The consumer city crisis during the COVID-19 pandemic

Since COVID-19 was declared a pandemic, I have been focused on understanding the impacts of this virus on people’s behavior, mainly in consumer cities. Several studies have looked for social patterns changes and what the “new normal” would look like over the past two years. We decided to use the same methodological approach that we have used for several of my research projects: a very well-defined theoretical framework that supports our hypotheses through the thorough analysis of large datasets. Today, I want to share with you one of my latest papers: “Demand for Social Interactions: Evidence from the Restaurant Industry during the COVID-19 Pandemic,” which was recently published in the Journal of Regional Science.

This research project analyzed the evolving demand for social interactions during the pandemic, using a well-known social venue: restaurants. We know that restaurants provide food but also the space for social interactions to happen. People might go alone to restaurants and enjoy a good meal, but also go in groups and enjoy good time with others. Our study is built around the idea that restaurants provide basic need (i.e., food) and are an ideal place for social activities. Thus, if people spend more time inside a restaurant, it could be seen as they were having fun socializing with others rather than just going there to eat. In our project, we constructed a social index for each restaurant chain that represents the median time spent in each restaurant of the chain. In short, we wanted to understand how people’s behaviors changed regarding social activities by analyzing restaurants’ visits in the US. In our study, we defined two clear periods during the pandemic after the lockdown period (there were almost no dine-in activities before this): when there was no vaccine available yet (June to December 2020) and when there was a vaccine available for the public in general (January to May 2021). In both periods, people understood risk differently. In the first period, the number of new cases represented a better measure of risk because there was none other available. Indeed, when they saw that the number of cases were increasing, they would stop going to restaurants. However, this changed in the second period when news and media started using the vaccination rate to measure how “protected” people were. In this period, the number of new cases was less of a risk indicator for consumers, and the vaccination rate became more relevant. Hence, people started going out again to restaurants as soon as they saw that the local vaccination rates were increasing. However, to reach this conclusion, we needed to distinguish between local market attributes and restaurant attributes and how the different types of restaurants also affected the time people spent inside each venue. As we know, restaurants’ offers can vary from place to place and have very different local consumers and attributes. However, given that there are plenty of chains in the US, we saw this as an opportunity to disentangle local restaurant attributes from local market attributes. It is fair to say that within each chain, restaurant attributes (i.e., food, service, seating environment) are almost identical; hence what changes between them are what we call local market attributes. Similarly, if we analyze across chains, we can see that restaurant attributes and dining experiences are very different but remain quite similar within each chain. This two-step approach is key to our research and to accurately control by local market attributes and local restaurant attributes. As expected, our results suggest that consumers were constantly adjusting their choice of restaurant as their perceived risk evolved during the pandemic and that demand for social interactions in restaurants recovered rapidly when more people were getting vaccinated. In numbers, we found that a 1% increase in the new monthly COVID-19 cases was associated with a 2.5% decrease in restaurant visits from July to December 2020. Similarly, for the first half of 2021, our results suggest that a 1% increase in vaccination rate was associated with a 2.1% increase in restaurant visits. Our findings are clear evidence that there was a persistent demand for social interactions during the pandemic and that it was less likely to be substituted by takeout or delivery services.

Find our publication here