Impacts of Covid-19 on Food Service (2)

Impacts of Covid-19 on Food Service Industry

Students Name

Professors Name

Institutional Affiliation

Course

Date

LetterStudents Name,

University of Houston Clear Lake,

2700 Bay Area Boulevard

Houston, Texas 77058

Date

Janice Bethany,

Writing Lecturer,

University of Houston Clear Lake,

2700 Bay Area Boulevard,

Houston, Texas 77058

Dear Madam,

RE: TRANSMITTAL LETTER

Greetings, madam Janice; I hope you are doing fine and keeping safe. The bellow attachment is a research report on the impacts of covid -19 on the hotel and tourism industry.

Covid -19 pandemic has had diverse effects on various economic industries in the world. The hotel and tourism industry has been greatly affected because movement was ceased after the pandemic struck. In the report, I have discussed how the pandemic has affected the industry. I also did a case study about McDonald’s, a fast-food company and is among the leading fast-food companies in the world.

I hope the report meets the expected academic requirements. I will be waiting to get feedback from you concerning the report.

Yours faithfully

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Contents

TOC o “1-3” h z u Letter PAGEREF _Toc69979887 h 2Executive Summary PAGEREF _Toc69979888 h 4Impacts of Covid-19 on Food Service Industry PAGEREF _Toc69979889 h 5Introduction PAGEREF _Toc69979890 h 5Background and Context PAGEREF _Toc69979891 h 5Scope of the Study PAGEREF _Toc69979892 h 5Discussion PAGEREF _Toc69979893 h 5Who Is the Company? PAGEREF _Toc69979894 h 5Covid-19 Economic Impact PAGEREF _Toc69979895 h 6Table 1 PAGEREF _Toc69979896 h 6McDonald’s Coronavirus Measures PAGEREF _Toc69979897 h 7McDonald’s Charity Works for Covid-19 PAGEREF _Toc69979898 h 8CONCLUSION PAGEREF _Toc69979899 h 8References PAGEREF _Toc69979900 h 9

Executive SummaryCovid-19 pandemic is a disease caused by the novel coronavirus and was first discovered in Wuhan, China, in 2019. Because of how contagious the disease is, some medical guidelines had to be adhered to manage the disease. The disease led to a bad economic state because businesses were forced to close for the virus to be contained. Every economic sector around the globe has been affected by the pandemic either positively or negatively. In the report, how covid-19 has affected the foodservice industry will be discussed, and a case study on a fast-food company (MC Donald’s) has been discussed. In the case study, how MC Donald’s has been affected by the pandemic and how it has managed to cope with the situation to maintain profitability has also been discussed.

The disruption that the coronavirus pandemic has brought about is unusual. Historically, natural occurrences like tsunamis and hurricanes have been the leading cause of the long-term closure of human activities. Regional and global chains and independent business operators are both facing the pressures of covid-19. A massive drop in the occupancy rate in all parts of the world was recorded in 2020. Let take New York as an example, the occupancy rates were 80% lower than the expected rate in the year, and many hotels had to close temporally.

Impacts of Covid-19 on Food Service IndustryIntroductionBackground and Context

The foodservice and restaurant industry are estimated to have $ 899 billion contributions to the economy. Hotels, restaurants, cafes, and other foodservice providers are spread widely across the globe to a point where every family member has a history working in this sector. The foodservice industry comprises any establishment that serves edible products outside their homes. The industry is divided into two groups: those that provide services and products needed in the industry and those that prepare and serve edible products to customers. Restaurants are in the second category, and they have people who work at the back of the house and those that work at the front side of the house. Those in the front part include bartenders, waitresses, busboys, and hosts (Aday, & Aday, 2020). The back house crew includes the dishwashers, chefs, and cooks. Food trucks are also part of the food industry; they are mobile, and they need a few members to run, unlike restaurants.

In the year 2020, the foodservice industry market was estimated to be at $3.5 trillion us dollars and was estimated to reach $4.2 trillion in 2027. The growth was estimated to be at a rate of 2.7% within 2020-2027. The estimations were done before covid-19 struck, and this was evidence that the foodservice industry has a big contribution to the economy. The covid-19 pandemic resulted in business closure making the income generated from this sector decrease (Goddard, 2020). A reduction in income meant that the foodservice industry could not achieve the estimated market of that year.

Scope of the StudyMcDonald’s is one of the world’s biggest food restaurants in the world. The company’s origin is the United States, but it has spread all over the world. The reason for choosing mc Donald’s over other restaurants is its market share in the economy and its representation in the foodservice industry. Other restaurant companies like Starbucks and KFC could be discussed, but they are not big as mc Donald’s. Scoping on a big company like mc Donald’s will enable me to understand the adverse effects of covid-19. If a big company is affected, it means the whole industry is affected. The findings of this report will be from articles, books, personal experience, and website information.

Discussion

Who Is the Company?McDonald is an American fast food business corporation that was started in 1940 as a restaurant and was operated by Maurice and Richard McDonald. The restaurant was started in California in a city called San Bernardino. In the beginning, the business majored in serving hamburgers before the company later turning it into a franchise. Mcdonald’s later introduced its golden arches logo in 1953 in a place named phoenix in Arizona. In 1955, a businessman named Ray Kroc headed to buy the food chain from the two McDonald brothers. Ray became a member of the company as a franchise agent. Previously, the company’s headquarters were located at the oak brook in Illinois but was later moved to Chicago in 2018 as the company’s global headquarters. As of 2018, McDonalds’s was the world’s leading food restaurant chain in terms of revenue. An analysis of the company showed that Mcdonald’s had a serving of over 60 million clients every day in over 100 countries in all of its 37,855 outlets globally.

The food chain restaurant is well known for serving cheeseburgers, French fries, and hamburgers, but it has diversified its menu over time (Petimar et al., 2019). The additional menu in Mcdonald’s includes desserts, milkshakes, soft drinks, breakfast, wraps, and chicken products. For a business to do well, consumer preference is an important aspect to consider. McDonald’s, over time, received a backlash on their menu, saying that the servings were not healthy. Responding to changes in consumer preference, the company included additional food items in their menu like fruits, salads, smoothies, and fish. The company’s revenue comes from sales from the company’s operating restaurants, fees from franchisees, rent, and royalties. The reports published in 2018 concerning the company showed that the company was ranked at the second position as the world’s biggest private employer with over 1.5 million employees. The first position was Walmart which had over 2 million employees. In the year 2020, the company was ranked in the 9th position globally in terms of brand valuation.

Covid-19 Economic ImpactBased on a report given by the chief executive officer of McDonald’s’, Chris kempczinski, in 2019, the company had a strong performance because of the velocity growth plan that they had already implemented. The year 2020 had begun with positive momentum in all of its restaurants worldwide until the pandemic struck. The pandemic had server impacts on the company because it interrupted worldwide operations. In the United States, the third quarter of the year 2020 was favorable for the company because it recorded a 4.6% increase in sales. Although business was booming in the United States, the income could not offset the other company’s restaurants in other parts of the world. Different countries in the world could not effectively respond to the coronavirus pandemic. This might be why in the US, McDonald’s’ was doing well while in other countries, the company was recording a decrease in sales. Table 1 below is a comparison of fourth-quarter sales in the years 2019 and 2020.

Table SEQ Table * ARABIC 1

Comparable sales of the fourth quarters ending December 31

2020 2019

United States Increased by 5.5% Increased by 5.1%

International Operational Markets Decreased by 7.4% Increase by 6.2%

International Developmental Licensed Markets and Corporate Decreased by 3.6% Increas3e by 6.6%

Total Sales Decreased by 1.3% Increased by 5.9%

In the united states, there was an increase in sales for both years. This increase was because of the strategic marketing and promotions by the company in 2019 and the beginning of 2020. the company had introduced promotions in their main menus, and this attracted many customers. In 2020, McDonald’s restaurants were still operational because of their quick response to the covid-19 regulations; thus, sales improved. The international operating market sales decreased because of the covid-19 impact. The regulation and restrictions in various countries in the world led to decreased sales. The global developmental markets dropped because of reduced sales in Latin America and Asia because covid-19 had hit hard in these regions. Although japan offset the international developmental licensed markets and corporate, it was recorded an increase in sales throughout the year.

Besides the WHO guidelines on covid-19, governments of different countries also issued additional measures like stopping all dining activities in public places and changes in operating hours. In the United States McDonald’s restaurants, the sales of the year 2020 had increased compared to the previous year. These two examples of the effects of the pandemic. There was a decrease in Chicago shares by over 2.5%; the global sales also decreased significantly. The drop in sales was substantial in sales in places like France, Latin America, and the United Kingdom, where the pandemic had hit hard. Some countries were issued with lockdowns that limited business operation, explaining why sales were still being recorded in the United States. McDonald’s restaurants remained operational in the US, although they offered drive-thru and home delivery services.

McDonald’s Coronavirus MeasuresAs the company faces new challenges, they have worked so hard to ensure they tackle the new challenges effectively to ensure they achieve their long–term goals. The corporation has a big market share in the foodservice industry, and if they do not find a solution to the incoming challenges, it is most likely that they will lose their share to competitors. The pandemic made many businesses close down because they could not keep up with the measures issued by the government. Instead of closing the business, McDonalds ensured they cared about their clients’ safety and managed to cater to their needs. Since the pandemic would last remains unpredictable, people have to come out of their comfort zones and find a way of operating amid a pandemic to ensure the economy stabilizes.

McDonald’s has implemented measures that protect both the company’s employees and their customers because one of the company’s cultures ensures health and safety to all of the company’s clients and employees. One of the measures implemented is contactless services through the drive-thru and home deliveries. The contactless services are for situations where restaurants are not allowed to offer dining services. In cases where restaurants can be opened, McDonald’s’ has ensured social distancing by distancing the dining tables per the WHO directives and the customers. The crew members are also expected to wash their hands frequently and are provided with protective equipment like gloves and face shields. The company has also given frequent cleaning of the kitchens, tables, and serving tray equipment and sanitizers. To ensure their clients adhere to covid-19 regulations, McDonald’s ensures that every client has a face mask and the temperature checked.

The corporation has also put measures to ensure the set guidelines are followed to the latter. Together with the food chains franchises, the company has invented an initiative called safety reaffirmation visits. These visits are to be done regularly to ensure no one disobeys the guidelines. The company has stopped cash payments and allowed credit cards to make purchases to avoid spreading the virus through contact. In places where social distancing can be challenging, the company has installed protective panels to prevent direct or close contact with clients, like in the cashiers’ point.

McDonald’s Charity Works for Covid-19McDonald’s is one of the most widespread food chain corporations globally, which means a large community surrounding them (Lee, & Lambert,2017). Corporations and businesses play a role in the communities surrounding them, and McDonald’s is not an exemption. The company is expected to respond to the community in need because its success is in its communities. Mcdonald is well known for its charity contribution in times of crisis and not only the covid-19 pandemic; through their participation in helping in times of need, it can be said that helping societies is one of the company’s core values. Companies should embrace thinking from a global perspective but act locally. This will help them have a good relationship with the people around them, thus promoting business and community growth.

The coronavirus pandemic has had serious effects on most of the world’s communities. (Mattoo, & Mensbrugghe, 2020). Most people lost their jobs because of the bad economic state, increasing the numbers of people going hungry in the world. In most cases, people died of cases of starvation and depression and not because of the virus. Since McDonald’s’ is a food chain, they have provided charity services to the community by donating food; the donations are for marginalized groups like the elderly, the homeless, and children who depended on school meals. The company has also partnered with the Red Cross to help give back to society in times of need. The pandemic affected the operations of the company, its consumers, and society’s surrounding. This made the business entity work to support these listed groups to ensure the business runs smoothly.

ConclusionFoodservice and restaurant industry is estimated to have $ 899 billion contributions to the economy. In the year 2020, the foodservice industry market was estimated to be at $3.5 trillion us dollars and was estimated to reach $4.2 trillion in 2027. The estimations were done before covid-19 struck, and this was evidence that the foodservice industry has a big contribution to the economy. The covid-19 pandemic resulted in business closure making the income generated from this sector decrease.

In the United States McDonald’s restaurants, the sales of the year 2020 had increased compared to the previous year. Among the effects of the pandemic was a decrease in Chicago shares by over 2.5%, the global sales of the company also decreased by a significant number. The drop in sales was a major drop in sales in places like France, Latin America, and the United Kingdom, where the pandemic had hit hard. McDonald’s has implemented measures that protect both the company’s employees and their customers because one of the company’s cultures ensures health and safety to all of the company’s clients and employees. Mcdonals is well known for its charity contribution in times of crisis and not only in the covid-19 pandemic; through their participation in helping in times of need, it can be said that helping societies is one of the company’s core values.

ReferencesAday, S., & Aday, M. S. (2020). Impact of COVID-19 on the food supply chain. Food Quality and Safety, 4(4), 167-180.

Goddard, E. (2020). The impact of COVID‐19 on food retail and foodservice in Canada: Preliminary assessment. Canadian Journal of Agricultural Economics/Revue canadienne d’agroeconomie.

Lee, A., & Lambert, C. (2017). Corporate social responsibility in McDonald’s Australia. Asian Case Research Journal, 21(02), 393-430.

Maliszewska, M., Mattoo, A., & Van Der Mensbrugghe, D. (2020). The potential impact of COVID-19 on GDP and trade: A preliminary assessment. World Bank Policy Research Working Paper, (9211).

Petimar, J., Ramirez, M., Rifas-Shiman, S. L., Linakis, S., Mullen, J., Roberto, C. A., & Block, J. P. (2019). Evaluation of the impact of calorie labeling on McDonald’s restaurant menus: a natural experiment. International Journal of Behavioral Nutrition and Physical Activity, 16(1), 1-11.