It’s that time of year; when businesses analyze the current state of their industry in the hopes of building on trends for the year ahead. The restaurant industry analysis is certainly an interesting one as food service is trying to regain profits after a two-year whirlwind caused by the pandemic. Let’s take a look at the struggles, triumphs, and future.
Based on mid-year stats from the National Restaurant Association, food and beverage sales in the restaurant and foodservice industry are projected to be $789 billion for 2021, a 19.7 percent increase from 2020. Great news for an industry that suffered a downturn in 2020 due to COVID-19 pandemic shutdowns and slowdowns. A double-digit increase in sales is encouraging but this is still below pre-pandemic estimates. Small victory, nonetheless, it does appear the industry is bouncing back.
2022 Challenges
2022 will not be without its challenges. Heading into the new year, there are three major issues restaurants will be challenged with, as will most service-related businesses. Those challenges include fluctuating COVID numbers, labor shortages, and supply chain issues.
Datassential is an insights company, and according to their restaurant industry analysis, there’s concern about supply chain problems driving inflation. Analysts suspect supply chain issues are likely to plague the United States at least through 2022 and into 2023. Based on numbers from the U.S. Bureau of Labor Statistics, inflation is pushing up the price of beef and grain products by nearly 60 percent from last year. To remain profitable, those additional costs will have to be absorbed by consumers. This means refurbishing menu options yet again, and providing fewer items at higher prices to get over this bump. Consumer prices for food away from home were up 3.9 percent, which is the highest annual rate in more than a decade.
Even though consumers are absorbing higher food costs, 2021 trends indicate that patrons are willing to spend the money to eat out or take out. Whether due to decreased spending at the height of the pandemic, or government stimulus checks, consumer spending is rebounding despite fluctuating COVID variant numbers. After months of shutdowns in 2020 and virus concerns coming into 2021, now, with vaccine options and COVID-combatting drugs proposed for approval, some consumers are regaining confidence. Businesses and consumers appear to understand that navigating these fluctuations in COVID variant numbers is the new normal.
So, despite increased menu prices, Americans are once again enjoying their favorite restaurants. This consumer demand, however, is being met with labor shortages. You’ll recall, many laborers laid off at the onset of the pandemic made more money staying home, collecting higher than usual unemployment due to Pandemic Unemployment Assistance. To entice workers to come back to work, restaurant operators have had to incentivize with higher pay, better work conditions, and employee perks like bonuses and benefits. This means restaurants are dealing with labor costs at a 20-year high. Add that to the inflation rate, and patrons are guaranteed to experience the ever-increasing menu prices to offset these costs.
Future of the Restaurant Industry
Looking toward 2022, where is the restaurant industry? Supply chain issues are out of the control of operators, as are COVID variant numbers and increased fuel costs. But labor is something that can be managed and is expected to stabilize as the very creative and innovative foodservice industry has learned how to work around labor shortages. Restaurant owners have figured out how to do more with less.
As have consumers. Diners have come to expect longer wait times for food and service. In addition, patrons know store hours have been reduced and days of service cut as a result of smaller crews.
Some of the accelerated innovations of the past year will move into high gear, especially with automation in the restaurant industry and technological advances meant to streamline preparation, service, and delivery. Easier ordering and payment capabilities to benefit customer service through streaming apps are here to stay. According to Reuters, 64 percent of consumers prefer to place delivery orders directly from the actual restaurant rather than through a third-party app. Restaurant owners who pay attention to consumer demand will continue to thrive.
This is why the QSR model, ahead of the game for customer convenience, will flourish in 2022. Curbside, takeout, contactless, drive-thru, and meal kits will be part of a burgeoning business. Based on this, restaurants are looking at improved to-go containers designed to be fully recyclable, efficient, and more cost-effective.
Foodwise, palates are changing a bit. Based on restaurant industry analysis from the National Restaurant Association, perhaps fueled by the pandemic, healthy foods are top of the list for consumers along with foods serving up more international flare.
The restaurant industry is changing, adapting to the environment. While it will never be the same, there’s no reason to look back — instead we are seeing a new era emerge.
Restaurant owners who survived the pandemic fallout are better positioned and have the opportunity to thrive. Despite 10 percent of restaurants closing their doors due to the pandemic economy, restaurant sales are rising. There are nearly one million restaurants in America, and 20 percent are for sale at any given time. There is a real need in this industry for restaurant brokers.
That’s our expertise at We Sell Restaurants. We have a branded systemic franchise process for buying and selling restaurants that capitalizes on the demand for restaurant industry experts. The business broker industry is forecast to increase to $1.4 billion in 2022 — now is the time to enjoy owning your own franchise that assists those buying and selling restaurants.
The We Sell Restaurants franchise is a low-cost franchise investment that provides flexibility, a quick ramp-up, and a proven concept.
If you are looking for a new career in the new year, working in a lucrative industry with a proven concept, request info to find out about owning a We Sell Restaurants franchise.
Robin Gagnon, Certified Restaurant Broker®, MBA, CBI, CFE is the co-founder of We Sell Restaurants and industry expert in restaurant sales and valuation. Named by Nation’s Restaurant News as one of the “Most Influential Suppliers and Vendors” to the restaurant industry, her articles and expertise appear nationwide in QSR Magazine, Franchising World, Forbes, Yahoo Finance, and BizBuySell. She is the co-author of Appetite for Acquisition, an award-winning book on buying restaurants.