Oops! Looks like this one was never published before the backlog blew up. Here y’all go!
Might as well just pick up from where we left off…
Restaurants: Long Term Low Demand
One of the most obvious features of the Long Pandemic Economy is a demand slump for restaurants. As we saw in Part 1, public health orders and the lack thereof are actually pretty marginal in terms of their impact on demand. Most of the slump is from people voluntarily avoiding eating out.
However, like the trends in seasonality and public health responses, demand (and thus policy) lags reality. America was objectively growing safer during the early phases of the vaccine rollout, but because we were still recovering from the psychological hit of the winter wave, policymakers lagged on opening things up, and people stayed home because they didn’t trust that America truly was growing safer. And then when Delta hit, people had grown attached to the idea of things having opened up, so both people and policymakers responded slower than they should have.
Restaurants: Carryout And Delivery Aren’t Enough
Another long-term weakness is that carryout and delivery haven’t replaced dine-in demand. As long as we muddle along in this low-demand regime (again, regardless of state or local policy, the mere existence of the pandemic is the main driver of low demand), carryout and delivery capacity just isn’t strong enough or expandable enough to make up the gap in any meaningful way.
It’s just too expensive to run delivery, which is why delivery-heavy or delivery-only restaurants tend to be low-margin operations. And while carryout runs fewer costs, those costs shift onto the consumer, who doesn’t benefit from the dine-in experience while bearing most of the same costs of it (driving there, parking, etc.).
However, one long-term effect we may end up seeing is that more restaurants decide to take the plunge of investing more in their carryout/delivery capacity. I’d expect this to be a somewhat “sticky” phenomenon: Once a restaurant has optimized its practices, getting rid of capacity is leaving money on the table. But over time, this will of course fade, as turnover in the restaurant industry on both the staffing and business side is notoriously high.
Restaurants: Sidewalk Culture
American sidewalk cafe culture has flourished during the pandemic, at least in places that could support it to begin with. Restaurants aren’t going to give up what’s essentially free capacity, and they won’t let local governments take it away from them without a fight.
Some local governments are still going to do the dumb thing. My own town, for instance, reopened the parking lanes it had blocked off.
But in dense cities like NYC, the semi-permanent street capacity is slowly becoming permanent. Even if sidewalk dining dies off in most other places, it’s at least going to become a permanent feature of NYC’s dining culture, and that will undoubtedly keep the ethos and institutional knowledge in place for the next major disruption. Gentrified neighborhoods across the country that were already modeled after NYC, will continue modeling themselves after its sidewalk culture. Towns that successfully rebuild themselves from the collapse of the Suburban Growth Ponzi Scheme will likely take sidewalk culture in new directions.
Downtowns: What To Do With Fewer Restaurants?
As mentioned earlier, the wierd thing here is that most of the workers doing the moving are Millennial professionals who hate suburbs and prefer walkable downtowns a la Strong Towns model. At the same time, those Main Streets were hollowed out by the pandemic.
The worst case scenario here is that those Main Streets just die off for lack of investment and demand. But they probably won’t. Instead, the survivors left around today will get propped up by new residents. However, that’s still not going to be enough to revitalize those neighborhoods - as we discussed, demand is down, carryout is up, and sidewalk seating is proving inconsistently durable.
Without a replacement to backfill the Main Streets, they’ll be left in an uneasy sort of limbo. They won’t die off. They just won’t grow, either. Perhaps retail fills the void. Hopefully it’s not “smoke shops and liquor stores” - call me old fashioned, but that’s the number-one sign that your neighborhood has gone downhill.
Zoomers Are Fed Up
This one should surprise no one, but it seems to come as a shock to some Millennial elites who fantasize Zoomers to be merely younger clones of themselves, with the same sensibilities and slightly-more-recent fashion tastes.
But they aren’t. Just like we had our parade rained on in 2008, Zoomers got tossed into a shitty job market last year, with even worse student loan burdens than we had, and then we scolded them for wanting to party those troubles away with each other “because there’s a pandemic on, don’tcha know?”.
If we aren’t careful, Zoomers will be lured in by COVID-skeptical politics. Middle-aged Millennials would do well to remember what it felt like to have our twenty-something partying spoiled by rules, and just how invincible we felt back then — especially against a pandemic they’re among the least vulnerable to. Zoomers are going through the same stage of their lives, and it’s understandable that Quarantine Fatigue and Skepticism have hit them the soonest and hardest. We should be focusing on giving them attractive outlets for all that youthful energy, not just telling them “no” all the time.
Next Time…
In Part 3, we’ll identify some policy recommendations for dealing with these problems.