Profitability of Italian Restaurants Before and During the Pandemic

Authors:

Pages: 31-38
DOI: https://doi.org/10.54664/NXYO1490

Abstract:

Restaurant businesses play a leading role in the economy of a tourist country. Traditionally the destination of many foreign guests, Italy is also renowned for its excellent cuisine based on the Mediterranean diet. This paper analyzes the trend of two profitability indices of a sample of large Italian restaurants, related to the pre-pandemic period and in the COVID-19 year, 2020. For this purpose, financial statements from the AIDA database were used. Profitability was studied using RoE (return on equity) and RoS (return on sales). The study is related to the entire country and its three macro-regions (North, Center, and South with islands). The analysis showed a dramatic fall in the year of COVID-19 despite government interventions to support the business that has been subject to forced closures. The main limitation of this study is its purely quantitative nature limited to a sample of restaurants with annual revenues over €800,000. The results are useful to Italian and foreign entrepreneurs who can relate their situation to the average situation in the sector. In the future, the study should consider other profitability and asset indices, as well as investigate investments in sustainability, taking into account the role of restaurants which should contribute to the development of fair, ethical, and sustainable tourism.

Keywords:

tourism; economic ratios; RoE; RoS

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