Restaurants’ Solvency in Portugal during COVID-19

Conceição Gomes, Filipa Campos, Cátia Malheiros and Luís Lima Santos ()
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Conceição Gomes: CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal
Filipa Campos: CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal
Cátia Malheiros: CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal
Luís Lima Santos: CiTUR Centre for Tourism Research, Development and Innovation, Polytechnic University of Leiria, 2411-901 Leiria, Portugal

IJFS, 2023, vol. 11, issue 2, 1-16

Abstract: The main purpose of this study is to understand how Portuguese restaurants’ solvency was affected by the COVID-19 pandemic, considering the factors that influence it. Financial information was collected for the years 2019 and 2020 in the SABI database to elaborate a quantitative methodology; a descriptive analysis was used and Pearson’s correlation coefficient, a Paired t -test, a one-way ANOVA test, and a multiple linear regression were used to test the formulated hypotheses. The findings confirm that solvency is affected by several determinants, such as financial autonomy, indebtedness, financial leverage, asset turnover, return on equity, and long-term bank debt. Solvency is influenced positively by financial autonomy and financial leverage. In contrast, solvency is negatively influenced by indebtedness, asset turnover, and long-term bank debt. Additionally, this paper represents the first study, in the restaurant sector in Portugal, which analyses the importance of solvency and its determinants, by facing a normal year with a crisis year. The paper is innovative in terms of knowledge about restaurant solvency behavior in periods of financial crisis and also because the COVID-19 pandemic has added an additional variable to restaurant solvency: short-term bank debt. In terms of theoretical implications, this study provides further insights about the factors influencing solvency in restaurant businesses during periods of a financial crisis. The main practical contributions are linked to improving the leadership skills of restaurant owners and managers to deal with periods of crisis in general, thus improving the solvency of their businesses and decreasing the risks associated with bankruptcy.

Keywords: solvency; indebtedness; financial autonomy; restaurant industry; COVID-19; regions (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2023
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