State of the Restaurant Industry

U.S. State of the Restaurant Industry Report measures COVID-19’s impact

The National Restaurant Association has released its 2021 State of the Restaurant Industry Report, offering an insight into the damage done by the COVID-19 pandemic.

The report measures the impact of the pandemic on the restaurant industry and examines the current state of key pillars including technology and off-premises consumption, labour, and menu trends.

The report also provides a look at the path to recovery for chains, franchises, and independents and the year of transition ahead.

Key findings

Key findings of the State of the Restaurant Industry Report regarding the impact of coronavirus on the U.S. restaurant industry include:

  • Restaurant and foodservice industry sales fell by US$240 billion in 2020 from an expected level of US$899 billion.
  • As of December 1, 2020, more than 110,000 eating and drinking places were closed for business temporarily, or for good.
  • The eating and drinking place sector finished 2020 nearly 2.5 million jobs below its pre-coronavirus level.

Accelerated development and adoption of technology and off-premises

The State of the Restaurant Industry Report found that state and local mandates have forced operators to make developments to streamline or enhance off-premises and contactless capabilities, and many restaurants across all segments have become more efficient as a result.

The pandemic induced a widespread adoption of technology and off-premises use among groups that may not have otherwise engaged in off-premises.

Takeout and delivery have become a part of people’s routines with 68 per cent of consumers more likely to purchase takeout from a restaurant than before the pandemic and 53 per cent of consumers that say takeout and delivery is essential to the way they live.

Other key takeaways include:

  • 64 per cent of delivery customers prefer to order directly from the restaurant and 18 per cent prefer to order through a third-party service.
  • 72 per cent of adults say it’s important their delivery orders come from a location that they can visit in person, as opposed to a virtual kitchen space.

Legacy businesses lost

Of restaurants that closed for good in 2020, the majority were well-established businesses and fixtures in their communities. These operators had been in business, on average, for 16 years, and 16 per cent of them had been open for at least 30 years.

Additional data on these businesses include:

  • They employed an average of 32 people; 17 per cent employed at least 50 people before they closed.
  • 72 per cent 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 per cent think they’ll stay in the restaurant industry in some form in the months or years ahead.

Devastating year for the restaurant workforce

The restaurant and foodservice industry was projected to provide 15.6 million jobs in 2020, representing 10 per cent of all payroll jobs in the economy. However, the impact of the pandemic has caused staffing levels to fall across all restaurant and foodservice segments with restaurant employment below pre-pandemic levels in 47 states and D.C.

Key figures on the restaurant workforce include:

  • 62 per cent of fine dining operators and 54 per cent of both family dining and casual dining operators say staffing levels are more than 20 per cent below normal.
  • There are nearly two million fewer 16-to-34-year-olds in the labour force, the most prominent age cohort in the restaurant industry workforce.
  • Restaurants were hit harder than any other industry during the pandemic, and still have the longest climb back to pre-coronavirus employment levels.

Streamlined menus with comfort food and alcohol to-go

While restaurants continue to optimize and streamline operations, their menus prove no exception. 63 per cent of fine dining operators and half of casual and family dining operators say they have fewer items on the menu than before the pandemic.

Consumers are equally influenced to choose one restaurant over another if the restaurant offers a good selection of comfort foods and/or dishes on the healthier side, but the availability of diet-specific fare such as vegan or gluten-free plays a lesser role in restaurant-choice criteria.

The availability of alcohol to go with takeout orders, however, is an influence on restaurant choice.

Restaurants are meeting these demands. One in five family and casual dining operators added comfort items and seven in 10 full-service operators added alcohol to-go since March 2020. Consumers are also finding new ways to enjoy their favourite restaurants such as embracing bundled meals, restaurant subscription services, and meal kits.

Key data points on food and beverage trends include:

  • 38 per cent of on-premises and 33 per cent of off-premises customers say their restaurant choices will be influenced by whether the menus include the comfort foods they crave.
  • 38 per cent of on-premises customers say healthy choices would impact their restaurant choice.
  • 35 per cent of off-premises customers — with millennials leading the category at 53 per cent — are more likely to choose a restaurant if it offers the option of including alcoholic beverages with the to-go order.

Pent-up consumer demand remains high

The State of the Restaurant Industry Report did, however, find that there is no doubt consumers are ready to return to restaurants. Six in 10 adults say restaurants are an essential part of their lifestyle. Baby boomers really want to return to restaurants, beating out Gen Z adults and millennials who say they are not eating on-premises at restaurants as often as they’d like.

Additional data that validate pent-up demand include:

  • 88 per cent of adults enjoy going to restaurants and 85 per cent of them say going out to a restaurant with family or friends is a better way to spend their leisure time than cooking (and cleaning) at home.
  • Nearly eight in 10 adults say their favourite restaurant foods deliver flavour and taste sensations that just can’t be duplicated in the home kitchen.
  • A majority of adults across all generations say they are not eating at restaurants as often as they would like.

The 2021 State of the Restaurant Industry Report was conducted based on a survey of 6,000 restaurant operators and consumer preferences from a survey of 1,000 adults.

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