MICROECONOMICS YEAR 1

THE RESTAURANT BUSINESS IN BARCELONA

RIGHT NOW

1
1

Overview

Overview 2

Introduction - Market Analysis 4

Demand 5

Supply 10

Government Intervention 14

Conclusion - Future Scenarios () 18

Bibliography 23

1
Unknown. "Restaurant Barceloneta - Barcelona Navigator". Barcelona Navigator,
https://barcelonanavigator.com/restaurant-barceloneta/. Accessed 24 Nov 2020.

2
 Introduction - Market Analysis

Tapas, paellas, wines, and a festive atmosphere are characteristics of the Spanish culture
that permitted the restoration sector to represent an effective and fundamental part of the
country's economy. Barcelona, as the principal touristic capital of the country, stands out
thanks to the various cafes, restaurants, bars, terraces, which welcome an important
number of clients daily.

Therefore, the restoration market aims to offer cooked plates and drinks to consume
on-site, in exchange for money. But it isn’t the only occupation of this sector, since the
animation and the appropriate welcoming of the client is an essential factor of the activity.
The objective is to draw and retain the consumer, by ensuring he spends a pleasant and
nice time. The client usually includes in the sum paid the amount of the animation,
decoration, and service of the personnel, in addition to his meal price.

Blending conviviality, festivity, and holiday spirit in the collective imaginary, the restoration
at Barcelona has usually been an ideal project for many entrepreneurs.

However, after the Covid-19 pandemic and what it entails as restaurant closings,
diminishing capacities, social-distancing measures, and activity weakening, can we still
encourage future businesspersons towards this project?

Companies in restoration, most of them, managed to adapt part of their activity to the
crisis, by developing digital supports, and favoring food delivery and what it includes as
services (developing applications, strengthening the online Customer Support…).

Nevertheless, to what extent does the change in consumer’s behavior permanently affect
this market? Is an eventual re-opening of the restaurants sustainable in the long-term? 2

2
Larry Lynch (2020, May) How restaurants plan to reopen amid the coronavirus pandemic | ABC News. YouTube.
https://www.youtube.com/watch?v=PFJ8DT58318

3
 Analyzing Demand

It’s important to understand the focus of analyzing demand: we will look at the types of
consumers, their behavior, the elasticities they form and any psychological considerations
regarding this topic. Considering Barcelona’s and Spanish culture in general, going out to
eat is a way of socializing, something that all citizens used to do almost on a daily basis
before COVID and the government restrictions put in place to prevent the spreading of this
virus. In this section, we will analyze how demand has changed and the reason for this.

Firstly, determinants of demand are a perfect place to start as they provide evidence as to
when demand shifts, where and how much. As seen in the table below there are four main
determinants: income, preference, price of substitute goods, price of complementary
goods and population demographic.

Regarding income, it’s clear that the pandemic caused lots of people to lose their job, and
those that were lucky enough to keep it, suffered huge pay cuts that reduced the amount
of spendable income they possessed to spend on going out. Another key factor was the
price of substitute goods, delivery apps like Glovo started running huge discounts on all
types of cuisines in order to encourage people to order their food through the app, further
reducing the demand to go out in the strict time slots that the government appointed.
Lastly, while the population demographic itself didn’t change, the demographic of people
visiting the restaurants did. The massive drop in tourism for Barcelona hurt restaurants
particularly as almost 50% of their clientele were foreigners who came to enjoy the city and
its amazing food.3 All of these points contributed in shifting demand to the left, reducing
the interest of people in restaurants.

Unknown. COVID-19 Era Serves Up Big Changes for U.S. Restaurants | Morgan Stanley
https://www.morganstanley.com/ideas/coronavirus-restaurant-trends
3
Sánchez, Álvaro. "Spanish Economy Sees Record-High Quarterly Rise, But Remains Far From
Pre-Crisis Levels". EL PAÍS, 2020,
https://english.elpais.com/economy_and_business/2020-10-30/spanish-economy-sees-record-high-q
uarterly-rise-but-remains-far-from-pre-crisis-levels.html.

4
 Determinants of demand Demand is lower because...

Income Less individuals have less income

Preferences

Price of substitute goods Substitutes like Glovo

Price of complementary goods

Population demographic Older generations aren’t going out at all

International tourists (represents approx.
50% of demand in Barca restaurants)

Secondly, before drawing a graph, it’s necessary to understand the elasticity of demand,
once again looking at its determinants. They include: availability of substitutes, whether the
good is considered a necessity or a luxury, the time taken by the consumer to make the
purchase and the proportion of income spent on the good.

In this case, three out of the four determinants apply. The two main substitutes to eating
out in restaurants are delivery through apps like Glovo or cooking at home. Both of these
options became even more popular during the first lockdown during spring, this popularity
then impacted their use in the period we are analyzing since people realized their
effectiveness and how cheap and convenient they could be. As previously mentioned, going
out to eat on the weekends was considered the norm for Barcelona’s population, however,
during this period, going out to the restaurant slowly became a luxury as the mix of
government restrictions and fear limited people’s cultural manners. Lastly, looking at the
decrease in income that much of the population suffered, it’s normal to infer that going out
to eat, especially for families, was gonna eat up a larger percentage of a person’s income
compared to before. This was even further amplified by the recent closing of bars that
caused almost 14000 workers to register to the Seguridad Social.4 Overall, every single

4
Gutiérrez, Maite. “El Cierre De Bares y Restaurantes Dispara El Número De Afectados Por ERTE.” La
Vanguardia, 21 Oct. 2020,
www.lavanguardia.com/economia/20201021/484208109264/en-bares-y-restaurantes-el-cierre-de-la-
restauracion-dispara-el-numero-de-afectados-por-erte.html.

5
factor helped in making the demand more price elastic, therefore more subject to changes
in price.

Determinants of elasticity of demand Elasticity is higher because...

Glovo
Availability of substitutes Cooking at home

Necessity v. Luxury Going to a restaurant became a luxury

Time taken to make a purchase

Higher % of income ( if any ) spent

Proportion of income spent on good

Market for restaurants in Barcelona

- D = demand before lockdown

- D1 = demand after lockdown
- Pe = price before lockdown
- P1 = price after lockdown
- Qe = quantity before lockdown
- Q1 = quantity after lockdown

Quantity change = Qe - Q1

Price change = Pe - P1

As analyzed by the determinants of demand and PED, we see a shift of the Demand curve
leftwards to D1, causing an decrease in price from Pe to P1 and in quantity from Qe to Q1.
Furthermore, the demand is also seen to become more elastic as people decide to give this
good less importance, per se. The reduction in consumer surplus can also be seen by the
difference between the green and the blue triangle, caused by this shift in demand.While
it’s nearly impossible to calculate the exact values that would be placed in these graphs, the

6
effects of coronavirus are extremely clear, reducing price, quantity demanded, consumer
surplus and making demand more elastic.

Glovo market comparison

- D = demand before lockdown

- D1 = demand during lockdown
- Pe = price before lockdown
- P1 = price during lockdown
- Qe = quantity before lockdown
- Q1 = quantity during lockdown

Quantity change = Qe - Q1

Price change = Pe - P1

Another market relating to the restaurant business that is extremely interesting to evaluate
during the lockdown is delivery. As mentioned earlier, the popularity that Glovo received
over the last year is mesmerizing; just in July, it was able to raise over million €115 euros in
funding. 5 This popularity can be seen in the graph above, almost as an opposite of the
previous one. The shift in demand from D to D1 caused an increase in both quantity and
price from Qe to Q1 and from Pe to P1; also greatly growing the consumer surplus as seen
by the difference between the blue and green circle. The inability to exit the house also
made the demand slope a lot more inelastic as people that didn’t want or weren’t able to
cook at home had no other option than ordering food. Nevertheless, for restaurants,
delivering food wasn’t a viable option to make up for the lost profit, as in many cases,
despite this new income, the losses were still incredibly high, airing around 90%.6

5
Unknown. “Glovo – the Barcelona Delivery Startup Taking on Deliveroo.” Sifted, 9 July 2019,
sifted.eu/articles/glovo-the-food-delivery-app-taking-on-deliveroo-and-winning/.
6
Benvenuty, Luis. “El 'Take Away' No Logra Sacar Del Desastre a La Restauración.” La Vanguardia, 10
Nov. 2020,
www.lavanguardia.com/local/barcelona/20201110/49376106647/take-away-no-logra-sacar-desastre-
restauracion.html.

7
Psychological Consideration

In terms of psychological considerations to keep into account when analyzing for COVID
there are two main areas: fear and economic uncertainty.

With the current situation, looking at the current numbers of people infected with COVID,
most individuals are scared to go out in fear of catching the disease. The continuous
reminders on social media, newspapers, the internet, the metro, and literally anywhere you
look only help to either intensify or install this fear in the citizens. Furthemore, it’s now
common knowledge that this disease hits the older people more intensely, causing
everyone that is living with older relatives to be even more careful about what they are
doing and their surroundings. For this reason, it’s hard that things will completely go back
to normal, as analyzed by Bocconi 7 since people completely adapted their ways of doing
around this new behaviour and unfortunately going out to restaurants was one of the first
things that they stopped doing.

The economic situation of the whole population in Barcelona, in Spain and around the
whole world is extremely fragile right now. Everyone is worried if and when their new
paycheck will come and what numbers will be written on there. This continuous stress and
economic uncertainty for the future causes people to save more of their earnings with a
“just in case mentality”8, reducing all costs to a bare minimum. Once again, for people
facing this problem, the cost of going out to eat became a complete luxury, a cost that
would take up a considerable amount of their income, therefore, a cost that they can easily
avoid.

7
Scaglioni, Alice. “Il Dopo Coronavirus? Dai Negozi Alle Vacanze, Le Cose Che (Forse) Non Torneranno
Come Prima.” Corriere Della Sera, Corriere Della Sera, 27 Mar. 2020,
www.corriere.it/economia/consumi/20_marzo_27/coronavirus-negozi-vacanze-cose-che-forse-non-to
rneranno-piu-come-prima-1914a4a4-6ad3-11ea-b40a-2e7c2eee59c6.shtml.
8
Sánchez, Álvaro. “Spain's Coronavirus Paradox: 'I Have More Savings than Ever'.” EL PAÍS, 26 Nov.
2020,
english.elpais.com/economy_and_business/2020-11-26/spains-coronavirus-paradox-i-have-more-sav
ings-than-ever.html.

8
In conclusion, for all the determinants of both demand and PED analyzed above, the
restaurants market is one of the most impacted by the coronavirus situation, causing
massive losses and a heavy reduction in demand for the service.

Analyzing Supply

The supply side

Determinant of the supply

Available technology and level of productivity

Number of Firms

Price of the product

Price of other product that the firm can easily

change

The cost structure

Determinant of the supply elasticity

Price of raw materials

Number of clients

Government intervention lock down)

After the analysis of the demand, we will turn to the analysis of the supply side. By looking
at the typologies of the firms, the market concentration and the type of costs that we can
find in a restaurant.

9
Firstly, you have to know that there are over 8500 restaurants in Barcelona. Also, there are
10 main actors who shared the restaurant market for more than 10 years.

no Group/industry Firms employment Annual sales

(millions €)

1 Areas SA Pizza Grill, Café 2747 243,33

Café

2 Sigla SA Vips, Starbucks, 4662 230,71

Gino’s, The Wok

3 The Eat Out Pans Company, 4500 200

Group SL Fresh ready,
bocatta, Café Di
Fiori

4 Compass Group Eurest 7326 186,20

Colectividades

5 Tele Pizza SA Telepizza, Pizza 3083 184,13

World

6 McDonald's Mc Donald’s 2580 94,31

7 Sodexho SA Sodexho 2586 85,64

8 Aramark SL Aramark 2301 77,09

Servicios de
Catering

9 Autogrill SA Autogrill 1072 75,66

10 Grupo Zena de Burger King 1009 55,35

restaurantes SA

10
The table shows us that the market is dominated by multiple firms. And that from the
beginning of the pandemic, the demand rate has decreased so there is less demand. We
can say that there is an OLIGOPOLY situation in the restaurant market in Barcelona.

Market concentration

Regarding the market concentration, the competition authority has not yet measured it
with traditional instruments like the Herfindahl index. But we can imagine how the market
concentration will be according to different sources :

Due to the Covid-19 pandemic, nearly 25% of bars and restaurants in the city are going to
go bankrupt, according to the restaurant owners’ union in Barcelona. Also, the decreased
demand will affect the productivity of the restaurants which will thus decrease the supply
rate of the firms.9

Supply graph for restaurants in Barcelona:

S1: Supply before covid

S2 supply after covid

Q1: quantity before covid

Q2 : quantity after covid

As we can see in the graph, the reduction in numbers of firms and the decreased
productivity has shifted the supply to the left, so the supply decreased.

9
Salvado, N., 2020. Coronavirus: Un Été Sans Bars, Restos Et Boîtes À Barcelone. [online] Equinox.
Available at:
<https://www.equinoxmagazine.fr/2020/04/25/coronavirus-un-ete-sans-bars-restos-et-boites-a-barc
elone/> [Accessed 2 December 2020].

11
And that will affect the market concentration, which will lead it perhaps to a result between
1000 and 2000 with a variation greater than 250, that means an intermediate zone, which
may present risks in the presence of certain factors.

Type of costs of the firm

There are two types of costs in a restaurant:

There are fixed costs, the insurance that protects against risks. Those costs didn’t change
even with the pandemic.

However, the bills ( electricity and water ), and the raw materials have decreased during the
pandemic. Exceptionally, the salaries and the rent that are fixed costs have decreased
during the pandemic, so we can say that with the pandemic, the salaries and the cost 10
moved from fixed costs to variable costs of the firms.

10
Hosteleria, Secteur De L'hôtellerie Restauration En Espagne. [online] Camarazaragoza.com. Available
at: <https://www.camarazaragoza.com/docs/InteligenciaCompetitiva/Documento25.pdf> [Accessed 2
December 2020].

12
 Government Intervention

Restaurants in Barcelona have experienced quite a lot of change ever since COVID.
Government intervention played a crucial role in this change. Even before COVID
governments had been intervening in the restaurant market through taxes and licenses
and certification requirements.

An example of this is the 10% VAT for restaurants. 11Additionally, governments had
enforced standard interventions such as the requirement of an alcohol license in order for
restaurants to sell alcohol, a music license to have musical events and restaurants must
have a license regarding health and safety procedures in order to open. Furthermore, an
employee license is required, in order to allow for the employment of workers, as well as a
food handler certificate, which means that an exam has to be passed on food safety. 12

The pandemic caused by COVID-19, however, led to intensified government interventions in

the market of restaurants. The interventions can be split into positive and negative
interventions.

The negative interventions significantly harmed the economic well being of the restaurant
market. The drastic intervention was the forced closure of restaurants in March until April
2020, where restaurants were fully closed and take out service was prohibited13. During this
time, the government also released the Royal decree law line 2020 stating that Covid
provides no justification for the termination of employee contracts. This means that
restaurants still had to pay their workers, even though they did not make any profit.
However, with this, the employees were obliged to make up these paid hours after the

11
Unknown. "IVA En Restaurantes Y Alimentación: Lo Que Debes Saber". Barymont.Com, 2019,
https://www.barymont.com/pepepromedio/blog/iva-restaurantes/. Accessed 24 Nov 2020.
12
Unknown. "Open A Restaurant In Spain". Companyformationspain.Com, 2018,
https://www.companyformationspain.com/open-a-restaurant-in-spain. Accessed 24 Nov 2020.
13
Ramos, Alejandro, and Miguel Pastur. "COVID-19: Guidance For Employers In Spain". Bird & Bird,
2020,
https://www.twobirds.com/en/news/articles/2020/spain/covid19-guidance-for-employers-in-spain.
Accessed 24 Nov 2020.

13
reopening of the restaurant’s 14. In May, as well as from the end of October to the end of
November, governments allowed take-out service by restaurants, however, customers
were not allowed to be seated at tables, or consume their food in the restaurant.
Restaurants also have an additional expense regarding the need to comply with the
disinfection rules15. Restaurants also faced the problem of fitting fewer customers into their
stores as a result of the 1.5-meter distance rules which was put into place by the
government. Additionally, the government limited the maximum size of dining groups in
restaurants and bars to between 6 and 10 people. The government also put two curfews
into place during the last months of 2020. The night-time curfew prohibits people from
leaving their home from 10 p.m until 6 a.m. There is also the weekend curfew in which one
may not leave their town and in which the night time curfew is also in place. Lastly, due to
the short period of closure of land, air, and sea borders, tourists were not able to travel into
Barcelona, and these tourists are very important for the restaurant business. Therefore,
due to the absence of tourists, there was a lower demand for restaurants.

With positive interventions, the government tried to limit the negative economic effects of
the pandemic on the restaurant market. During times of lockdown, restaurant owners had
the right to limit their rent payment to their tenant to a minimum of 50%. An example of
another positive government intervention is that they gave restaurants more flexibility
regarding the payment of municipal taxes. Moreover, during the lockdown, the commercial
and industrial collection fee was waived for restaurants. For restaurants normally using
public spaces, for example, public sidewalks as seating areas, the payment was waived
during the lockdown. Additionally, the tourist tax usually paid by restaurants was deferred16
.

14
Unknown. "Spanish Government Ramps Up Workplace Legislation In Fight Against Covid-19".
Osborne Clarke, 2020,
https://www.osborneclarke.com/insights/spanish-government-ramps-workplace-legislation-fight-covi
d-19/. Accessed 12 Nov 2020.
15
Ramos, Alejandro, and Miguel Pastur. "COVID-19: Guidance For Employers In Spain". Bird & Bird,
2020,
https://www.twobirds.com/en/news/articles/2020/spain/covid19-guidance-for-employers-in-spain.
Accessed 24 Nov 2020.
16
Unknown. "Covid-19: Information For Shops, Bars, Cafés And Restaurants". Commerce, 2020,
https://ajuntament.barcelona.cat/comerc/en/covid-19-information-shops-bars-cafes-and-restaurants
. Accessed 24 Nov 2020.

14
This short term reduction of cost in regards to the revenue earned by restaurant owners
can be seen in the following graph:

The graph demonstrates how the average costs (AC) were higher, and that once the
government understood the consequences of their negative interventions they lowered
costs for rent for example. The impact of this decrease in AC depends on each individual
restaurant, however, there were two outcomes. It was either lowered to lower losses
(outcome 1 / AC1) or to make a profit (outcome 2 / AC 2). One can see that if the AC is
lowered to below the average revenue/marginal benefit (AR=MB) line, abnormal profit will
result. However, when the AC is lowered but is still above the AR=MB line, then there will be
losses, as highlighted in orange. These losses, on the other hand, are less than the losses
made with the original AC, as highlighted in purple.

Even though restaurants were forbidden to personally serve and seat people in May as well
as during the end of October until the end of November, they were permitted to take out

15
services, meaning an income could still be made. Until the release of the Royal decree 2020,
March 27th, it was possible to terminate contracts due to force majeure in regards to
Covid-19. In that case, companies with less than 50 employees were freed from the
payment of their social security contributions17.

17
Ramos, Alejandro, and Miguel Pastur. "COVID-19: Guidance For Employers In Spain". Bird & Bird,
2020,
https://www.twobirds.com/en/news/articles/2020/spain/covid19-guidance-for-employers-in-spain.
Accessed 24 Nov 2020.

16
 Conclusion - Future Scenarios

Possible scenarios; middle and long run

Generally speaking, it can be said that 2020 has been a particularly tough year for Spain
economically. The International Monetary Fund (IMF) estimates a 12.8% decrease in GDP
(constant prices) for 2020 compared to last year18. Amongst this crisis, the restaurant
industry has been one of the hardest hit sectors. As a reference point, the National
Restaurant Association had projected $899 billion worth of sales in the United States and
has recently reduced the estimate to $659 billion, that is to say, a 26,7% decrease19. Spanish
restaurants suffered, even more, considering that the lockdown in Spain was longer and
stricter. After such a difficult year, what scenarios can we expect for the restaurant industry
in the middle and long run?

Middle run (2021-2022):

Predicting accurately the situation for the restaurant industry in Barcelona in the next 12
months is no straight-forward task. Looking at the 3rd quarter, Spain’s economy showed
large growth, while expectations for the last quarter are worsening rapidly20.

The most determinant factor of demand for next year will be the arrival of the vaccine. The
World Health Organization estimates that a vaccine could be ready from early to mid-2021
21
. The moment when the vaccine will become obtainable will determine the beginning of
the economic recovery and thus the recovery of demand for restaurants in Barcelona. The
arrival of a new vaccine will not only mean a loosening of government restrictions, but it
will also have a noticeable impact on consumer behavior by reducing consumer fear, risk

18
Financial Access Survey, The International Monetary Fund.
19
Littman, Julie. "7 Months Later: Where The Restaurant Industry Stands". Restaurant Dive, 2020,
https://www.restaurantdive.com/news/7-months-later-where-the-restaurant-industry-stands/586860
/.
20
Sánchez, Álvaro. "Spanish Economy Sees Record-High Quarterly Rise, But Remains Far From
Pre-Crisis Levels". EL PAÍS, 2020,
https://english.elpais.com/economy_and_business/2020-10-30/spanish-economy-sees-record-high-q
uarterly-rise-but-remains-far-from-pre-crisis-levels.html.
21
"Coronavirus Disease (COVID-19): Vaccines." Who.int. N.p., 2020. Web. 2 Dec. 2020,
https://www.who.int/news-room/q-a-detail/coronavirus-disease-(covid-19)-vaccines

17
perception and economic uncertainty. Lastly, the better sanitary situation would lead to a
slow and progressive increase in tourism, which, in Barcelona, used to represent half of the
demand.22

Another element that will determine demand is income. The pandemic has affected
people’s income in a very asymmetrical and unequal way. Public servants, salaried workers,
pensioners and people who can work remotely have continued to receive their salaries
during the crisis. However, because of government restrictions, fear of infection and
economic uncertainty, these paid employees and pensioners have started saving a large
part of their income instead of spending it. Consequently, restaurant owners (and all other
self-employed and business owners), on top of having no government help or guarantee in
regard to their income, have had to endure the 23.9% decrease in consumption as a result
of the other group making savings23. An important question for the middle-run is whether
the savings will be spent when the sanitary situation gets better. Chief Economist at the
Spanish investment bank Arcano, Ignacio de la Torre is an optimist: “I think next year when
the vaccine arrives, these saving reserves will end up being spent”. The European
Commission also has positive prospects: its autumn forecast estimates that consumption
will rebound next year as people gradually release accumulated savings and adjust to the
sanitary circumstances24.

During the lockdown, people have had to change their behavior and their habits. Namely
ordering food delivery instead of eating on restaurant premise. Due to the length of these
periods of lockdown, people have gotten used to this alternative and it has become part of
their habits. Just Eat, the leading food delivery company in Spain, is now available in a third
more restaurants compared to last year25. The delivery market will become increasingly
large and will be a large focal point for restaurants and restaurant owners. People have

22
"Coronavirus: Les Bars De Barcelone Reprennent Vie Après Cinq Semaines De Fermeture".
Challenges, 2020,
https://www.challenges.fr/monde/coronavirus-les-bars-de-barcelone-reprennent-vie-apres-cinq-sem
aines-de-fermeture_738761.
23
Sánchez, Álvaro. "Spain’s Coronavirus Paradox: ‘I Have More Savings Than Ever’". EL PAÍS, 2020,
https://english.elpais.com/economy_and_business/2020-11-26/spains-coronavirus-paradox-i-have-m
ore-savings-than-ever.html.
24
European Commision, European Economic Forecast - Autumn 2020,
https://ec.europa.eu/info/sites/info/files/economy-finance/ip136_en.pdf
25
Unknown. Just-Eat.Es, 2020, https://www.just-eat.es/explora/gastrometro.

18
also taken up more cooking at home and bought more ready-meals26; for the less fortunate
and most financially impacted in this crisis, these have become the only options.

MIDDLE RUN CHART OF DIFFERENT THEORETICAL SCENARIOS

Variables Optimistic scenario Most probable Pessimistic scenario

scenarios

Vaccine solution Available beginning Available mid-2021 No effective/approved

2021 vaccine

Government None or very few: Light restrictions: Same restrictions:

restrictions interior capacity back interior capacity interior capacity still at
to 100% increases to 50-70% 30%, possibility of
lockdown

Customer fear Very low Moderate, slowly High

decreasing

International Close to pre-covid Slowly recovery Remains very low

tourism levels

(50% of demand)[14]

Sense of solidarity, Slight decrease Increase Large Increase

sensibility to price

Disposable income Slightly higher, money Slightly lower Much lower

saved during
lockdown

26
"Cooking At Home Becomes Major Trend Coming Out Of Covid-19". Consultancy.Uk, 2020,
https://www.consultancy.uk/news/25412/cooking-at-home-becomes-major-trend-coming-out-of-covi
d-19.

19
Long run (2022+):

In the long run, the main concern will no longer be the time at which the vaccine is available
but the recovery from the damage the virus has made to the economy. The largest
challenges for restaurants will be managing debt and finding demand.

Due to the impact and length of the pandemic, most changes in consumer behavior are
likely to stay and solidify. The main factor that will impact the demand for restaurants in the
long term is the development of people’s income. Spain’s economic situation is expected to
continue its rebound in 2022, 2023, and 2024, although the growth rate is expected to
quickly slow down after 2021. The IMF projects growths of 4,5% in 2022, 3,4% in 2023 and
2,8% in 2024 compared to 7,1% in 202127. According to the European Commission,
consumer spending is likely to moderate in 2022 due to lasting uncertainty about job and
income prospects which are likely to keep precautionary savings elevated28. Consumer
spending will also be determined by government monetary and fiscal policy. The
government will likely continue its expansionary policies while limiting as much as possible
their indebtedness. How the Spanish government uses the 2020 EU recovery fund of $72.5
billion in grants will be determinant for the survival of restaurants29. Emilio Ontiveros,
president of International Financial Analysts, warns about scarring of our spending habits:
“The pandemic has strengthened the perception of vulnerability. The 2007 [financial] crisis
was a big scare. It created the general perception that the economic system was more
vulnerable than we thought. And this is being internalized”30.

The repayment of debt will no doubt also be a challenge for restaurants. Unless banks
implement flexibility measures, many small restaurants with modest revenue may find

27
Financial Access Survey, The International Monetary Fund.
28
European Commision, European Economic Forecast - Autumn 2020,
https://ec.europa.eu/info/sites/info/files/economy-finance/ip136_en.pdf
29
Pérez, Claudi. "Why Spain Will Not Ask For €70 Billion Of Its Share Of EU Recovery Fund". EL PAÍS,
2020,
https://english.elpais.com/spanish_news/2020-10-19/why-spain-will-not-ask-for-70-billion-of-its-shar
e-of-eu-recovery-fund.html.
30
Sánchez, Álvaro. "Spain’s Coronavirus Paradox: ‘I Have More Savings Than Ever’". EL PAÍS, 2020,
https://english.elpais.com/economy_and_business/2020-11-26/spains-coronavirus-paradox-i-have-m
ore-savings-than-ever.html.

20
themselves in a situation of insolvency and be forced to file for bankruptcy. This decrease
in supply will increase the market share of larger establishments, which have the necessary
resources to repay their debts.

21
 Bibliography

Works cited: MLA8

1. Benvenuty, Luis. “El 'Take Away' No Logra Sacar Del Desastre a La Restauración.” La
Vanguardia, 10 Nov. 2020,
www.lavanguardia.com/local/barcelona/20201110/49376106647/take-away-no-logra-sac
ar-desastre-restauracion.html.
2. European Commision, European Economic Forecast - Autumn 2020,
https://ec.europa.eu/info/sites/info/files/economy-finance/ip136_en.pdf
3. Gutiérrez, Maite. “El Cierre De Bares y Restaurantes Dispara El Número De Afectados
Por ERTE.” La Vanguardia, 21 Oct. 2020,
www.lavanguardia.com/economia/20201021/484208109264/en-bares-y-restaurantes-el-
cierre-de-la-restauracion-dispara-el-numero-de-afectados-por-erte.html.
4. Larry Lynch (2020, May) How restaurants plan to reopen amid the coronavirus pandemic
| ABC News. YouTube. https://www.youtube.com/watch?v=PFJ8DT58318
5. Littman, Julie. "7 Months Later: Where The Restaurant Industry Stands". Restaurant
Dive, 2020,
https://www.restaurantdive.com/news/7-months-later-where-the-restaurant-industry-stan
ds/586860/.
6. Pérez, Claudi. "Why Spain Will Not Ask For €70 Billion Of Its Share Of EU Recovery
Fund". EL PAÍS, 2020,
https://english.elpais.com/spanish_news/2020-10-19/why-spain-will-not-ask-for-70-billion
-of-its-share-of-eu-recovery-fund.html.
7. Ramos, Alejandro, and Miguel Pastur. "COVID-19: Guidance For Employers In Spain".
Bird & Bird, 2020,
https://www.twobirds.com/en/news/articles/2020/spain/covid19-guidance-for-employers-i
n-spain. Accessed 24 Nov 2020.
8. Sánchez, Álvaro. "Spain’s Coronavirus Paradox: ‘I Have More Savings Than Ever’". EL
PAÍS, 2020,
https://english.elpais.com/economy_and_business/2020-11-26/spains-coronavirus-parad
ox-i-have-more-savings-than-ever.html.

22
 9. Sánchez, Álvaro. "Spanish Economy Sees Record-High Quarterly Rise, But Remains
Far From Pre-Crisis Levels". EL PAÍS, 2020,
https://english.elpais.com/economy_and_business/2020-10-30/spanish-economy-sees-r
ecord-high-quarterly-rise-but-remains-far-from-pre-crisis-levels.html.
10. Scaglioni, Alice. “Il Dopo Coronavirus? Dai Negozi Alle Vacanze, Le Cose Che (Forse)
Non Torneranno Come Prima.” Corriere Della Sera, Corriere Della Sera, 27 Mar. 2020,
www.corriere.it/economia/consumi/20_marzo_27/coronavirus-negozi-vacanze-cose-che-
forse-non-torneranno-piu-come-prima-1914a4a4-6ad3-11ea-b40a-2e7c2eee59c6.shtml.
11. Unknown. “Cooking At Home Becomes Major Trend Coming Out Of Covid-19".
Consultancy.Uk, 2020,
https://www.consultancy.uk/news/25412/cooking-at-home-becomes-major-trend-coming-
out-of-covid-19.
12. Unknown. “COVID-19 Era Serves Up Big Changes for U.S. Restaurants” | Morgan
Stanley https://www.morganstanley.com/ideas/coronavirus-restaurant-trends
13. Unknown. "Coronavirus Disease (COVID-19): Vaccines." Who.int. N.p., 2020. Web. 2
Dec. 2020.
https://www.who.int/news-room/q-a-detail/coronavirus-disease-(covid-19)-vaccines
14. Unknown. "Coronavirus: Les Bars De Barcelone Reprennent Vie Après Cinq Semaines
De Fermeture". Challenges, 2020,
https://www.challenges.fr/monde/coronavirus-les-bars-de-barcelone-reprennent-vie-apre
s-cinq-semaines-de-fermeture_738761.
15. Unknown. "Covid-19: Information For Shops, Bars, Cafés And Restaurants". Commerce,
2020,
https://ajuntament.barcelona.cat/comerc/en/covid-19-information-shops-bars-cafes-and-r
estaurants. Accessed 24 Nov 2020.
16. Unknown. Financial Access Survey, The International Monetary Fund.
17. Unknown. “Glovo – the Barcelona Delivery Startup Taking on Deliveroo.” Sifted, 9 July
2019, sifted.eu/articles/glovo-the-food-delivery-app-taking-on-deliveroo-and-winning/.
18. Unknown. "IVA En Restaurantes Y Alimentación: Lo Que Debes Saber". Barymont.Com,
2019, https://www.barymont.com/pepepromedio/blog/iva-restaurantes/. Accessed 24
Nov 2020.
19. Unknown. Just-Eat.Es, 2020, https://www.just-eat.es/explora/gastrometro.

23
 20. Unknown. "Open A Restaurant In Spain". Companyformationspain.Com, 2018,
https://www.companyformationspain.com/open-a-restaurant-in-spain. Accessed 24 Nov
2020.
21. Unknown. "Restaurant Barceloneta - Barcelona Navigator". Barcelona Navigator,
https://barcelonanavigator.com/restaurant-barceloneta/. Accessed 24 Nov 2020.
22. Unknown. "Spanish Government Ramps Up Workplace Legislation In Fight Against
Covid-19". Osborne Clarke, 2020,
https://www.osborneclarke.com/insights/spanish-government-ramps-workplace-legislatio
n-fight-covid-19/. Accessed 12 Nov 2020.

24