Lots of jobs data to dissect. Restaurant spending continues to grow as customer traffic improves, but not all segments are proceeding at the same pace. A casual-dining chain begins to roll out a new prototype designed to support on-premises dining and two virtual brands. These stories and more This Week in Foodservice.

There’s good news and bad news in reviewing restaurant industry results for the second quarter of 2021. The good news: As government bodies across the country loosened the reins on restaurants, consumers came back, and the industry showed improvement compared to the same period in 2020. The bad news: Restaurant traffic and revenue levels continue to lag behind 2019’s pre-pandemic pace.

Consumer spending at restaurants increased 32% in the second quarter of 2021 compared to the same period in 2020, per data from The NPD Group. Looking at the data through a pre-pandemic lens, sales were flat compared to the same quarter in 2019.

Restaurant visits, dining in or off-premises, increased by 22% in the quarter compared to the same quarter in 2020 and declined 7% compared to the second quarter of 2019. Quick service restaurants, which NPD reports as representing 81% of restaurant visits in the U.S., realized a 15% gain in traffic in the second quarter compared to a year ago and a 5% decline compared to the second quarter of 2019.

During the second quarter in 2020, which covered the height of the pandemic lockdowns and restaurant dine-in restrictions, QSR off-premises orders increased by 9% compared to the same quarter in 2019, driven by solid growth in drive-thru and delivery orders, NPD reports. In this year’s second quarter, off-premises grew by 5% compared to a year ago.

Total visits to full-service restaurants, which includes dine-in and off-premises, increased by 60% in the second quarter over a year ago and declined 17% compared to the second quarter of 2019. On-premises visits to full-service restaurants increased by 214% in the quarter compared to a year ago when they declined by 80%. Despite the gains, full-service restaurant dine-in visits declined 37% from the second quarter of 2019.

“The U.S. restaurant recovery is underway, but it will take time for it to return to pre-pandemic levels fully,” says David Portalatin, NPD food industry advisor and author of Eating Patterns in America. “Commercial restaurants overall remain below 2019 traffic levels. The QSR segment, ideally suited to today’s new consumer realities, is performing very near pre-pandemic traffic levels, with dollar volumes well ahead of that pace. On the other hand, FSRs still face headwinds such as dining room capacity restrictions in some places. Even where restrictions are minimal, labor shortages may keep operators from realizing their full operational capacity.”

Economic News This Week

• For the week ending July 31, initial unemployment claims totaled 385,000, a decrease of 14,000. The 4-week moving average was 394,000, a decrease of 250 from the previous week.
• Employers added 943,000 non-farm payroll jobs during July per data from the U.S Bureau of Labor Statistics. The unemployment rate came in at 5.4%, down 0.5% from the previous month. This is the biggest increase since August 2020. Notable job gains occurred in leisure and hospitality, in local government, education, and in professional and business services. The number of unemployed totaled 8.7 million, a decline of 782,000 from the previous month. While this report absolutely represents progress from the February to April 2020 recession, unemployment remains greater than its pre-pandemic levels of 3.5% and 5.7 million, the bureau points out. It’s also important to note the July jobs report beat some expectations.
• Private employers added 330,000 jobs from June to July, per the ADP National Employment Report. Looking at this by company size, small businesses (1-49 employees) added 91,000 jobs, medium businesses (50-499) added 132,000 positions and large businesses (500 or more) added 106,000 positions. The leisure and hospitality sector added 139,000 positions.
• The number of open positions grew to 10.1 million as of June 30, up from 9.2 million in May, per CNBC. Economists had actually anticipated the number of openings would decline to 9.1 million. The jump came as the quits rate increased while the layoffs and discharges rate was unchanged, reflecting increased bargaining power and employment options for workers.
• Existing-home sales rose 1.4% from May to June, with no region showing a sales decline, per the National Association of Realtors. The median existing-home sales price rose at a year-over-year pace of 23.4%, the second-highest level recorded since January 1999. “Home sales continue to run at a pace above the rate seen before the pandemic,” says Lawrence Yun, NAR's chief economist.
• Privately-owned housing building permits in June totaled 1.59 million, 5.1% less than May, per data from the U.S. Census Bureau. It does, however, represent a 23.3% increase compared to June 2020.

Foodservice News This Week

• Restaurant industry employment continues to improve. Eating and drinking places added a net 253,200 jobs in July, per the U.S. Bureau of Labor Statistics. This marks the strongest increase since February, when the industry added 336,600 positions. July also represented the third consecutive month with job gains greater than 200,000. For context, prior to the coronavirus pandemic, the restaurant industry had never added more than 100,000 jobs in a single month, per The National Restaurant Association. In total during the first seven months of 2021, eating and drinking places added a net 1.3 million jobs. That brought the sector within 1 million jobs of returning to its pre-pandemic employment level of 12.3 million, per the NRA.
• While the restaurant industry overall continues to improve, operator budgets continue to grow, albeit slowly. And some segments will continue to increase their spend faster than others, per the 2022 forecast published by the International Foodservice Manufacturers Association. Spending among all restaurants will return to 98% 2019of levels by end of 2022, per IFMA. QSRs, which have performed better than other segments overall, are expected to surpass 2019 operator spend levels by 7%. The fast-casual segment will lag, though. Full-service restaurant segments, including midscale and casual dining, will not see the same recovery as QSR, only reaching 81% and 91% of 2019 spending, respectively, per IFMA. Collectively, on-site segments in 2022 will reach 84% of 2019 spending, constrained by a slow recovery in the travel and leisure and business and industry segments, per IFMA projections.
• Casual-dining chain Smokey Bones will use a new prototype design when it opens new locations in the suburbs of Indianapolis and Detroit. Smokey Bones’ new design features a smaller dining room, large bar area in the middle of the restaurant, new decor, fixtures, original art and a vestibule area dedicated to off-premises customers with a separate entrance and to-go station, for both virtual brands The Wing Experience and the Burger Experience, as well as the chain’s menu.
• Foodtastic acquired Pita Pit Canada and Pita Pit International. Pita Pit operates 225 restaurants in Canada and an additional 135 internationally. Foodtastic intends to aggressively grow the brand in Canada well as internationally, expecting to open more than 50 new locations in the next 36 months, per a company release.
• Growth Chains: Little Caesars intends to grow its presence in the Denver market by adding 15 units in the region by the end of 2024. The Michigan-based pizza chain has more than 30 units in the Denver market. Custom-made pizza concept Pieology inked a development deal with franchisee CRASH-COYOTE to develop five locations in Idaho. Roll-Em-Up Taquitos plans to open nine units in California’s Riverside County. Franchisee The Aurora Group plans to open three to four locations within the next year, with the first unit being operational by the first quarter of 2022.

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