Restaurant industry shows strong recovery, but sales still down $110 billion from pre-pandemic projections

The National Restaurant Association released its mid-year report today and it shows a significant recovery is happening across the industry, despite the ongoing global pandemic.

The association forecasts food and beverage sales to reach $789 billion in 2021, an increase of nearly 20% from a devastating 2020 in which dining halls were closed across the country. countries and people were eager to just leave their homes.

Much of this recovery has come from the easing of restrictions. As of June 2021, 39 states and the District of Columbia have reopened indoor dining capacity to 100%; 11 states and Puerto Rico are open to varying capacities ranging from 50% to 80%, according to the association.

While the positive trajectory is certainly worth acknowledging, the projection remains down $110 billion from the original 2020 projections before COVID-19 took hold in the United States. In February 2020, the National Restaurant Association estimated that sales that year would reach a record $899 billion.

Such a disparity between then and now is a grim reminder that we have lost a significant number of restaurants over the past 18 months and are not quite off the hook yet. To find a silver lining, however, it also indicates that we have a long way to go for creative growth – a comeback story is in the works.

That’s not to say it will be easy, especially as the industry as a whole grapples with historic labor pressures. Despite a steady trend of job creation in the first half of the year, restaurants and drinking places still have almost one million jobs, or 8%, below pre-employment levels. the pandemic, and the restaurant and accommodation sector is showing one of the highest levels of job vacancies. job postings from any industry. Seventy-five percent of restaurant owners say recruiting employees is their biggest challenge, the highest level ever.

Labor issues are not expected to fade any time soon. The industry has thrown the kitchen sink at the jobs issue, wooing workers with free iPhones, fries, college tuition and more. In fact, industry wages increased by 10% in Q2the biggest increase in years, facilitated in part by a 4% increase in menu prices through June 2021.

Despite these efforts, the dropout rate in the industry is historically highwith workers citing not only pay but also COVID-related safety and harassment issues as reasons for going elsewhere.

Still, there are reasons to remain optimistic. Most restaurants have proven their agility over the past year and a half, sprinting to implement new operating models. Companies that have invested in technology to support the significant increase in offsite demand have been able to quickly generate a return on investment and are likely to find stickiness in this offsite activity, even when returning to the restaurant.

Some chains that had never considered drive-thru before quickly changed their minds and are attracting new customers as a result. Other chains are adopting entirely new real estate models to cater to a pandemic-altered set of digital consumers. Digital consumers tend to spend more, so it’s hard to find a negative point here.

Restaurants have also been forced to get creative and find efficiencies where they may not have done before. Some have added take-out alcohol or set up sidewalk tables, while others have reduced menus or simply added QR codes to ease labor pressure.

Consumers have made it clear that they like these changes and want them to stay. According to the association’s report, 52% of adults would like restaurants to incorporate more technology to make it easier to order and pay, for example, while 84% favor restaurants setting up tables outside in permanence.

Of course, it’s still early days and the delta variant of COVID-19 has the potential to disrupt some of the industry’s recovery. In fact, six out of 10 adults have changed their restaurant use due to the rise in the delta variant, the association notes.

But if we’ve learned anything in the past 18 months, it’s that the restaurant industry is nimble — perhaps more nimble than anyone predicted in February 2020. And while those February projections 2020 have been significantly higher than today’s projections, the industry is unquestionably stronger and wiser. now because of what he’s been through.

“Faced with one of the most devastating and disruptive events of our lifetime, the restaurant industry has made significant strides towards rebuilding in the first half of 2021,” said Tom Bené, President and Chief direction of the National Restaurant Association, in a press release. “Consumer expectations of foodservice have changed, and the industry is constantly adapting to not only meet, but exceed those expectations. Restaurant owners, along with their partners across the supply and distribution chain, remain focused on providing diners with a safe and enjoyable experience, amid rising food and labor costs. -work and challenges related to the pandemic. Given these factors, our outlook through the end of the year is one of cautious optimism. »

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Cecil N. Messick