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Tech, outdoor dining, to-go alcohol opportunities as food, labor costs rise: mid-year State of the Restaurant Industry Report

As Delta variant shifts dining behavior, consumers want more restaurant tech, outdoor spaces for restaurants

Food and beverage sales in the restaurant and foodservice industry will reach $789B, a 19.7% increase from 2020, according to the National Restaurant Association’s 2021 State of the Restaurant Industry Report mid-year supplement. Still, 2021 sales will show less than a full recovery when compared to 2019’s $864.3B. The update, sponsored by Sage Intacct, provides updated metrics and trends propelling the restaurant recovery through June and July of 2021.

The mid-year supplement also offers a state of the state, focusing on the economy, workforce and food and beverage sales. Major findings, shared by the Association, are below:

  • The first half of the year has seen many jobs returning; however, eating and drinking places are still nearly one million jobs, or 8%, below pre-pandemic employment levels. More importantly, the restaurants and accommodations sector has had one of the highest levels of unfilled job openings of any industry.
  • As of this June, 39 states and the District of Columbia had reopened to 100% indoor dining capacity; 11 states and Puerto Rico have opened in a variety of capacities, from 50% to 80%.
  • Because of the Delta variant, six in 10 adults have changed their restaurant use.
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To-go alcohol, outdoor dining, technology important to consumers

Consumers have embraced technology in the form of online ordering, electronic payment and order pickup, accelerating their adoption of advances fueled by the pandemic. According to the Association’s findings, consumers would like to see restaurant operators continue to incorporate technology into their operations and provide outdoor dining. According to a technology-use survey, a total of 57% of respondents viewed a menu online in the past year, while 18% used mobile pay at the table.

A majority of consumers also favor restaurants continuing to provide alcohol to go and making this a permanent offering. In 31 jurisdictions, notes the Association, consumers will be able to continue ordering alcoholic beverages with their takeout thanks to approved legislation.

In addition,

  • 52% of adults would like to see restaurant operators incorporate more technology in their operations to make ordering and payment easier.
  • 84% of adults say they favor allowing restaurants to set up tables on sidewalks, parking lots or streets on a permanent basis.

“Faced with one of the most devastating and disruptive events of our lifetime, the restaurant industry has taken significant strides toward rebuilding over the first half of 2021,” said Tom Bené, president and chief executive of the National Restaurant Association. “Consumer expectations around dining out have changed, and the industry is continually adapting to not only meet, but exceed, these expectations. Restaurant operators, along with their partners throughout the supply and distribution chain, remain focused on providing diners with a safe and enjoyable experience, amid rising food and labor costs and challenges related to the pandemic. Given these factors, our outlook through the end of the year is one of cautious optimism.”

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Delta revives pandemic concerns

As foodservice industry trends headed in the right direction during the first half of 2021, the Delta variant started spreading and taking the pandemic to new levels in some states. A National Restaurant Association survey conducted August 13 to 15 shows signs that COVID-19 is a threat once again, and could reverse the gains made in the first six months of the year.

The data indicate behaviors shifting as a result of the Delta variant:

  • 60% changed their restaurant use due to the rising Delta variant.
  • 19% of adults said they stopped going out to restaurants altogether.
  • 32% of adults said that if asked to wear a mask and/or show proof of vaccination to dine indoors again, they would be less inclined to dine in a restaurant.
  • 37% of adults said they ordered delivery or takeout instead of dining in a restaurant.
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Labor and food costs loom large

Although July marked the seventh consecutive month of growth in staffing, producing a net increase of 1.3 million jobs in the first half of 2021, eating and drinking places remain nearly 1 million jobs or 8% below pre-pandemic levels.

But operators also face challenges in terms of higher prime costs. Wholesale food prices have increased at their fastest rate in seven years. April’s 2.8%-increase of wholesale prices was the steepest. In June, wholesale prices saw a gain of 2.2%.

  • 75% of restaurant operators reported that recruiting employees was their top challenge as of June 2021—the highest level ever recorded.
  • The full-service segment was down 626,000 jobs, or 11% below pre-pandemic levels.
  • Limited-service restaurants were down 175,000 jobs or 4% in the same period.
  • Menu prices have increased almost 4% through June 2021.

Readers can download the full mid-year supplement here.

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