Conditions for Re-opening Following Lockdown in 2020 during the Covid-19 Pandemic (Essay Sample)

Conditions for Re-opening Following Lockdown in 2020 During the Covid-19 Pandemic First and Last Name Department and Academic Institution Course Name and Number Instructor Due Date Conditions for Re-opening Following Lockdown in 2020 During the Covid-19 Pandemic The Covid-19 pandemic sent businesses around the world into a panic. Overnight, businesses were told that they had to close their doors and re-open with new regulations in place. Every sector of the economy was affected in some way by the global pandemic, but specific sectors were the hardest hit. Restaurants and hospitality services felt the most immediate impact. Because conducting business revolved around in-person interaction, these businesses were forced to shutter their doors. Some went out of business almost immediately due to a lack of liquidity. Those which were able to remain solvent faced a difficult choice in deciding whether or not to re-open. The specific conditions that made re-opening a profitable venture are the subject of this analysis. While some businesses were able to weather the storm, other business owners ultimately elected to remain permanently close rather than sink further resources into a losing venture. The conditions that made permanent closure the sensible option will also be examined here. Businesses on the bubble Once Covid-19, governments around the world instituted policies designed to slow the spread of the virus. These restrictions included lockdowns, in which many types of businesses in which crowds of people typically congregate were forced to close. The restrictions meant that certain sectors of the economy thrived. The ones which were the most detrimentally affected fell into the category of face-to-face service providers. This includes especially businesses which fall into the category defined by the National Restaurant Association as “food services and drinking places.” Besides restaurants, this designation includes bars, food stalls, caterers, coffee shops and related types of businesses (Carman, 2022). Collectively, businesses in this category face many of the same challenges, though not all of the same challenges. Certain businesses, for instance in the category of food stall, were able to adapt more quickly to the change since they were better equipped to fulfill takeaway orders than were restaurants oriented primarily around dine-in options. However, in general many of the businesses in this type can be treated as comparable for the purposes of metanalysis. The initial effects of the pandemic and subsequent restrictions were devasting across the sector. According to a study conducted in 2020 by online service reviewer Yelp.com, roughly sixty percent of businesses in the food services and drinking places category closed permanently as a result of the pandemic (Sundaram 2020). Many restaurants and other food and drink servers operate on marginal profits, often as little as 2-5% (Vesoulis 2021). This means that a sudden downturn, like the forced closure of a business, often makes the enterprise non-viable. The sudden shock meant that business owners were forced to dismiss staff they could no longer pay or ask them to go on unpaid furloughs until businesses were allowed to re-open. The sudden collapse in demand meant that orders of materials had to be cancelled. While government assistance was meant to help businesses weather the storm and avoid permanently closing, these funds were not always accessible and some businesses lost out (Vesoulis 2021). Because so many businesses were negatively affected by the effects of the pandemic, for many business owners the pandemic represented a turning point. It was no longer worth continuing operations, and the business was either sold or shuttered altogether. During the lockdown, many businesses were forced to close. However, after restrictions were lifted, or at least eased, business owners had to make a decision about whether to re-open. Interestingly, the period which saw the highest number of closures was not the period immediately following the announcement of lockdowns or the beginning of the enforcement of restrictions but immediately following the easing of restrictions (Zhai & Yue, 2021). Why this is true is not exactly clear, though there are several plausible explanations. One is that businesses which were on the brink of collapse at the beginning of the lockdown were able to hold on for the weeks and months until the restrictions were eased. However, it is also quite likely that business owners, faced with the decision to re-open took appraisal of their businesses and decided that closure was the best option. Simple menus and adaptive locations Businesses which decided to reopen following the easing of restrictions had a number of advantages. Those which did not had corresponding disadvantages. Those in strong positions tended to have physical locations which were amenable to takeout ordering. That is, they could adapt the structure of their businesses to prioritize takeout orders. Often this meant reducing the number of menu items they offered to streamline the process of food prep and take advantage of limited kitchen space (Swarts, 2022). Restaurants which already had limited menus with easy-to-produce items had the advantage for this reason. But these businesses also had to have robust demand so that those increased takeout orders could compensate for the sudden disappearance of in-person dining. The question of whether a given business could expect robust demand depended in part on whether or not the goods they furnished could be delivered easily. Necessarily, this meant that businesses already oriented around takeaway orders, like coffee shops and food vendors, were in a better position than were fine dining establishments where careful control over every aspect of food prep meant that it was not possible to ensure the same level of quality for delivers sent to homes. Businesses in which the physical space was the central of the appeal, like bars and cocktail lounges, were the least equipped to adapt. The experience they offered was built around the opportunity to socialize, which was not adaptable to delivery. Perhaps fifty-four percent of bars and nightlife venues may have closed permanently according to one estimate (Sundaram, 2020). Labor Costs and Access Access to labor was another important factor in deciding whether or not a restaurant could re-open. The onset of the pandemic created a simultaneous set of crises for both businesses and labor. One was a liquidity crisis for many businesses as revenue was no longer flowing. This made labor suddenly unaffordable. This labor shock meant that those businesses which were the least affected had an adaptational advantage. For example, the owner of a coffee stall who owned their own materials and did not require outside help was in a better position to reopen than a restaurant which required a large number of employees working in unison to function efficiently. For those businesses which did require large staffs to function, they faced the challenge of trying to maintain the right number which could be comfortably maintained without overburdening their budgets. As stated above, many employees were thrown out of work by the sudden introduction of lockdowns. This labor shock was followed swiftly by another, this time in reverse. Businesses which had previously looked to shed employees quickly discovered that the pool of available labor had shrunk. Many workers were wary of returning to work knowing that the total volume of demand would be reduced. Some feared working in close contact with customers for hours on end, while others found alternative employment in the intervening time (Vesoulis, 2021). This represented a loss in institutional memory, as employees trained in the particular operations of the business in question could not be automatically replaced. Even when new workers who would work for wages that ownership could afford to pay could be found, they had to be trained. This training required time. Workers are never completely interchangeable even when the tasks they perform are predictable and prescribed. Businesses which had to shed experienced workers and replace them with inexperienced ones were at a disadvantage during the period immediately after the lockdown. Alternatively, businesses which had enough capital and were able to make payroll could retain experienced workers. Government programs like the CARES Act were intended to help small businesses maintain their staff. However, this government infusion of capital ceased abruptly in July 2020, quickly eliminating the lifeline that businesses had been reliant on and likely retarding recovery (Zhai & Yue, 2021). There were businesses which were lean enough that they had few workers to start with, or they had enough capital to keep their people employed during the interim period between various restrictions. Even so, the type and severity of restrictions varied widely across different regions, and some restrictions were lifted only to be reintroduced later, making it difficult for businesses to adapt. Supply chains access and the adaptational advantage of scale Supply chain issues were also a major challenge facing businesses during the pandemic. The firms where reopening made the most sense were those which were able to absorb price shocks in materials, and could secure bulk orders. In both cases, chains were better adapted to meet these challenges than were smaller firms with a single location. A restaurant profiled by Time is provides a useful anecdote. Sara Sawicki was able to coordinate between different branches of her Oregon-based chain of restaurants. Because they were able to share supplies, the restaurants were better adapted to shortages (Vesoulis, 2021). It is easy to imagine the alternative, a single restaurant without sister stores facing supply shocks and an already-dwindling customer base, th...