COVID-19 vaccines expected to boost foodservice, hospitality industries – but full recovery could be years away
Restaurants are expected to be somewhat buoyed as more Americans receive COVID-19 vaccines, however, experts predict that 2021 will still be a rough year for the foodservice and hospitality industries.
Around 10 to 12 percent of United States restaurants – representing 65,000 to 80,000 eateries – will be forced to close down by February, Darren Tristano, the CEO of foodservice consulting and research firm FoodserviceResults, told SeafoodSource. But Tristano said many of those restaurants could reopen after COVID-19 vaccines are widely distributed.
Tristano also expects continued restaurant bankruptcies to be filed this year, “as many chains on the bubble struggle to keep their corporate offices open.”
The restaurant industry isn’t expected to fully rebound to 2019 sales levels until around 2025, according to Tristano.
Florida Atlantic University Hospitality and Tourism Management Program Director Peter Ricci seconded the opinion that restaurant-sector growth will return in 2025. However, the hospitality and tourism industries will likely take longer to recover, he said.
“Business travel to other states and convention cities will take years to rebound. Working professionals are now accustomed to hybrid or virtual meetings, and companies have severely limited travel budgets,” Ricci said in an FAU press release.
With travel curtailed, hotels face a difficult two years at least, according to Ricci.
“As a result, a wave of mergers, foreclosures, and acquisitions is likely,” he said.
The cruise industry may rebound in a shorter period of time, Ricci said.
“The Centers for Disease Control and Prevention could relax its guidelines on cruising, whose pent-up demand is higher than most other industry segments, once about 20 million COVID-19 vaccines have been distributed,” FAU said.
The cruise industry has the highest guest satisfaction ratings among any area of the hospitality and tourism industry, and the highest repeat percentage among any sector, according to Ricci.
Foodservice research firm Technomic is providing a brighter outlook for restaurant performance in 2021.
“While the COVID-19 pandemic has steamrolled foodservice, the industry is still gearing up for the beginning of a recovery in 2021. Capacity constraints, service suspensions and lingering guest hesitation may persist, but ongoing consumer and operator adjustments – along with the expectation for medical advances – will result in a positive outlook for the industry,” Technomic said in a press release.
There is a noted opportunity, the firm said, in real estate and brand acquisition for companies with the capacity this year.
“Savvy organizations will assess the current climate as a green light to take advantage of prime buying opportunities not only in real estate, but in the acquisition of brands,” Technomic said.
Overall, Technomic is projecting strong growth over the next 12 months, “yet still amounting to sales less than 2019 levels.”
Meanwhile, Tristano predicted that larger seafood chains will be among the hardest hit restaurant operators in 2021.
“Higher-priced brands will see the biggest negative impact. Value-oriented seafood concepts will find ways to shift sales off-premise in the short term to maintain expenses,” Tristano said.
Red Lobster, which is already struggling financially, continues to face a challenging operating environment this year, according to Tristano. The Orlando, Florida-based chain is in the midst of a “big struggle because they are in the casual dining sector,” he said.
“Moving into regulations or limitations within the restaurant space, they will have a hard time making payroll with that reduced revenue,” he said.
Overall, fine dining and buffet concepts will be the hardest-hit segments of the foodservice industry in 2021, while limited-service restaurants should flourish, according to Tristano.
As more independent operators close down, Tristano said he expected chain restaurants to take over a larger share of the market. However, independent restaurants will come back in late 2021 and 2022, “as real estate opportunities increase and demand for dining away from home trends back to 2019 demand,” Tristano said.
In good news for seafood suppliers, Tristano and Technomic expect restaurants to add more seafood items to their menus this year.
“The seafood value has improved due to shortages and price increases we have seen in meat and poultry,” Tristano said.
Tristano said more comfort foods like shrimp and grits could grace menus, since “comfort foods are important to all of us during this very difficult time.”
More eateries are adding street tacos with seafood, as well as macaroni and cheese dishes that include seafood, according to Tristano.
Technomic expects “protein swaps,” such as seafood meatballs or ragus, popping up on more restaurant menus in 2021. The firm also predicts that more immunity-boosting foods will be added to menus, including leafy greens and plant-based proteins.
Photo courtesy of Darren Tristano/FooodserviceResults