News

Restaurant industry down 2.5 M jobs, what's next?

Provided

January 26, 2021

The restaurant industry is still limping along, according to the National Restaurant Association, which Tuesday released its annual State of the Restaurant Industry Report revealing that sales fell by $240 billion in 2020 from an expected level of $899 billion.

Based on a survey of 6,000 restaurant operators and 1,000 consumers, the report revealed that as of Dec. 1, 2020, more than 110,000 eating and drinking places were closed for business temporarily or for good and that the eating and drinking place sector finished 2020 nearly 2.5 million jobs below its pre-coronavirus level.

"As we approach the one-year mark of pandemic-related dining restrictions, we know that virtually every restaurant in every community has been impacted. Amid an ever-changing landscape of dining restrictions and widespread closures, restaurants found ways to adapt, keep people employed and safely serve our guests," Tom Beneì, president and CEO of the National Restaurant Association, said in a press release. "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."

Accelerated development and adoption of technology and off-premises

State and local mandates 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% of consumers more likely to purchase takeout from a restaurant than before the pandemic and 53% of consumers that said takeout and delivery is essential to the way they live.

Other key takeaways include:

• 64% of delivery customers prefer to order directly from the restaurant and 18% prefer to order through a third-party service..
• 72% of adults said 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% of them had been open for at least 30 years. Additional data on these businesses included:

• They employed an average of 32 people; 17% employed at least 50 people before they closed.
• 72% of restaurant owners who closed for good said it was unlikely they'd 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.

Devastating year for the restaurant workforce

The restaurant and foodservice industry was projected to provide 15.6 million jobs in 2020 representing 10% of all payroll jobs in the economy. 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% of fine-dining operators and 54% of both family-dining and casual-dining operators said staffing levels were more than 20% below normal.
• There were nearly 2 million fewer 16-to-34-year-olds in the labor 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 continued to optimize and streamline operations, their menus proved no exception with 63% of fine-dining operators and half of casual and family dining operators saying they had fewer items on the menu than before the pandemic. Consumers were equally influenced to choose one restaurant over another if the restaurant had 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 played a lesser role in restaurant-choice criteria. The availability of alcohol to-go with takeout orders, however, was an influence in restaurant choice.

Restaurants are meeting these demands with one in five family and casual dining operators adding comfort items and seven in 10 full-service operators adding alcohol to go since March 2020. Consumers are also finding new ways to enjoy their favorite restaurants such as embracing bundled meals, restaurant subscription services and meal kits. Key data points on food and beverage trends include:

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

Pent-up consumer demand remains high

There is no doubt consumers are ready to return to restaurants. Restaurants are an integral part of the nation's social fabric, and six in 10 adults said they were an essential part of their lifestyle. In late April 2020, 83% of adults said they were not eating on-premises at restaurants as often as they'd like, a big jump from the 45% reported in January 2020. Baby boomers really wanted to return to restaurants, beating Gen Z adults and millennials who said they weren't eating on-premises at restaurants as often as they'd like. Additional data that validate pent-up demand included:

• 88% of adults enjoyed going to restaurants and 85% of them said 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 said their favorite restaurant foods delivered flavor and taste sensations that couldn't be duplicated in the home kitchen.
• A majority of adults across all generations said they are not eating at restaurants as often as they would like.

"Restaurants are the cornerstone of our communities, and our research shows a clear consumer desire to enjoy restaurants on-premises more than they have been able to during the pandemic," Hudson Riehle, SVP of the association's research and knowledge group, said in the release. "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. 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."