Foodservice operators face headwinds, but are optimistic about 2021

Published on
February 4, 2021

Wage inflation and some Americans’ hesitancy to get COVID-19 vaccinations are both expected to hurt the foodservice channel this year.

Nonetheless, many suppliers and restaurant operators are optimistic about the resilience of the industry.

The restaurant industry is “certainly going to look different than in years past,” Phillips Foods Business Development Vice President Brice Phillips said at this week's virtual Global Seafood Marketing Conference, hosted by the National Fisheries Institute.

COVID-19 has forced restaurants to transform the way they operate, and some of those changes will likely stick around, Phillips said. But as the country begins to recover from COVID-19, many in the industry are worried that vaccine holdouts could delay a restaurant rebound.

“Forty-six percent of Americans said they won’t get it [the COVID-19 vaccine] or don’t know if they will get it,” Phillips said. “That is worrisome. We can’t have a healthy recovery if we don’t have a healthy population.”

The question of recovery is not if, but when, a recover will occur, according to Derrick Guss, the category manager for seafood and beverages at Walt Disney Company.

“I think it will come back, but it will be awhile,” Guss said. “We need a lot more comfortability with vaccines and [being around] other people.”

Jocelyn Hancock, vice president of strategic sourcing for hotel purchasing firm Avendra Group, is concerned about the hospitality sector's recovery in 2021, with U.S. hotels at an average occupancy rate of 42 percent in 2020.

“We should be ending 2021 at an average 60 percent occupancy rate, but REVPAR [revenue per available room] will be down,” Hancock said. “It is one thing to have everyone vaccinated, but another to have people comfortable being around other people, being on a crowded plane, and being in a hotel room and having confidence that a hotel room is clean and that everything is sanitized. It is going to take some time.

Hotels have faced unprecedented financial hardships in the past year, as have restaurants, with 11 percent of U.S. restaurants having closed – 8.5 percent permanently and 2.5 percent temporarily with hopes of opening again, Datassential Director of Customer Solutions Kelly Fechner said. 

The hardest-hit sectors are casual dining and fine dining – among the largest customers of many seafood suppliers, Fechner noted. Nearly 19 percent of fine dining restaurants are permanently or temporarily closed, and 12.6 percent of casual dining operations are permanently or temporarily closed.

Restaurant operators have mixed outlooks on their future prospects: 28 percent believe it will be six months or more before business will be back to normal, and 21 percent are not sure when business will return to normal.

“There have been some permanent shifts in our industry and there are going to be fewer restaurants. For the restaurants that remain, it is going to be important that we maintain a quality, consistent experience,” Bloomin’ Brands Senior Vice President Michael Healy said. Bloomin' Brands, operates Bonefish Grill, Outback Steakhouse, and other restaurant brands.

With U.S. President Joe Biden proposing a national minimum wage hike of USD 15.00 (EUR 13.00) per hour, wage inflation is going to be a “true headwind for our industry,” Healy said.

“We have to figure out a way to not have to pass those costs on to our customers, including partnering with our supplies upstream,” Healy said. “We can’t pass those costs along. We have to continue deliver a great experience and great value to drive traffic.”

Despite significant challenges facing the foodservice and hospitality sector, many operators and experts are optimistic that the COVID-19 vaccine rollout and pent-up consumer demand will help fuel a recovery in 2021.

“There are a number of vaccines in development. It is truly monumental when you think about the speed with which those vaccines [were developed]. We are looking forward to that,” Healy said. “As we look to 2021, we feel very confident the country and world will continue to get back to normal.”

Leisure travel is expected to rebound faster than business travel this year, which will benefit restaurants, hotels, and entertainment companies.

“Summer into fall should be a rebound period for us because people want to get out. After getting together and going out for dinner with family, vacation is the next thing people want to do,” Guss said.

While the restaurant industry is “extremely challenged”, it is a “substantial part of our community and we should be committed to helping restaurants survive,” said Bo Jackson, former professional athlete and president and CEO of Jackson & Partners, a supplier of farmed shrimp and other products to retail and foodservice.

“The challenge is to look at unknown recovery as an opportunity to push forward in a new direction,” Jackson said. “I am living proof that it can be done.”  

Photo courtesy of George Sheldon/Shutterstock

Contributing Editor



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