The National Restaurant Association is projecting an uptick in restaurant sales in 2021, but concerns about the COVID-19 delta variant, labor shortages, and rising food costs could reverse gains made during the first half of the year, the organization said.
Total U.S. food and beverage sales are projected to rise 19.7 percent to USD 789 billion (EUR 664 million) in 2021, the NRA said in its mid-year supplement to the 2021 State of the Restaurant Industry Report. However, the rise in COVID-19 cases and hospitalizations due to the rapidly spreading delta variant will likely impact sales for the remainder of the year, it said.
Nineteen percent of Americans surveyed said they have completely stopped going out to restaurants, while 37 percent are ordering take-out or delivery instead of dining at a restaurant. In addition, 32 percent of those surveyed said that, if they are asked to wear a mask or show proof of vaccination to dine indoors again, they will be less likely to dine in a restaurant.
“The trends from the first half of the year are promising, but a lot of uncertainty remains in regard to the delta variant, consumer confidence, and ongoing labor challenges,” NRA Senior Vice President of Research Hudson Riehle said. “We expect restaurant pent-up demand will remain high in the coming month. However, in this state of flux, maintaining the availability of on-site dining with few capacity restrictions will be critical to keeping the overall sales momentum going forward, especially for full-service operators.”
In addition to delta concerns, labor and inflation issues continue to plague restaurants. Despite a steady trend of job creation in the first half of the year, eating and drinking places are still nearly one million jobs, or 8 percent, below pre-pandemic employment levels, NRA found. The full-service segment was down 626,000 jobs, or 11 percent below pre-pandemic employment levels, while the limited-service segment was down 4 percent in the same period.
Seventy-five percent of restaurant operators reported that recruiting employees was their top challenge as of June 2021 – the highest level ever recorded.
Foodservice companies are also taking a hit with rising seafood prices. Seventeen percent of restaurant operators report that they realized a “big increase” in seafood prices over the past three months and 57 percent said they were hit with general seafood price hikes, Datassential CEO Jack Li revealed during a recent Datassential Outlook 2022 webinar.
Thirty-eight percent of restaurant operators said they are “taking the hit” and absorbing the price increases on seafood, while 43 percent are passing along costs to their customers by raising menu prices.
Overall, menu prices have increased nearly 4 percent through June 2021, NRA found.
On the upside, U.S. consumer spending at restaurants soared 32 percent in the second quarter of 2021 compared to the same quarter of 2020, according to research firm NPD Group.
Photo courtesy of Ron Adar/Shutterstock
