After a dire 2020, the restaurant industry is making a comeback, but headwinds will likely prevent it from returning to 2019 levels, according to a new report.
The National Restaurant Association predicts that restaurant and foodservice industry sales will rise nearly 20% to $ 789 billion this year, from $ 659 billion in 2020. But the projection is still well below sales. before the $ 864 billion pandemic, the group said in the mid-year “State of the Industry Report.”
Suppressed consumer demand, stimulus payments and vaccine availability fueled restaurant sales in the first half of the year and helped restaurateurs recover from losses suffered by the industry in the early months of the health crisis.
But serious challenges such as labor shortages and rising food and fuel prices are limiting the gains. Even more worrying, an upsurge in Covid-19 cases in recent weeks darkens the picture for the months to come. This has delayed the return to the office of some companies, limited travel and could have an impact on consumer behavior.
“2020 has certainly been the toughest year in restaurant industry history, and 2021 is shaping up to be the year of transition and rebuilding,” said Hudson Riehle, senior vice president of the research and knowledge division of the business group.
“There are recruitment and retention challenges, food cost challenges, rapid changes in consumer demand for on-site and off-site meals… but the impacts of the pandemic are still being addressed week by week,” did he declare. noted.
The challenges of work intensify
The workforce rose, the data showed, with seven straight months of job gains. But food and beverage outlets still account for nearly a million jobs below pre-pandemic workforce levels, at 11.3 million in July.
Workforce issues intensified, with 75% of operators saying recruiting and retaining workers was their biggest business challenge – the highest level in the 20 years the group has tracked this data. In January, only 8% of operators said workforce was their main challenge.
Homeowners are also grappling with how to manage vaccination requirements.
At Olamaie, a modern Southern restaurant in Austin, Texas, owner Michael Fojtasek has three employees short and had to get the shot. He said his vaccine tenure had so far not hampered the hiring process.
It opened a second business, Little Ola’s Biscuits, two months ago, as a spin-off from its main location. Things are going well for the new company, which offers a contactless and curbside model, but Fojtasek said the future is uncertain as the pandemic continues.
“Our main challenge today is uncertainty,” he said. “As operators, we don’t know the best way to run the business. We all try, as we have been from the start, to figure it out for ourselves. And I would say we don’t. not had a large amount of leadership from our elected officials around this for the hospitality industry. ”
Delta weighs on the recovery
The rapid spread of the delta variant of the coronavirus is an imminent threat. The summer started off with high hopes in the restaurant industry as rising vaccination rates brought diners back. But now Covid-19 cases are increasing across the United States in some places, and the increase in the number of rivals seen during the winter peak. Some southern states are experiencing their worst epidemics of the entire pandemic.
A recent National Restaurant Association survey of 1,000 adults found that 6 in 10 say they have changed their eating habits because of the delta. One in five people say they choose to sit outside for dinner, 37% say they have ordered a delivery or take-out instead of having dinner there, and 19% say they have stopped eating out altogether.
Last week, McDonald’s and its franchisees discussed data that should prompt dining rooms to close again, according to internal company documents seen by CNBC.
Cava CEO Brett Schulman said the Mediterranean food chain has seen a slow and steady recovery in urban restaurants over the summer as the Delta takes hold, but consumers continue to seek familiar experiences of different manners. The recovery continued in the suburbs, where most of its restaurants are located.
“People have grown accustomed to using our digital contactless channels even more than before the pandemic, it has helped us engage with them more frequently as more in-store businesses come back. They realize that there are several out there. ways for them to get their lunch Cava, ”he said.
Schulman said digital sales have grown by more than 65% and represent 45% of the company’s channel mix today. The private company does not disclose specific sales totals.
Homeowners are also facing rising food and fuel prices, and menu prices have also gone up. Consumer prices for out-of-home food have increased 3.9% year-to-date through June, which will correlate with menu prices rising to their highest annual rate in over a decade. ‘a decade.
Many Creative Solutions Operators who have relied on during the pandemic have supported business in a positive way and are likely to stay. Customers surveyed said the technology made ordering and payment easier, improved customer service, and accelerated the overall restaurant experience.
Take-out alcohol, which became a staple last year, is also here to stay. Sixteen states and Washington, DC, will allow it permanently, and 14 states have extended their original programs.
Likewise, outdoor dining and parklets remain popular. Ninety percent of operators who took advantage of expanded access to outdoor rest areas said they would continue to offer it if their jurisdiction allowed these options after the pandemic. Offsite demand also remained above pre-pandemic levels.
“The two fundamental drivers of the restaurant industry are convenience and socialization, and this component of convenience during the pandemic has been emphasized and accelerated for greater uptime,” said Riehle. “The past few months have shown that there remains a substantial pent-up demand for the socialization engine – in other words, the on-site restaurants. So these two in tandem, engage in ebb and flow at as the pandemic progresses and then diminishes. “