The Demand for Social Interactions in Consumer Cities: Evidence from Restaurant Industry During the COVID-19 Pandemic

Abstract

We study the impact of the COVID-19 pandemic on restaurant visits in the post-lockdown era in the U.S., from the lens of social interactions. We construct a “social index” based on pre-pandemic mobile phone data to measure levels of social interactions that happened in different restaurants. We utilize a unique data structure of chain restaurants to disentangle restaurant attributes such as food and service types (which vary across chains) and the local market attributes such as local infection risk (which vary with the geographical location of each establishment). Our results suggest that chains with higher social indices experienced larger drops when local new cases increased in 2020, but when vaccination programs expanded in 2021, visits to these restaurants also rebounded faster. In addition, the demand for restaurants in urban centers with denser consumer amenities recovered faster than those in surrounding commuting areas. Our results provide evidence of a persisting demand for social interactions in consumer cities, and such demand has demonstrated its resilience when the economy started to recover from the COVID-19 pandemic.