How Coronavirus Is Impacting the Food Industry

By now, you've already heard. SXSW: canceled. Coachella might be canceled. And in the food world, more of the same. Expo West and the International Association of Culinary Professionals (IACP) conference are both huge industry events, totaling over 86,000 attendees, that announced cancelations due to Coronavirus concerns in the past several days, impacting food companies, distributors, chefs, editors, writers, and more.

To put the concern in context, most of these measures are preemptive. Austin, for example, where SXSW is held, doesn't have any confirmed COVID-19 cases as of this writing. The hope is to keep it that way by stopping hundreds of thousands of people from descending onto the city.

Still, customers are reacting in major ways, sometimes due to xenophobic fears. In New York's Chinatown, business has dropped 40 to 80%, we reported last week. 98% of the neighborhood's businesses are mom-and-pop, and some have taken to paying their staff from their own wages due to razor-thin margins.

Just as officials are just beginning to understand coronavirus's public health impact, people in food — farmers, restaurateurs, and servers — are waiting out its financial toll. Some industry responses have been positive. A few days after our plea for restaurants to provide paid sick leave for their staff, Darden Restaurants (of Olive Garden and Red Lobster) announced they would offer it to their hourly workers, in a move that we hope spreads industry-wide.

The situation is still unfolding, and it's likely that the full impact will take months, even years, to be seen. But here's what we're seeing so far.

SXSW: Food vendors, restaurants, and bartenders

Brent Fogerty runs a popsicle cart business in Austin called Cold Ones Pops. For him, the festival's cancellation might steal a fifth of his revenue for the year. "For us it is especially hard because all our costs are up front — ingredients, prep, and labor prepping for the 10 day festival takes us almost a month to prep for," he tells Food & Wine.

SXSW counted over 70,000 attendees last year, who spent over $182 million on hotels, restaurants, and bars. (And that's not even counting what official organizers and temporary workers spent.) Now that the event is canceled, some of those registered attendees might still come to town. There's also a slew of unofficial events that might still go down. The question is, how many?

For Caroline Wallace, deputy director of The Texas Craft Brewers Guild, the economic impact remains to be seen. So far, she hasn't noticed any downturn in attendance at restaurants and bars around town due to coronavirus. But everyone's waiting until next week to see what happens — now-canceled SXSW was slated for March 13 through 22.

For Austin's craft breweries, the financial impact of SXSW is multi-pronged: there's the loss in sales of bottles of beer and kegs to events, as well as to local bars. There's also a potential downtick in customers taking tap room tours. And then, of course, there's the loss of corporate sponsorships: Twitter, Facebook, and Netflix all reportedly pulled out in advance of the official cancelation. Direct economic impact aside, small companies are also experiencing the loss of visibility and press.

How to help: Austinites have already set up fundraising websites like Ilostmygig.com, which estimates an average income loss of about $1,000 for food vendors, videographers, DJs, and sound engineers. You can also donate directly through this website.

Farmworkers

While a lot of coronavirus coverage has understandably been focused on public places like restaurants, less has been reported on other parts of the food industry that aren't customer-facing. Farmworkers continue to be some of the most economically and physically vulnerable populations, and they stand to be greatly affected by COVID-19. Although there haven't been a significant number of reported cases among farm workers, the possibility of it is putting their lack of resources into harsh spotlight.

Elizabeth Strater, director of alternative organizing for United Farm Workers, represents about 10,000 farmworkers. Many of these workers travel seasonally from Mexico to orchards in Washington State, where some of the most well-reported coronavirus outbreaks have occurred. For her, it's not just about the workers — it's about their children.

"If the Yakima schools closed," then farmworkers would have to stay home with their children, she explains. "There would be nobody to pack for distribution. Apples would start being scarce in stores within three days."

In the event of illness, the majority of these workers and their families would rely on charity clinics, already stretched thin and serving large, remote populations.

Even assuming zero further outbreaks in Washington, however, farm operations are being affected. The planting season — happening soon — is reliant on products from China. "Did you know that orchard trellising hardware is only manufactured in Wuhan? Nobody will be planting Orchard acreage this year," Strater says. Wuhan, China's inland Eastern city, is widely acknowledged to be the global center of the outbreak.

Chinatowns

"According to Yelp's latest data, United States consumer interest in Chinese restaurants is down about 20% since widespread fears of coronavirus began to take hold," Carl Bialik, a data science editor at Yelp, shared with Food & Wine through a spokesperson.

"Yelp users' calls to Chinese restaurants, visits to their websites, searches for directions, and perusals of menus, as a share of the totals for all U.S. restaurants, all were down about 20% in the first three weeks of February…" he says. This is compared to business during the first three weeks of December, before the seasonal uptick over Christmas, New Year's Day, and the Lunar New Year.

In addition to in-restaurant dining, delivery and takeout orders were also down 13%, according to Bialik's findings.

And business owners have been feeling the effects. As Food & Wine reported, "In the past few weeks, with so little money coming in, many Chinatown business owners have been forced to pay their staff's salaries from their own savings. Often the employees have been with them for decades and are almost like family themselves. But business owners can't absorb the downturn too much longer."

Delivery drivers

And then there's delivery companies like UberEats, Postmates, and DoorDash. Have they seen an uptick in orders due to people staying in? Postmates didn't return a request for comment, and UberEats responded to our request with a bot-answer via their customer support line. So, it's unclear.

Quinci LeGardye, however, a DoorDash and Postmates driver in Los Angeles, noticed that DoorDash has been having surge pricing. It basically incentivizes drivers to work by paying them a little more for each ride — and this might indicate more demand.

"Tonight was the highest surge I've seen in the past month," she told Food & Wine on Friday. "There was a set surge for +$2.50 this morning and it went up to +$4.50 during rush because the app was very busy, but I don't know if that's because of less drivers or more orders than usual."

Both companies have issued in-app alerts for drivers reiterating standard CDC guidelines, and Postmates rolled out "no-contact" deliveries where drivers can leave food outside someone's door.

UberEats also announced they'd be offering paid time off for drivers officially diagnosed with coronavirus. The limitations are pretty strict though: there's a cap of 14 days, and this currently doesn't apply to all markets worldwide.

The California Labor Federation pointed out the hypocrisy of Uber's memo, noting that the company is currently funding a ballot measure to restrict drivers' sick days, among other workers' rights.

Food business owners

Expo West, originally started as a natural products conference in the '70s, has now grown to the flagship food event for nearly 4,000 companies worldwide — including big names like General Mills, Honest Tea (owned by Coca Cola), and Nestle. Small business owners, though, are the ones who really rely on it.

"What many outside the industry may not know is that many exhibitors are very small companies that use the Expo as a cost-efficient way to introduce their new items to retail and distributors," says Mysty Stewart, a PR consultant. "Without it, one has to wonder how that will affect those companies. Will smaller companies be able to sell their new items in a timely manner or will they sit in inventory?"

On Saturday, we spoke to the owner of a pastry company from Paris, who was still scrambling to recoup money from changed flights and canceled hotels. Like has been previously mentioned, these are financial effects that will take months to understand.

How to help

Given that restaurants are the one part of the food chain that customers have direct contact with — as opposed to, say, farm workers — it's probably the easiest to impact. If you can afford it, go out to eat. And tip well. Especially at your local Chinatown, if you have one. Many of these businesses continue to be mom-and-pop-run, meaning tighter margins.

If you have health concerns, buying a gift certificate is also a great way to support businesses. Again, if you can afford it and feel moved to donate, check out fundraisers for SXSW workers like Ilostmygig.com, mentioned above.