Wuhan shows world how economies may recover after the virushttps://www.bnnbloomberg.ca/wuhan-shows-world-how-economies-may-recover-after-the-virus-1.1463784
Wuhan shows world how economies may recover after the virus
"Three months after it reopened its economy, Wuhan’s uneven recovery offers a glimpse of the hard road back to normality for cities after containing the coronavirus."
"As of May, factory output, retail sales and exports in the city were nowhere near the same level as last year. That’s even though some factories worked throughout the lockdown and normal activity had resumed by April. Private consumption continued to lag factory production, mirroring the divergence seen across China."
"While factories and offices quickly got back to business, consumers were slower to return, with residents cautious and habits such as cooking at home and shopping online persisting after the 76-day lockdown."
"“Even a tiny flare-up could cause panic among people that directly stops them from dining out,” said Xiong, who still hasn’t reopened the five other restaurants he owns. Xiong said profits have dropped as much as 80 per cent because he has to spend more money on marketing and promotions to lure hesitant diners."
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Reopening of restaurants does not mean the revenue and certainly not the profits will return to pre-COVID levels. Remember fixed costs do not change with revenue and profit margins in this business are very slim... ie if you get 80% of customers, it does not mean you will get 80% of previous profits... in fact, you will most likely still have a loss. In Canada, many office towers (banks for e.g.), universities, etc. remain closed with much fewer people physically being downtown (at least until September). Many are thinking of hybrid, predominantly online model even beyound this fall. Fewer people means fewer customers for food courts as well as steet-front restaurants for lunches as well as coffee, morning breakfast, as well as evening dinners/nights out. If you have to get your group of co-workers or friends together to commute to the city just for a burger or beer, you are less likely to meet at a downtown restaurant than if you were all just leaving your work for the weekend.