After a terrible 2020, the catering industry is back on track, but headwinds are likely to prevent them from recovering to 2019 levels, according to a new report.
The National Restaurant Association projects that sales in the restaurant and food service industry will increase by nearly 20% to $ 789 billion this year, from $ 659 billion in 2020. But the projection is still far behind. below pre-pandemic sales of $ 864 billion, the group said in the mid-year report on the state of the industry.
Accumulated consumer demand, stimulus payments, and vaccine availability fueled restaurant sales during the first half of the year and helped restaurant owners recover from the losses the industry suffered during the first months of the health crisis.
But serious challenges, such as labor shortages and rising food and fuel costs, limit profits. Even more worrying, a resurgence of Covid-19 cases in recent weeks is clouding the outlook for the coming months. Plans have been delayed for some companies to return to the office, they have limited travel and may affect consumer behavior.
“2020 was arguably the most challenging year in the history of the restaurant industry and 2021 is shaping up to be the year of transition and reconstruction,” said Hudson Riehle, senior vice president of the restaurant division. research and knowledge of the sales group.
“There are recruitment and retention challenges, food cost challenges, rapid changes in consumer demand both on-site and off-site restaurants … but the impacts of the pandemic are still being addressed weekly, ”he said. dit.
Job challenges intensify
The workforce has grown, according to the data, with seven consecutive months of increased employment. But places to eat and drink are still nearly 1 million jobs below pre-pandemic staffing levels, with 11.3 million in July.
Labor challenges have intensified, with 75% of operators saying hiring and retaining workers was their main business challenge: the highest level recorded in the 20 years the group has followed this data. In January, only 8% of operators said labor was their main challenge.
Owners are also trying to handle vaccination requirements.
At Olamaie, a modern southern food restaurant in Austin, Texas, owner Michael Fojtasek has three employees and needs vaccinations. He said his vaccine tenure has so far not affected the recruitment process.
He opened a second business, Little Ola’s Biscuits, two months ago as a derivation of its main location. Things are going well for the new business, which offers a contactless contact model, but Fojtasek said the future feels uncertain as the pandemic continues.
“Our main challenge today is uncertainty,” he said. “As operators, we don’t know the best way to run the business. We all, as we have been from the beginning, try to figure it out for ourselves. And I would say we haven’t had a lot of leadership from our elected officials around of this subject for the hospitality industry “.
Delta weighs in on recovery
The rapid spread of the coronavirus delta variant is an approaching threat. The summer kicked off with high hopes for the catering industry, as rising vaccination rates brought diners back. But now, Covid-19 cases are on the rise across the United States in some places, and the increase in the number of rivals seen during the winter peak. Some southern states are seeing their worst outbreaks in the entire pandemic.
A recent survey by the National Restaurant Association of 1,000 adults found that 6 out of 10 say they have changed their restaurant habits because of the delta. One in five say they choose to sit outdoors when eating, 37% say they have ordered delivery or takeaway instead of eating on the spot and 19% say they have stopped eating at restaurants.
Last week, McDonald’s and its franchisees discussed what data should cause the dining halls to close again, according to the company’s internal materials consulted by CNBC.
Cava CEO Brett Schulman said the Mediterranean food chain has experienced a slow and steady recovery of urban restaurants over the summer as the delta has consolidated, but consumers continue to look for family experiences in a variety of ways. The recovery has remained stable in suburban towns, where most of its restaurants are located.
“People have become conditioned to use our contactless digital channels even more than before the pandemic, which has helped us interact with them more often as companies return to the store. S ‘they realize there are several ways to get their Cava lunch,’ he said.
Schulman said digital sales have grown more than 65 percent and now account for 45 percent of the company’s channel mix. The private company does not disclose specific sales totals.
Lasting changes
Homeowners are also facing higher food and fuel prices and have also raised menu prices. Consumer prices for food outside the home rose 3.9% to date through June, which will correlate with menu prices rising at the strongest annual rate in more than a decade.
Many of the creative solutions that operators relied on during the pandemic have boosted the business in a positive way and are likely to stay. Respondents said the technology facilitated orders and payments, improved customer service and accelerated the overall restaurant experience.
Alcohol for consumption, which became a staple last year, is also here to stay. Sixteen states and Washington, DC, will allow it permanently and 14 states have expanded their initial programs.
Similarly, outdoor dining rooms and parquet floors remain popular. Ninety percent of operators who took advantage of expanded access to outdoor seating areas said they would continue to offer it if their jurisdiction allowed these post-pandemic options. Demand outside the premises has also remained above pre-pandemic levels.
“The two key drivers of the catering industry are comfort and socialization, and this component of convenience during the pandemic has been highlighted and accelerated for greater availability,” Riehle said. “Recent months have shown that there is still substantial accumulated demand for the engine of socialization, that is, local restaurants. Therefore, these two in tandem participate in a ebb and flow as the pandemic progresses and then it decreases “.