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2021 State of the Restaurant Industry Report

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2021 State of the Restaurant Industry Report 1 TAU RES RAN HE T T IN F D O U E S T T A R T Y S 2021 2 3 ABOUT THIS REPORT The National Restaurant Association each year prepares a comprehensive overview of the restaurant industry and provides a look ahead. The Association’s research is considered the most authoritative source for restaurant industry sales projections and trends. It is based on analysis of the latest economic data and extensive surveys of restaurant operators and consumers. See p. 51 for methodology and visit Restaurant.org/Research for the latest industry trends and analysis. HIGHLIGHTS The Association’s research and analysis have a long-standing reputation for the highest * The restaurant industry ended 2020 with total credibility, neutrality, and accuracy inside and sales that were $240 billion below the National outside the industry. The Association is considered Restaurant Association’s pre-pandemic forecast a leading authority on restaurant industry statistics, for the year. analysis, trends and forecasts. * Although restaurant and foodservice sales are Hudson Riehle expected to post double-digit growth in 2021, Senior Vice President, Research and Knowledge it won’t be nearly enough to make up for the Group substantial losses experienced in 2020. Bruce Grindy * More than 8 million eating and drinking place Chief Economist and Vice President, Research employees were laid off or furloughed during the peak of the lockdowns. Beth Lorenzini Managing Editor, Enterprise Marketing * The eating and drinking place sector finished 2020 Susan Raynor nearly 2.5 million jobs below its pre-coronavirus Senior Art Director level. Dani Smith * By December, 110,000 eating and drinking places Director, Creative and Brand Strategy were closed long term or for good. RESTAURANT * The majority of permanently closed restaurants were ISBN SEGMENT well-established businesses in operation for 16 years; Digital: 978-0-9978029-9-3 DEFINITIONS 16% had been open for at least 30 years. * Restaurants survived by shifting to off-premises foodservice, streamlining menus, setting up outdoor National Restaurant Association dining, marketing discount deals, bundling 2055 L Street, NW and blending meals, and selling alcohol to go. Suite 700 The survey data in this report categorize restaurants Washington, DC 20036 into two broad segments: fullservice restaurants (with * Operators adopted contactless order and payment (800) 424-5156 table service) and limited service restaurants. Within technologies at an accelerated pace; consumers each segment are three categories of concepts: expect to be able to use their smartphones for more FULLSERVICE RESTAURANTS aspects of the restaurant experience. • Family dining * The vast majority of operators plan to keep at least • Casual dining some of the changes they made to their restaurant • Fine dining during the pandemic. LIMITED SERVICE RESTAURANTS • Quickservice * A source of optimism is that consumers greatly • Fast casual miss dining at restaurants; their pent-up demand • Coffee & snack for restaurant experiences is high. When responding to the survey, restaurant operators Although 2020 was the most challenging year in were asked to self-classify their operation into one of * restaurant history, this industry full of resilient these six categories. entrepreneurs will recover. 4 5 CONTENTS PART 1: PART 3: SALES & ECONOMIC FOOD & MENU FORECAST TRENDS INTRODUCTION 2020 5 INTRODUCTION 31 INTRODUCTION 2020 was the worst year in restaurant industry Menus and service styles changed, some for good The Most Challenging history … so far 32 TOP MOVES FOR SURVIVAL 6 OUTLOOK FOR 2021 Streamlined menus and focus on off-premises Year for the Hurdles on the road to recovery 34 TOP SELLING MENU ITEMS 7 THE 2021 RESTAURANT SALES FORECAST For fullservice and limited service restaurants Restaurant Industry The breakdown by restaurant segment 35 SMART MENU MARKETING The coronavirus pandemic is 8 CONSUMER OUTLOOK Blended and bundled meals, meal kits, more Pent-up demand for on-premises dining is high devastating the restaurant industry. 40 ALCOHOL TO GO Mandated closings, capacity limits, Cocktails click with young adults and a cratered economy are putting 42 COMFORT FOODS Comfort foods topped the best-seller charts; the industry through the worst healthful held its own business conditions in its history. PART 2: The economic toll has been staggering. From mid- OPERATIONAL March to the end of 2020, the restaurant and food- TRENDS service industry lost an estimated $240B in sales. During the peak of mandated lockdowns in April, an PART 4: estimated 8M eating and drinking place employees WORKFORCE were laid off or furloughed. Industry employment is 13 INTRODUCTION TRENDS nearly 2.5M jobs below pre-pandemic levels. Never have so many had to change so fast Rather than continue to struggle through an 14 OFF-PREMISES extremely uncertain business environment, many Pivots and preferences on takeout, delivery, restaurant operators decided to close their doors. curbside 45 INTRODUCTION The National Restaurant Association estimates that 21 TECHNOLOGY Restaurant industry is 2.5 million jobs below as of December 1, more than 110,000 eating and Accelerated adoption of touchless technologies pre-pandemic levels drinking places completely closed for business 24 SERVICE OPTIONS 46 JOBS LEVELS IN 2020: A TIMELINE temporarily, or for good. Table service sorely missed, plus data on outdoor The bottom fell out in December The situation is not lost on consumers. In one dining 48 EMPLOYMENT LEVELS BY STATE Association survey, 92% of adults are concerned that 28 MARKETING TRENDS Only 3 states had more jobs in November than businesses in their community, including restaurants, February Loyalty programs and value propositions may not be able to survive the economic fallout 30 IN THE COMING YEAR 50 SHRINKING LABOR POOL from the pandemic and 60% are aware of a Operators report on profits and intentions U.S. labor force has nearly 2 million fewer in the 6 Outlook for 2021 restaurant in their community that permanently 16-34 age range closed during COVID-19. 7 2021 Restaurant Sales Forecast 8 Consumer Outlook Recovery is going to take time. 6 NATIONAL RESTAURANT ASSOCIATION |STATE OF THE RESTAURANT INDUSTRY | OUTLOOK FOR 2021 NATIONAL RESTAURANT ASSOCIATION | STATE OF THE RESTAURANT INDUSTRY | SALES FORECAST 7 The long road to recovery will continue in 2021, both for the economy and the restaurant industry. While the Association expects the economy to OUTLOOK THE 2021 RESTAURANT grow at a healthy pace in 2021, it will barely be enough to recover the ground lost during the pandemic. To be sure, the restaurant industry will FOR 2021 SALES FORECAST have a much steeper climb out of the crater that was created by the coronavirus. RESTAURANT AND FOODSERVICE INDUSTRY FOOD AND BEVERAGE SALES1: 2019 TO 2021 Overall, total restaurant and foodservice sales were down $240 billion from expected levels in 2020. 2019 2020 2021 ’20-’21 SALES SALES ’19-’20 SALES ’20-’21 REAL % This included the sales shortfall at eating and (billions) (billions) % CHANGE2 (billions) % CHANGE2 CHANGE drinking places, plus a sharp reduction in spending at foodservice operations in sectors EATING AND DRINKING PLACES $615.9 $497.6 -19.2% $548.3 10.2% 6.7% such as lodging, arts/entertainment/recreation, education, health care and retail. FULLSERVICE SEGMENT3 $285.0 $199.5 -30.0% $220.8 10.7% 7.6% Although restaurant and foodservice sales are LIMITED SERVICE SEGMENT4 $308.9 $290.4 -6.0% $313.6 8.0% 4.0% expected to post double-digit growth in 2021, the business environment for restaurants will BARS AND TAVERNS5 $22.0 $7.7 -65.0% $13.9 80.2% 77.6% likely be a tale of two halves with conditions varying significantly by region. ALL OTHER FOODSERVICE ESTABLISHMENTS6 $248.4 $161.5 -35.0% $183.2 13.5% 10.4% Sales growth during the first half of the year will continue to be constrained by on-premises TOTAL $864.3 $659.0 -23.8% $731.5 11.0% 7.5% capacity restrictions that stem from elevated Source: National Restaurant Association estimates virus case levels in many parts of the country. 1. Data are given only for establishments with payroll. 2. Percent change calculations are based on unrounded data, and may not match calculations based on data rounded to one decimal point. As the vaccine rollout becomes more wide- 3. Includes family dining, casual dining and fine dining fullservice restaurants. Waiter/waitress service is provided, and the order is taken while the patron is seated. Patrons pay after they eat. spread by mid-year, business conditions will 4. Includes quickservice restaurants; fast casual restaurants; cafeterias, grill-buffets and buffets; snack and nonalcoholic beverage bars; steadily improve. As local economies reopen and social caterers. Patrons generally order at a cash register or select items from a food bar and pay before they eat. 5. Includes bars, taverns, nightclubs, or drinking places primarily engaged in preparing and serving alcoholic beverages for immediate restrictions are eased, consumers will be poised consumption. These establishments may also provide limited food services. to burn off their accumulated pent-up demand 6. Includes the following categories: managed services (also referred to as onsite food-service and food contractors); lodging places; retail- host restaurants (health-and-personal-care-store restaurants, general-merchandise-store restaurants, variety-store restaurants, food- for restaurants. store restaurants and grocery-store restaurants, gasoline-service-station restaurants and miscellaneous
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