Restaurants in a post-pandemic world: What will the new normal be?
77 percent of Americans are now comfortable eating in a restaurant. Does that point to a return to normalcy? Let’s dig in.
The global emergency caused by the COVID-19 pandemic is officially over, and people are venturing back into restaurants and other crowded spaces like movie theaters as restrictions and social distancing end. In fact, 77 percent of Americans are now comfortable eating in a restaurant, compared to just 23 percent who felt comfortable in May 2020.
Does this point to a return to normalcy for the industry?
Many have memories of their favorite restaurants restricting dining or closing during the pandemic. These incidents aren’t just anecdotal. More than 110,000 restaurants and bars closed in 2020.
While the industry has shown signs of recovery (for example, fine dining reservations are back to pre-pandemic levels), COVID-19 has had lingering effects. In 2022, there were 631,000 restaurants in the United States compared to 703,000 in 2019. Experts also estimate a decline this year, leaving projections for 2023 at just 630,000 restaurants.
And it may be another several years until restaurant numbers rise back to pre-pandemic levels, according to recent numbers.
A tough economy.
The COVID-19 emergency caused a wave of economic blows to the restaurant industry. A staggering 2.5 million industry jobs were lost in 2020, and a year later restaurants and accommodations saw the highest number of job openings ever at 1.7 million.
While the number of vacancies sits around 400,000 now, establishments are still struggling to fill positions–and keep up with higher wages for current employees. About half of restaurant operators named recruitment and retention as their biggest challenge last year.
A look ahead.
Despite the challenges, the food service industry is projected to earn $997 billion in sales this year–$100 million more than its 2019 earnings. However, it is clear dining might not look the same for some time.
Not only did many restaurants close for good during the pandemic, some that returned didn’t do so at full capacity. On average restaurants have cut weekly operations by 6.4 hours compared to 2019 (mainly due to labor shortages).
So, while it may be too soon to know the total ramifications of the pandemic on the restaurant experience, the latest numbers already tell us an interesting story: The public is once again ready to patronize restaurants, but restaurants aren’t ready for the demand.
Shorter hours, fewer workers, and high food costs could damper the return to restaurants. The rise in take-out and delivery services could lessen the financial burden for eateries, but it’s clear the dine-in experience isn’t back to “normal.”
However, I am encouraged by the restaurant industry’s response to this challenging period. Entrepreneurs in any space can learn from these examples of resiliency, adaptability, and innovation.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.