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The Transition to Recovery and Rebuilding: Consumer Trends and Policy Implications Provide Hope for the Hospitality Industry

May 5, 2020
By Michael Moroney

While the social and economic damage caused by the COVID-19 pandemic has left no business untouched, few sectors of the economy have been as visibly ravaged as the hospitality industry. Based on the nature of on-premise food and drink establishments – places to gather with friends, receive personal service and meet new people – the industry finds itself particularly hard-hit by state and local shutdown orders. The path forward will be challenging, but there are glimmers of hope as consumers begin imagining the world after stay-at-home orders are lifted.

FleishmanHillard‘s TRUE Global Intelligence practice recently released a study detailing how the pandemic is reshaping consumer perceptions, expectations and behavior. In the United States, more than 54% of consumers were willing to order food and products for delivery or pick up in order to support businesses that have had to close, rather than reduce shopping or dining, and 31% were willing to tip more than usual.

As the restaurant industry looks toward recovery, it will be important to keep in mind new consumer expectations for employee protections and how quickly laid-off staff can be rehired. Overall, 91% of consumers expect companies to take various steps to help workers stay healthy – providing personal protective equipment and hand sanitizer, breaks to wash hands and making physical changes to space and operations to allow social distancing. And 40% of consumers think it’s important that companies hire back any workers they lay off as soon as the crisis is over.

Furthermore, consumers’ expectations for the on-premise dining experience have changed. According to new data from Nielsen CGA, the top things consumers want to see in venues when they reopen include:

  • 50%: fewer tables or patrons within venues to accommodate social distancing
  • 49%: additional hygiene programs taking place in outlets
  • 41%: take out/ delivery offerings still being available

Encouragingly, consumers seem eager to return to on-premise establishments. In fact, 22% plan to return as soon as venues reopen, and 28% say they will return when bars and restaurants demonstrate they can facilitate distancing. Only 23% are waiting until the number of COVID-19 cases doesn’t start to increase again. While 19% of consumers said they would only return when COVID-19 is completely gone, the vast majority are willing to return in the early stages of recovery.

However, from a business and policy perspective, there are a couple evolving proposals that should be top of mind for the hospitality industry:

Liability protections: Senate Majority Leader Mitch McConnell is pushing for business liability protections, which he sees as crucial to protect employers who reopen during the crisis. Democratic leaders have voiced concerns that such protections for businesses could lead to less safe conditions for workers.

Tax Deductibility: The administration has floated the possibility of restoring meal and entertainment cost deductibility for corporations. The industry has long enjoyed this boost, but the policy was changed with the signing of the Tax Cuts and Jobs Act of 2017.

The onset of COVID-19 changed how every business operates, overnight, and brought with it a flurry of policy changes. However, as we begin to emerge from this crisis, it’s important to think beyond the immediate recovery. It’s important to ask:

  • How will company policies and legislation implemented during the next five months impact your business over the next five years?
  • Are you actively and visibly prioritizing consumer and employee safety over profits?
  • Are you communicating how your business decisions are directly benefiting your employees?
  • Do you have a return-to-work plan, and if so, are you willing to share it publicly to reassure consumers?
  • If you work in a hospitality-adjacent industry, what are you doing to help restaurants and bars recover and rebuild?

The economic and policy solutions implemented during the recovery and rebuilding period will carry long-term implications that will shape the trajectory of the hospitality industry for decades to come, and how businesses treat their employees and customers during this period will have long-lasting reputational ramifications.