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The wave of diners returning to U.S. restaurants this summer has receded, leaving the industry dealing with labor shortages, rising prices for scarce supplies, and would-be customers who have chosen to bunker at home again amid the surging Delta virus, as we reported in “Worker Shortages, Virus Hobble Restaurants’ Recovery” (14 Sep 2021).
Eighty-four percent of owners of small businesses in the dining and hospitality industries worry about Delta’s impact on their operations, compared to 75 percent of the overall national business community, according to a new survey by Goldman Sachs’ 10,000 Small Business Voices program.
Virtually all have seen operating costs rise; 93 percent said that, since June, inflation has pinched their finances.
Also, 79 percent of survey respondents say finding and keeping good workers is harder than before the crisis, compared to 64 percent of businesses overall.
Almost 40 percent of food and hospitality businesses expect to apply for a loan or line of credit to keep their businesses afloat through the winter, compared to 29 percent of businesses overall, the survey found.
In August, open jobs across all economic sectors ranged above their 48-year average for the second consecutive month, the National Federation of Independent Business said.
“In June, 67 percent of small businesses, despite inflation, despite workforce challenges, said they thought the U.S. was headed in the right direction,” Joe Wall, director of the Goldman survey, said in a statement accompanying the poll’s result.
“That number is now 38 percent,” he noted.
“The Delta variant is Theme Number One in terms of why sentiment has shifted, then you pile on inflation and the workforce challenges,” he said.
The Goldman survey’s results highlight restaurants’ plight of being among the first businesses to close when the 2020 shutdown began and, quite possibly, the last to recover.
TREND FORECAST: Restaurants’ hopes for a recovery, stoked by diners’ return over the summer, are now dashed. And with many venues requiring vax passports to enter, sales will decline deeper.
Rising menu prices, shortages of food and workers, and the Delta virus are pushing more restaurateurs to the wall. More will close permanently, especially mid-price eateries, leaving the sector smaller when any sort of stable recovery becomes possible.
The sector will remain smaller than its pre-COVID size for at least a generation; entrepreneurs have seen how fragile the food-service business is and how quickly profits—slim during the best of times—can vanish.