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Restaurant Rebound Begins in 2021

Overall restaurant industry sales will total $548.3 billion in 2021, per projections from the National Restaurant Association in its 2021 State of the Restaurant Industry report. This is $240 billion less than the $899 billion the NRA projected heading into 2020 – before the pandemic. While the NRA’s projections for 2021 represent a $50.7 billion (10.2%) increase compared to 2020, industry sales this year will remain down significantly from 2019’s total of $615.9 billion.

Looking at the projections on a segment-by-segment basis, limited-service restaurants represent the one area poised to surpass its 2019 sales levels in the coming year. The NRA projects sales at limited-service restaurants will total $313.6 billion in 2021, up from $290.4 billion in 2020 and $308.9 billion in 2019.

In contrast, it will take a little longer for sales at full-service restaurants and bars to reach 2019 levels. For example, sales at full-service restaurants will grow to $220.8 billion in 2021, up from $199.5 billion in 2020 and $285.0 billion in 2019, per the NRA. Coming off sales of $22.0 billion in 2019, sales at bars and taverns declined to $7.7 billion in 2020, per the NRA. The association projects sales at bars and taverns will total $13.9 billion in 2021.

Sales at all other foodservice establishments will total $183.2 billion in 2021, up from $161.5 billion in 2020 and $248.4 billion in 2019, per the NRA. Operator segments in this category include on-site foodservice, lodging, and healthcare, among others.

Indeed, there’s no sugarcoating the impact the pandemic continues to have on the restaurant industry. Of the restaurants that closed for good in 2020, these operators had been in business, on average, for 16 years, and 16% of them had been open for at least 30 years, per the NRA. And 72% of restaurant owners who closed for good say it’s unlikely they’ll open another restaurant concept in the months or years ahead. Only 48% think they’ll stay in the restaurant industry in some form in the months or years ahead.

Hope on the Horizon

In addition to sharing these somber reminders of the current state of the restaurant industry, the National Restaurant Association’s study included some signs that better days lie ahead in the not so distant future. “Amid an ever-changing landscape of dining restrictions and widespread closures, restaurants found ways to adapt, keep people employed, and safely serve our guests,” said Tom Bené, president and CEO of the National Restaurant Association. “While we still have a long way to go, we are confident in the resilience of the industry’s workforce, operators, suppliers and diners. The year ahead will be critical as we continue to advocate for much-needed recovery funds to help get our industry back on track. Working together as one, I am confident in our ability to continue safely serving our guests and supporting our communities.”

The good news is that despite the trials and tribulations the restaurant industry continues face due to the pandemic, consumers still enjoy using restaurants and see unique value in these businesses. Along those lines, 88% of adults enjoy going to restaurants and 85% say going out to a restaurant with family or friends is a better way to spend their leisure time than cooking at home, per the NRA. And roughly 80% of adults say their favorite restaurant foods deliver flavor and taste sensations that just can’t be duplicated in the home kitchen.

“We’ve also found that even as the vaccine becomes more available and more social occasions return to restaurants, consumers will continue to desire expanded off-premises options going forward. Both will continue to be key for industry growth,” said Hudson Riehle, senior vice president, Research and Knowledge Group, National Restaurant Association. “With more than half of adults saying that restaurants are an essential part of their lifestyle, we are confident that, with time, the industry is positioned for successful recovery.”

In the interim, takeout and delivery will remain primary ways consumers can access restaurants. And this area represented one of the few industry bright spots in 2020. In fact, 68% of consumers are now more likely to purchase takeout from a restaurant than before the pandemic, and 53% of consumers that say takeout and delivery is essential to the way they live, per the NRA.

Throughout 2020 restaurants continued to streamline their businesses to deal with the current operating environment. In addition to staffing, one notable area where operators made adjustments was the menu. In fact, 63% of fine-dining operators and half of casual- and family-dining operators report having fewer items on the menu than before the pandemic, per the NRA.