E&S Extra

Editorial Director Joe Carbonara provides insights and commentary on the state of the foodservice equipment and supplies marketplace.


5 Factors Influencing Foodservice This Week

Editorial director Joe Carbonara offers five factors facing the foodservice industry.

1. Congress finally approves a stimulus plan, but is it enough to save the restaurant industry?

The big news of the week was that Congress finally came to terms on a $900 billion economic relief bill. Then came the bigger news: President Trump feels the bill does not go far enough and is asking Congress to do more to support families and small businesses. Speaker of the House Nancy Pelosi provided a quick and positive response, offering to revisit the measure and bring it to a vote right away.

Of course, in politics nothing is that easy. The bill was approved by lopsided votes in both the House of Representatives and the Senate, making it appear veto-proof. Further complicating matters is the fact that lawmakers linked the pandemic relief bill to an overarching funding measure to prevent the government from shutting down on Dec. 29. As a result, the next act in this political drama ought to be interesting.

The original bill targets the restaurant industry in several specific ways according to the National Restaurant Association. One notable example is the Payroll Protection Plan, which now provides a business with a forgivable loan based on 2.5 times monthly payroll costs. Restaurants, however, can seek forgivable loans based on 3.5 times monthly payroll costs.

While the bill certainly represents some good news, the industry continues to face significant challenges and will likely require additional help. “The action taken by Congress today will keep tens of thousands of restaurants from closing in the coming months,” says Tom Bené, president and CEO of the NRA. “A second round of PPP, combined with unique enhancements for the restaurant sector, will provide critical access to capital. Restaurant operators and their employees are dedicated to serving their communities, and today’s bipartisan agreement will give them the opportunity to do that through the holidays. However, the long-term economic challenges facing independent, franchise, and chain restaurants will not end with the new year, and we will continue to press federal and state leaders for the support that will put us on the road to recovery.”

Of course, this is Washington, D.C., and the year is still 2020, which means the bill is not without some partisan horse trading. Republicans pressed for, and included, a tax break for corporate meal expenses, which the Democrats went along with in exchange for expanded tax credits for low-income families and the working poor, per a Boston Globe report.

2. What is an essential worker?

Last week, news of a vaccine for the coronavirus to be distributed and administered to healthcare professionals and other frontline workers provided a figurative shot in the arm for many across the country. At the same time, though, it resurrected a conversation from the pandemic’s early days: What is an essential worker? The definition varies from state to state and in the foodservice industry it caused some hiccups in the supply chain back in the spring. For example, some states viewed manufacturers as essential workers while others did not. Are foodservice distributors essential workers? The International Foodservice Distributors Association says yes. In a letter to governors and public health officials in each state Mark Allen, IFDA president and CEO, requested foodservice distributors be considered for the first round of COVID-19 vaccines. In pleading his case Allen wrote, “Ensuring the continuing supply of food to foodservice customers is a critical government responsibility and state vaccination plans must ensure that foodservice distributors are a priority industry. It is critical that the men and women who work in the warehouses and drive the trucks to deliver these products can safely continue to fulfill their vital mission.” For months now, the National Restaurant Association has advocated for ensuring the stability of America’s food supply chain by prioritizing vaccines for those that work in this area. Just this weekend, in outlining its recommendations for who should receive the next round of vaccines, the CDC placed restaurant workers in a third priority group. If states follow these recommendations, restaurant workers would be in the pool of people that receive the vaccines after frontline essential workers, people more than 74 years old and people aged 16 to 64 with high-risk medical conditions. Those in the same group as restaurants include people that work in construction, law and transportation other than public transportation.

3. Calculating the continued impact of dining room closures

The shutting down of indoor dining has been a first step for governors around the country when trying to stop the spread of COVID-19 and it sparks a debate that divides along traditional lines. Governors and other municipal leaders say the step is essential to slow the spread of the virus while restaurateurs say they can continue to operate safely, and the step causes additional harm to their industry. Where there’s no debate is the toll these shutdowns continue to take on restaurant and other foodservice workers. A study from the Pennsylvania Restaurant & Lodging Association shed more light on this aspect of the pandemic. In response to the Keystone State’s latest round of dining room closures, restaurants reported laying off more than 26,000 employees and more than $1.5 million in food waste just for the weekend of Dec. 11-13. And this is from just 6% of the state’s restaurants participating in the survey. The PRL&A rightly assumes these totals would be higher with a higher base. Further, 14% of participants say they plan to defy the state’s latest directive to close dining rooms. This continues a pattern seen in other states, including Illinois and California, among others. “Our industry is on the brink of disaster. Restaurants are shuttering, storefronts are boarded up and laying off thousands just as federal unemployment benefits expire. This is the perfect storm of economic breakdown and government indifference to burden of businesses,” says John Longstreet, president and CEO of PRLA. “Governor Wolf can make a difference – restore indoor dining to 25% (or 50% with self-certification) and demand action from Congress. We are an industry that values safety, and there is no conclusive data showing that restaurants cannot operate safely when exercising CDC protocols.” 

4. Tech talk for restaurants

The use of customer-facing technology has been a saving grace for many restaurants throughout the pandemic. Not only does it help operators make more effective and efficient use of their labor and other key resources, contactless interaction with staff also makes consumers feel safer and more comfortable using restaurants. Expect operators to continue to emphasize technology in the near future. In fact, 68% of operators feel they will spend more on technology in the coming years, per data from Technomic. In addition, 51% of operators offer contactless payment and another 31% plan to add this feature, per Technomic. There’s little doubt technology will continue to play a more prominent role in the restaurant of the future. For the longest time, quick-service and fast-casual restaurants were the primary users of this type of technology, which made sense given the more transactional nature of those experiences. But more and more casual dining operators now see technology as a way to enhance their guest experiences. Technology has its tentacles into fine dining, too. Prior to the pandemic, some operators sold tickets to dinner, much like something one might buy for the theater. Guests made their purchases online and often paid in advance. Now many of these fine-dining operations use this technological infrastructure to offer meals and cocktails to go as well as meal kits.

5. Chefs channel their creativity in unique ways

At the start of the pandemic, countless businesses said they were going to do what it takes to emerge stronger than before. Saying it is one thing but actually walking the talk is another, particularly during such a turbulent time. The James Beard Foundation explored how chefs and restaurant owners continue to strengthen their businesses by redefining hospitality, prioritizing their employees, and finding ways to keep guests and staff safe. In doing so, the JBF showcases the creativity and innovation that have long been cornerstones of this industry.