The growing threat of a coronavirus pandemic in the U.S. has led more companies to cancel events and restrict international travel in a bid to prevent the contagion’s spread.
Louisville, Ky.-based Yum Brands has told its executives to limit all nonessential international travel, a challenge for a company that operates three brands with more than 50,000 global locations.
Meanwhile, organizers have started postponing or canceling large events amid health concerns. Natural Products Expo West, a retail-focused show set to begin this week in Anaheim, Calif., postponed the event following mass cancellations from both vendors and attendees, according to Restaurant Business sister publication Winsight Grocery Business. The show attracts tens of thousands of visitors every year.
Several other events have been canceled, both in the U.S. and around the world.
The cancellations impact restaurants in those communities by restricting travel there and decreasing the number of visits in those areas. Restrictions on business and other types of travel could also influence overall industry sales.
The Global Business Travel Association, an Alexandria, Va.-based trade group, estimated last month that the virus could cost the travel industry $46.6 billion per month.
As of Monday, nearly 89,000 cases of COVID-19 (the official name of the disease) have been confirmed, the vast majority of them in China. But the virus is spreading quickly outside of that country. The number of cases outside of China jumped 22% on Monday to 8,774, according to the World Health Organization (WHO), which said the global risk assessment is “very high.”
The U.S. Centers for Disease Control and Prevention (CDC) said Tuesday that there have been 60 cases confirmed domestically in 12 states, including six deaths. Most of the deaths have taken place in Washington State.
Mounting concern over the disease has generated some outside pressure on organizers to postpone or cancel events.
About 33,000 people have signed a petition to cancel the annual SXSW event in Austin this year over COVID-19, saying that “having an event like this is irresponsible amid an outbreak.”
More companies have started telling employees to work from home. That includes Twitter and payment-processing company Square, which are encouraging workers to telecommute. Numerous other companies have also started restricting travel for their employees, according to a transcript search on financial services site Sentieo.
All of these moves could influence industry sales in the coming months, at least on a temporary basis.
Sara Senatore, analyst with Bernstein Research, said in a note Tuesday that U.S. restaurant industry sales won’t likely be hurt as much as those in China, where severe government restrictions led to closed restaurants and limits on travel. Restaurants that are open in the country have seen traffic declines of more than 40%.
Such restrictions are unlikely in the U.S., though homebound consumers will likely limit certain types of dine-in restaurant visits.
But that could also be an opening for delivery. Delivery chains such as Domino’s, Papa John’s and Pizza Hut could benefit, as could chains with agreements through third-party delivery services such as DoorDash, Uber Eats and Grubhub.
Senatore likened the situation to a severe weather problem, during which declines in dine-in traffic are “partially offset” by transactions.
During a cold snap in January of last year, for instance, Restaurant Business sister company Technomic noted that quick-service restaurant sales declined 6.8%, while full-service restaurant sales slowed 8.3%.
But Senatore also suggests there could be a bounce back in sales once the outbreak clears. “We think the existence of aggregators increases the likelihood that consumers will replace restaurant visits with at-home consumption,” she wrote. “Given consumer desire for variety, extended at-home stays may encourage trial of non-pizza options.”
Some Chinese restaurants are reportedly working to add delivery, according to Eater. Chinatown districts in New York and elsewhere have seen steep traffic declines even though there is no evidence of coronavirus infections there.
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.
The WHO has guidelines for workplaces to get ready for COVID-19.
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