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Sales in the U.S. restaurant and food service industry will reach $789 billion this year, a 20-percent gain on 2020’s figure, but still well short of 2019’s $864 billion, the National Restaurant Association (NRA) has predicted.
Eateries are still short of workers, face rising food costs and menu prices, and now the COVID virus’s Delta variant is making diners hesitate to eat out, the association said in its midyear “State of the Industry” report.
Earlier this year, stimulus payments, pent-up demand, and the rapid progress of a national vaccination campaign sparked a restaurant revival, the NRA said, but now inflation, infection, and shortages weigh on the industry’s recovery.
This year “is shaping up to be the year of transition and rebuilding,” Hudson Riehle, NRA senior vice president of research and knowledge, said in a comment quoted by CNBC.
“There are recruitment and retention challenges, food cost challenges, rapid changes in consumer demand for both on-site, and off-premises dining,” he noted, “but the pandemic impacts still are being dealt with on a week-to-week basis.”
Although the industry has posted seven consecutive months of job gains and employed 11.3 million people as of July, it is still about one million jobs short of its pre-COVID workforce, NRA figures show.
Most recently, the sector shed 42,000 workers, labor department figures showed, as diners stayed home to avoid the Delta virus.
Three in four restaurant owners say finding and keeping workers is their most urgent challenge, the highest that concern has ranked in the 20 years the NRA has been asking members the question.
In January this year, just 8 percent rated labor as their most urgent problem.
Now the Delta variant is in a strong second place.
Six in ten U.S. adults report that the variant has caused them to change their patterns of dining out. One in five say they now sit outdoors, 37 percent say they order in, and 19 percent have quit restaurant dining entirely, according to a recent NRA survey.
Those who do patronize restaurants find menu prices have risen an average of 3.9 percent by 1 July, their biggest jump in more than ten years, CNBC reported.
“The two fundamental drivers of the restaurant industry are convenience and socialization, and that convenience component during the [COVID War] has been emphasized and accelerated for greater availability,” Riehle told CNBC.
“Recent months have demonstrated there remains substantial pent-up demand for the socialization driver—in other words, the onsite restaurants,” he noted, “so those two [drivers] engage in an ebb and flow as pandemic progresses and then wanes.”
TREND FORECAST: In the best of times, the restaurant industry has thin margins, health safety worries, and staffing headaches. During the COVID War, it was the first sector of the economy to collapse and will be the last to recover.
Restaurants’ costs will continue to rise with inflation, pushing menu prices up, reducing the number of people who can afford to dine out, and driving more restaurants to lay off workers and close permanently.
Any “recovery” for the industry will take years and, when the recovery peaks and levels, there will be fewer restaurants employing fewer workers, leaving fewer ways for teens and people of color, especially women, to enter the workforce.