While the restaurant industry continues to its climb back from the challenges brought forth by the pandemic, lots has changed in the past year and many of those changes have staying power – including how consumers use eating and drinking establishments, according to the National Restaurant Association’s mid-year update to its 2021 State of the Restaurant Industry Report.
Food and beverage sales in the restaurant and foodservice industry are projected to total $789 billion in 2021, up from $659 billion in 2020 but still down from $864.3 billion in 2019, per the NRA.
As an example of how much performance can fluctuate by segment, the NRA projects sales at bars and taverns will total $15.1 billion in 2021, a 91% improvement compared to 2020’s totals of $7.1 billion but still down significantly from $22.0 billion in 2019. A similar pattern plays out in the full-service restaurant segment, where the NRA projects sales will total $255.0 billion in 2021, up from $199.5 billion in 2020. But this year’s projections still represent a decline from 2019 where the full-service segment posted revenues of $285.0 billion. In contrast, the limited-service restaurant segment fared better than most throughout the pandemic. For 2021, the NRA projects sales in this segment will total $339.0 billion, up from both 2020 ($290.4 billion) and 2019 ($308.9 billion).
To nobody’s surprise, labor remains a center of the plate issue for the restaurant industry. Along those lines, 75% of operators identify recruiting and retaining top employees as their top challenge, the highest level the NRA has ever recorded. Further, this represents a 40% increase from February 2020, which was prior to the pandemic.
Labor concerns remain a front-burner issue, despite the fact that July marked the seventh consecutive month of staffing growth, translating to a net increase of 1.3 million jobs in the first half of 2021 for the restaurant industry, per the NRA. Despite these increases, eating and drinking places still represent nearly 1 million jobs or 8% less than pre-pandemic employment levels. Looking at labor by segment, full-service restaurants are down 626,000 jobs, or 11% less than pre-pandemic employment levels; the limited-service segment was down 175,000 jobs or 4% in the same period, per the NRA.
To offset various mitigations put in place to slow the spread of COVID-19, many operators got creative, turning to technology, investing in outdoor dining and adding more off-premises options. And it seems like these changes will remain a key part of the industry landscape for the foreseeable future, at least if consumers have their say. For example, 52% of adults would like to see restaurants incorporate more technology to make ordering and payment easier, per the NRA. And 84% of adults say they favor allowing restaurants to set up tables on sidewalks, parking lots or streets permanently. A majority of adults in states that allow alcoholic beverages with takeout and delivery orders would like to see it continue on a permanent basis. In 31 jurisdictions, thanks to approved legislation, consumers will be able to continue ordering alcoholic beverages with their takeout.
While the industry showed considerable progress in the first half of 2021, the fact remains the COVID-19 delta variant remains a threat to consumer confidence and consumers’ willingness and ability to use restaurants. In fact, 6 in 10 adults changed their restaurant use due to the delta variant and 19% of adults said they stopped going to restaurants, per an NRA survey conducted Aug. 13-15. Along those lines, 37% of adults said they ordered delivery or takeout instead of dining in a restaurant, the NRA study showed. And 32% of adults said that if asked to wear a mask and/or show proof of vaccination to dine indoors again, they would be less likely to dine in a restaurant, per the NRA study.
“The trends from the first half of the year are promising, but a lot of uncertainty remains in regard to the delta variant, consumer confidence, and ongoing labor challenges,” said Hudson Riehle, senior vice president of research for the National Restaurant Association. “We expect restaurant pent-up demand will remain high in the coming months. However, in this state of flux, maintaining the availability of on-site dining with few capacity restrictions will be critical to keeping the overall sales momentum going forward, especially for full-service operators.”