Restaurants on the Road to Recovery in 2021

Recent statistics including restaurant sales and jobs have shown signs of the food and drink business recovering as we move into the spring and summer of 2021. Restaurants have been hit hard by the pandemic, with over 110,000 US restaurants closing permanently during the last year, but those that are still in business are preparing for a return to a higher volume of in-person dining this year. 

Based on recent US Census data, the month of March saw a 13.4% rise in restaurant sales from February, along with a comparable boost in other industries. However, sales in March were still 5% below those of February of last year before the pandemic’s impact was felt, and the loss of revenue during the pandemic puts pressure on restaurants to increase revenue to compensate. Financial aid such as the US government’s PPP (Paycheck Protection Program) loans has helped with labor and other expenses during this time. 

Restaurant jobs were hit hard during the pandemic, with 2.5 million jobs in the food and drink industry wiped away from March 2020 to January 2021. Recovery on this front is also in progress: eating and drinking places added a net 175,800 jobs in March according to Bureau of Labor Statistics data. This is still below pre-pandemic rates in all 50 states and DC, and several states are still at 25% or more below pre-pandemic employment rates for restaurants. 

Outdoor Dining Could Continue to Thrive

Some of 2021’s growth will come from lifted restrictions and more customer willingness to ding out, but many restaurants who invested heavily in outdoor dining for safety reasons last year hope to see continuing appeal as warm weather comes this year. More than 1/4th of full-service restaurant operators added outdoor seating, and 43% of adults said they made use of outdoor, sidewalk, parking lot, or similar accommodations in the last year. Some customers may remain uncomfortable dining indoors while others are more willing to dine in, but regardless, public opinion favors outdoor dining as an option going forward: of those surveyed in March 2021, 84% favored letting restaurants continue offering seating on sidewalks and other public outdoor areas. 

With outdoor patios and awnings, restaurants can make outdoor dining comfortable in hot, rainy, or windy weather. These areas allow more opportunity for restaurants to recoup the investment they put into outdoor expansions that helped them stay open in 2020, and allow for more overall seating capacity for returning customers. As a seasonal practice, it could become more common. 

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Online Ordering Still a Major Factor

Whether for large chains or independents, online ordering and delivery stepped up during the pandemic to keep restaurants operating, and this trend will continue to provide a source of revenue and discovery to food and drink businesses. A survey from Paytronix found that 45% of customer spending on restaurants came from online orders. Furthermore, online buyers spent upwards of 50% more on their orders than in-person customers, making them an attractive market for restaurants to pursue after the pandemic. Restaurants can encourage larger orders to make delivery fees more cost-effective for both the seller and buyer. 

During the pandemic, many areas have relaxed laws that block delivery of alcoholic beverages, which has helped restaurants and bars sell high-profit items. Beverage delivery advocates hope to extend these relaxed standards and make alcoholic drinks a regular part of meal delivery.

Obstacles to Recovery

The industry’s recovery faces the challenge of those restaurants that will never reopen; the National Restaurant Association’s survey found that of those restaurants that closed permanently, 72% of their operators said they did not plan to open a new restaurant in the coming months of years. Similarly, restaurants report that they have yet to reach pre-pandemic employment levels. 9 in 10 restaurant operators reported less than normal levels of employment. However, when large numbers of diners return to a reduced number of restaurants, the demand for employees may rise again. 

Still, the industry is optimistic that recovery will bring restaurants back to normal after the pandemic, though it won’t be the same. According to the National Restaurant Association’s data, “32% of restaurant operators think it will take seven months to another year before business conditions return to normal.”