On a recent trip to Tennessee my family and I enjoyed our first sit-down visit at a restaurant in over 3 months. It was awesome to eat some good food AND not have to clean dishes! What economic insights can we get from restaurant booking trends?
One of the biggest casualties from COVID is the impact on the restaurant industry. These businesses are always running on thin margins as it is, so they’ve been hit particularly hard as local governments ordered them to close their sit-down service.
What are Good Real Time Economic Activity Indicators?
A few weeks ago we looked at trends in gasoline demand as a “leading indicator” of how quickly things were coming back. This time we’ll look at the latest trend in restaurant visits.
OpenTable, the popular restaurant reservation app, has published data on how many reservations they’ve been processing. The graph below looks at the year-over-year (“y/y”) change in number of reservations OpenTable has booked for major U.S. cities plus London.
As we all know, local government issued stay-at-home orders in mid-March. We can see how that impacted restaurants, with y/y bookings collapsing by 100% in almost all major cities. Starting in early and mid-May, cities such as Dallas and Las Vegas started to open up.
As of June 17, most of the cities listed here apart from London and New York have opened to limited seating capacity. Dallas, Denver, Las Vegas, and Miami are all doing the “best” but it’s notable that their y/y bookings are still down ~65% compared to last year at this time.
Therefore, much like the gasoline demand data we highlighted a few weeks ago, the takeaway is that the recovery from COVID shut downs is slow. This is not only problematic for restaurant’s ability to remain in business, but for employees as well.
How do Restaurant Trends Affect Employment?
There are an estimated 13.5 million restaurant workers in the United States out of the 150 million total workers. That’s 9% of the U.S. workforce.
In Summary, the message here is that the economy is not out of the woods yet. Stocks are nearing all-time highs, but that’s a reflection of the Federal Reserve pumping free money into the system vs. a fundamental recovery in the economy. The speed of the economic recovery is what we need to be watching.
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