What are the Economic Impacts of COVID-19 on Food Businesses?

The food industry is already feeling the economic impact caused by COVID-19.
The food industry is already feeling the economic impact caused by COVID-19.

Loss of customers

One of the most visual representations of the damage COVID-19 is doing to the food industry is the lack of customers in restaurants, fast food hubs, bars and pubs. Food businesses that are normally full with customers are either completely closed or, if they are still operating, have very minimal customers. It is evident that the concerns about the spread of COVID-19 and contracting it in public spaces is having a direct effect on customers visiting local food businesses.

Restrictions on food business operations are also curbing the amount of customers food businesses are receiving. In some locations, a state of emergency has been declared and food businesses that allow customers to dine-in must close their doors. In other areas, food businesses have to reduce the amount of capacity, sometimes to 50% or less. Both of these situations lead to a loss of customers and as a result, a significant loss of revenue.

Loss of staff

The COVID-19 pandemic is directly affecting the staff of food businesses around the globe. For those that are still operating, there is the very real risk that a staff member could come into contact with the coronavirus, SARS-CoV-2, and become ill. While most food businesses have contingency plans in place to deal with food workers not working due to illness, being down even one member of staff during this time period adds more stress to an already stressful situation. In some cases, the fear of COVID-19 alone is enough for some staff to quit entirely.

With loss of staff comes the challenge of not being able to maintain operations as usual. This means less meals being prepared and less customers being served. This leads to a significant economic decline for food businesses.

Loss of food

With some governments mandating that certain food businesses shut their doors to the public, food businesses are left questioning — what about the food? Some food items, like frozen foods, will be able to be kept for some time before they pass their limits for safe food storage in the freezer. Other food items, like fresh produce, will need to be donated to food banks or disposed of. This disposal of food creates a direct economic loss for a food business. While it is difficult to see perfectly good food being disposed of, it is the right thing to do if it cannot be donated. The last thing a food business wants to do when they re-open after the COVID-19 pandemic is to cause a food-borne illness outbreak.

Loss of a steady supply chain

Many food businesses rely on food manufacturers to produce food products that they buy and sell to their local customers. These food manufacturers often have production facilities that are outside of their own nation. With the extensive spread of COVID-19 to countries like China and Italy, food productions facilities in these regions are reducing operations or shutting down completely. This is having drastic effects on food businesses that rely on food manufacturers for product. Orders are significantly delayed or being cancelled completely. This means that food businesses that are relying on those orders can no longer make certain meals on the menu and thus, reduces their ability to make a profit.

4 things you can do to reduce the economic impact of COVID-19

While there has been great economic loss felt by many food businesses, making changes within your food business can help to change things for the better.

  1. Switch to a take-out or home delivery model. If you don’t already offer these services from your business, consider adopting these services so that you can reach your customers and continue to make a profit.

  2. Train your staff in COVID-19 specific training for the food industry. Training programs like the COVIDSafe Professional for Food Service program train your staff on increased personal hygiene standards and practical actions to take to prevent the spread of COVID-19 at work. This can help to reduce the risk of a COVID-19 case on your premises and put your staff at ease.

  3. If your food business hasn’t been forced to close just yet, now is the time to focus on inventory management. Be sure to stay on top of your fresh produce and only order a much as you can use in a short period of time. Switching up your menu items to use foods that don’t spoil easily will put you in a better economic position.

  4. If you are already feeling the effects on the food supply chain in your food business, take the opportunity now to consider alternative options for your food supply sources. There is much uncertainty about how long food supply chains will be affected, so it is a good idea to take action now.