Report Shows Restaurant Industry Poised for a Comeback after Disastrous 2020

True to the National Restaurant Association’s predictions, restaurant and foodservice industry sales fell by $240 billion in 2020 from an expected level of $899 billion.
State and local mandates forced operators to streamline or enhance their off-premise and contactless capabilities, resulting in better efficiency for many restaurants.
The data shows that consumers are eager to resume dining in at their favorite eateries while continuing to enjoy the benefits of delivery and carryout.

The National Restaurant Association’s direst predictions for the industry proved true in 2020 as the pandemic ripped through the industry like a coast-to-coast tornado. According to the Association’s 2021 State of the Restaurant Industry Report, restaurant and foodservice industry sales plummeted dramatically last year, and more than 100,000 eating and drinking places closed either temporarily or for good.

But better times lie ahead. The report’s data makes it clear that customers want to get their butts back in your restaurant’s seats and are planning to do exactly that once the pandemic is over.

The Association had originally predicted record sales of $899 billion for the year but had to revise its estimates when the pandemic hit in February, customers started staying home and lockdowns and dine-in restrictions went into effect. Association leaders repeatedly sought targeted relief from Congress and then-President Trump, but their pleas for help went unheeded except in the case of PPP loans.

This year’s 2021 State of the Restaurant Industry Report measures the impact of the coronavirus pandemic on the restaurant industry and examines the current state of key pillars, including technology and off-premise business, labor and menu trends across segments. It’s based on a survey of 6,000 restaurant operators and consumer preferences from a survey of 1,000 adults. The report also provides a look at the path to recovery for chains, franchises and independents and the year of transition ahead.

Key findings related to the pandemic’s impact on the industry include:

Restaurant and foodservice industry sales fell by $240 billion in 2020 from an expected level of $899 billion. The Association predicted exactly such a decline as early as March 2020.
As of December 1, 2020, more than 110,000 eating and drinking places were closed for business, either temporarily or for good.
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,” said Tom Bené, the Association’s president and CEO, in a statement accompanying the report. “Amid an ever-changing landscape of dining restrictions and widespread closures, restaurants found ways to adapt, keep people employed and safely serve our guests. 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 adjustments to streamline or enhance off-premise and contactless capabilities, and many restaurants across all segments have become more efficient as a result, the report notes. The pandemic induced a widespread adoption of technology and off-premises use among groups that may not have otherwise placed orders that way.

Takeout and delivery have become a part of Americans’ routines. Today, 68% of consumers are more likely to purchase takeout from a restaurant than before the pandemic, and 53% say takeout and delivery is essential to the way they live.

Additionally, 64% of delivery customers prefer to order directly from the restaurant, and 18% prefer to order through a third-party service. Interestingly, 72% of adults say it’s important that 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, the report found. 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 include:

These now-closed restaurants employed an average of 32 people, and 17% employed at least 50 people before they closed.
A whopping 72% of restaurant owners who closed for good say it’s unlikely they’ll 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.

A Devastating Year for the Restaurant Workforce
Prior to the pandemic, 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 say staffing levels are more than 20% below normal.
There are nearly two 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 continue to optimize and streamline operations, they’re doing the same with their menus. Sixty-three percent of fine dining operators and half of casual and family dining operators say they now have fewer items on the menu than before the pandemic.

Consumers are equally influenced to choose one restaurant over another if the restaurant offers 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 plays a lesser role in restaurant-choice criteria. The availability of alcohol-to-go with takeout orders, however, is an influence in restaurant choice.

Restaurants are meeting these demands, as 1 in 5 family and casual dining operators have added comfort items and 7 in 10 full-service operators have added 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-premise and 33% of off-premise customers say their restaurant choices will be influenced by whether the menus include the comfort foods they crave.
38% of on-premise customers say healthy choices would impact their restaurant choice.
35% of off-premise customers—with millennials leading the category at 53%—are more likely to choose a restaurant if it offers alcoholic beverages with the to-go order.

Pent-Up Consumer Demand Remains High
There’s also good news buried in all that data. There is no doubt consumers are ready to return to restaurants, the Association concluded, with 6 in 10 adults saying restaurants are an essential part of their lifestyle. In late April 2020, 83% of adults said they were not eating on-premise at restaurants as often as they’d like, a big jump from the 45% reported in January 2020. Baby boomers really want to return to restaurants, beating out Gen Z adults and millennials who say they are not eating on-premises at restaurants as often as they’d like.

Additional data that validate pent-up demand include:

88% of adults enjoy going to restaurants and 85% of them say 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 8 in 10 adults say their favorite restaurant foods deliver flavor and taste sensations that just can’t be duplicated in the home kitchen.
A majority of adults across all generations say they are not eating at restaurants as often as they would like.

Additionally, President Biden has expressed support for targeted relief for the restaurant industry. “Restaurants, bars and the hospitality industry have been slammed by the virus,” he said a few days before taking office. “We will direct relief to these businesses and others that have been hit hardest. We owe them that support to help them get through the other side of this crisis.”

At the same time, Biden has thrown his support behind an increased minimum wage, which could hurt restaurants and other businesses trying to recover from the pandemic’s economic devastation, the Association has said.

Regardless, the restaurant industry appears to be poised for a comeback. “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,” said Hudson Riehle, the Association’s senior vice president for the Research and Knowledge Group. “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.”

Riehle added, “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.”

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