey, distributed earlier this week, said they are paying close attention to the coronavirus, far ahead of any other news topic.

Yet 30% said the news about the coronavirus is overblown, while 45% disagree with that, a sign of consumer uncertainty about the topic.

“People don’t quite yet know what to think of it,” said Joe Pawlak, managing principal with Technomic, in an interview. “There are mixed messages from a consumer’s perspective in terms of what kind of threat it is right now.”

There is some evidence, however, that consumers are already changing their behavior in response to the epidemic.

Another survey by Coresight Research said more than a quarter of consumers are already avoiding public spaces such as shopping centers, entertainment venues and workplaces. Or they’re changing their travel arrangements. And 58% said they will take similar actions if the outbreak worsens in the U.S.

An outbreak could become a real problem for full-service chains and other concepts that rely on dine-in customers. Such chains are already struggling after years of shifting consumer behavior toward more takeout. Technomic’s report suggests thesy could be the most at risk among restaurants in the event of an outbreak in the U.S.

“People are going to avoid crowds,” Pawlak said. “Full-service restaurants are already struggling a bit. This could put another weight on them. This could push a few others on the brink. If this lingers, we could see a lot more bankruptcies.”

The surveys show that consumers are certainly concerned about the spread of the virus, also known as COVID-19, as it takes hold around the globe and increasingly in the U.S.

More than 93,000 people worldwide have been diagnosed with the disease, most of them in China. But the virus is spreading quickly in other countries: The number of cases outside China grew by more than 20% on Wednesday, to 12,668 confirmed cases. Nearly 3,000 people have died from the virus.

In the U.S., many of the cases have been in Washington state and California. The virus has been identified in patients in 18 states, with 11 deaths and more than 100 confirmed cases.

Starbucks, the Seattle-based coffee giant, said Wednesday that it is pausing the use of personal reusable cups and its “for here” cups, though it will still give customers a 10-cent discount if they bring in their own cup.

“We’ll continue to do what is right for our customers and partners,” Rossann Williams, president of Starbucks’ U.S. company-operated business and Canada, said in an open letter on the company’s website.

Coronavirus has already led some companies to limit travel. Denny’s pulled out of an investor conference, while KFC owner Yum Brands told executives to limit unnecessary trips. Some major events have been canceled or postponed, and other event organizers are under pressure to take similar steps.

Even movies are being affected: The release of “No Time to Die,” the next James Bond movie, was delayed to November.

Concern about the issue has intensified since government officials said the coronavirus is likely to become a pandemic, rattling stock markets. Since peaking on Feb. 19, the S&P 500 index has declined by 10%, even as it has had wild swings in recent days. The index was down 1.6% through late-morning trading Thursday.

Some big-name investors have started taking steps to protect their investments. Hedge fund manager Bill Ackman, a big investor in restaurant companies such as Chipotle Mexican Grill and Burger King operator Restaurant Brands International, said he is hedging his fund’s bets over the virus.

California, meanwhile, declared a state of emergency late Wednesday after the first person in that state died from a COVID-19 infection.

While the virus could be a problem for full-service restaurant chains as consumers stay home, it could benefit fast-food chains and delivery concepts as consumers shift toward takeout and at-home options. “People are going to rely more on delivery,” Pawlak said.

As for what restaurants should do in response to an outbreak, the vast majority of consumers (84%) told Technomic that restaurants should provide employees with sick days. And 58% said restaurants should carefully wash their food and utensils.

Yet 37% say they should operate “business as usual,” which Technomic said is an indication that a number of consumers are satisfied that restaurants are already prepared.

“The restaurant industry really has a great safety record as it relates to food safety,” Pawlak said. “Consumers are pretty confident the restaurant industry is responding very well.”

More coronavirus resources

How restaurants can prepare for a coronavirus pandemic.

The National Restaurant Association has guidelines for coronavirus and what restaurants can do.

The CDC has interim guidance for what employers can do to respond to coronavirus. It also has a checklist for employers to prepare for pandemic influenza planning.

The WHO has guidelines for workplaces to get ready for COVID-19.

The Fox Rothschild law firm has a list of consideration for workplaces.

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