State of the Restaurant Industry Update Looks at Challenges Facing F&B Brands

Sep 5, 2021 | Insight

Image: Pylyp Sukhenko via Unsplash

Positive trends improve industry outlook; uncertainty and waning consumer confidence could impact long-term rebuilding


The National Restaurant Association in the US has released a mid-year supplement to its 2021 State of the Restaurant Industry Report, which focuses on the continued impact of the COVID-19 pandemic on the restaurant industry while providing an updated look at “key indicators and trends influencing the industry’s recovery,” including the current state of the economy, workforce, and food and beverage sales.

Key findings include:

  • Food and beverage sales in the restaurant and foodservice industry are projected to total $789 billion in 2021, up 19.7% from 2020.
  • Despite a steady trend of job creation in the first half of the year, eating and drinking places are still nearly 1 million jobs, or 8%, below pre-pandemic employment levels and the restaurants and accommodations sector have one of the highest levels of unfilled job openings of any industry.
  • As of June 2021, 39 states and the District of Columbia had reopened to 100% indoor dining capacity; 11 states and Puerto Rico are open at varying capacities ranging from 50% to 80%.
  • Six in 10 adults have changed their restaurant use due to the rise in the delta variant.

“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 Bene?, President and CEO of the National Restaurant Association. 

In the first half of 2021 industry trends were positive, but there is still a long road ahead.

“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.”

Labor and Food Costs Remain Top Challenges

According to the report, “July marked the seventh consecutive month of staffing growth, translating to a net increase of 1.3 million jobs in the first half of 2021. Despite these increases, eating and drinking places remain nearly 1 million jobs or 8% below pre-pandemic employment levels. Operators also continue to grapple with higher input costs, with wholesale food prices increasing at their fastest rate in seven years.”

They added that:

  • 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 employment levels; the limited-service segment was down 175,000 jobs or 4% in the same period.
  • Menu prices have increased nearly 4% through June 2021.

Technology, Outdoor Dining, and Alcohol To-Go Are Here to Stay

“Consumers want to see restaurants continue incorporating technology and are keen to continue using outdoor dining. In 31 jurisdictions, thanks to approved legislation, consumers will be able to continue ordering alcoholic beverages with their takeout.”

  • 52% of adults would like to see restaurants incorporate more technology to make ordering and payment easier.
  • 84% of adults say they favor allowing restaurants to set up tables on sidewalks, parking lots, or streets permanently.
  • A majority of adults in states that allow alcoholic beverages with takeout and delivery orders would like to see it continue on a permanent basis.

The Continuing Delta Threat

“In the first half of 2021 industry trends were positive, but there is still a long road ahead,” says the National Restaurant Association. 

According to a survey, conducted Aug. 13-15, the delta variant of COVID-19 threatens to reverse the gains made in the first six months of the year.

  • 6 in 10 adults changed their restaurant use due to the rise in the delta variant.
  • 19% of adults said they completely stopped going out to restaurants.
  • 37% of adults said they ordered delivery or takeout instead of dining in a restaurant.
  • 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 likely to dine in a restaurant.

“The trends from the first half of the year are promising, but a lot of uncertainty remains in regard to the delta variant, consumer confidence, and ongoing labor challenges,” said Hudson Riehle, Senior Vice President of Research for the National Restaurant Association. 

“We expect restaurant pent-up demand will remain high in the coming months. However, in this state of flux, maintaining the availability of on-site dining with few capacity restrictions will be critical to keeping the overall sales momentum going forward, especially for full-service operators.”

The National Restaurant Association added that it will continue to monitor the effect of COVID-19 on the industry in the coming months and plans a full State of the Restaurant Industry Report in early 2022.

Click here to download the 2021 State of the Restaurant Industry Mid-Year Update, sponsored by Sage Intacct.

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