The COVID-19 Pandemic Has Had an Expected Effect on American Restaurants: It’s Boosted Their Productivity

COVID-19 had a surprisingly positive impact on the productivity levels of U.S. bars. The pandemic severely affected the hospitality industry worldwide, leading to significant revenue losses and the closure of many businesses. However, U.S. establishments saw a 15% increase in labor productivity compared to pre-pandemic levels. Interestingly, this notable surge has persisted even after conditions began to return to normal.

The key factor behind this productivity boost? Short visits.

COVID-19’s legacy. The pandemic severely impacted the hospitality industry, and many businesses closed as a result. However, researchers from Chicago and New York universities recently explored whether COVID-19 had impacted the productivity of restaurants and bars in the U.S. If so, how did it influence it, and does that effect still persist?

The team detailed its findings in a study published by the National Bureau of Economic Research.

15%. The study reveals that restaurant output notably increased during the pandemic years. “We document that, after remaining almost constant for almost 30 years, real labor productivity at U.S. restaurants surged over 15% during the COVID pandemic,” researchers explain.

This increase is intriguing because it doesn’t solely represent a specific past situation linked to the most challenging years of the pandemic. Notably, the team points out that this change hasn’t yet lost its impact: “This surge has persisted even as many conditions have returned to pre-pandemic levels.”

Why did productivity surge? Once researchers analyzed and calculated the increase in productivity, the next question was clear: What caused it? To answer this question, experts examined around 100,000 U.S. restaurants, focusing on aspects such as sales and the number of customers served per employee. Additionally, the team used phone data to gain insights into customer visits.

While the sample was extensive, you should consider certain characteristics.

The research team focused on a specific business profile: limited service restaurants (LSRs). In this kind of establishment, the interaction between staff and customers is minimal, similar to many fast-food restaurants. The study specifically focused on three subcategories: popular chains such as Taco Bell and McDonald’s, buffets, and coffee shops like Starbucks. More than 600 brands were included in the analysis to ensure a broad sample.

Why LSRs? According to the study, LSRs account for about 45% of employment and sales in the American restaurant industry. Over the past decades, these establishments saw “very similar productivity movements” to the restaurant industry as a whole. Moreover, LSRs provided a unique advantage because researchers had complete access to their visit flow.

Analyzing the data. With extensive data at their disposal, researchers began to draw conclusions. The findings were striking. “The microdata reveal significant productivity growth among individual restaurants whether measured in sales per employee or even in a more basic/physical measure of total consumer visits per employee,” the team concludes. The study also rules out the possibility that this improvement in performance could be attributed to economies of scale, an increased market share, or shifts in demand.

Additionally, researchers discovered that employees’ growth in sales wasn’t due to them working more hours. The average number of hours worked per week between July 2022 and June 2024 was 25.1 hours, which is consistent with the hours worked from 2006 to 2008. “In fact, current hours per worker are actually a bit below the 2018-19 pre-COVID average of 25.6 hours per week,” the team points out.

So, what boosted productivity? Researchers observed a notable change in the duration of visits to restaurants. They found “significant drops in the amount of time” customers spent at these establishments, especially among a group of consumers who stayed for just 10 minutes or less. This trend was particularly evident during the pandemic and persisted even after the health crisis had ended.

“Average customer dwell times fell, and most of the reduction came from the rise in the share of the visits lasting less than 10 minutes,” the study concludes. The data clearly demonstrates that the rise in restaurant performance is “strongly correlated” with shorter customer visits, especially express visits of under 15 minutes.

Beyond minutes. The reduction in visit duration explains part of the mystery behind increasing restaurant performance, given that shorter visits allow for serving more customers without hiring additional staff. However, it leaves another important question unanswered: Why were visits so brief? Researchers have an answer: takeout orders.

“The frequency of such ‘take-out’ customers rose considerably during COVID, even at fast food restaurants, and never went back down,” researchers say. As such, increased delivery options are a key factor in short visits to restaurants. Moreover, the growth of orders placed via phone or apps also explains this change, with customers stopping by to pick up their meals for consumption at home, the office, or elsewhere.

“If the restaurant can satisfy such quick-turn customers in addition to their regular customers with the same labor force, that would show up in the data as a clear, legitimate increase in their productivity,” the study explains.

A nuanced advancement. The reported 15% increase in output is beneficial for businesses, but some experts are urging caution. Douglas Holtz-Eakin, president of the advocacy group American Action Forum, noted that there’s an intangible value that isn’t captured in the study’s quantitative measures: the human factor.

“The wait and bar staff deliver two services. The first is food and drink–the same as the take-out operation–and the second is sucking up, aka service. The service is valuable… but not priced by the restaurant. As a result, the ‘output’ of the wait staff is understated and the productivity underestimated as well,” he explains.

Images | Toa Heftiba | Dan Gold

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