More than half of restaurateurs said it would take a year or more before business conditions return to normal, according to the National Restaurant Association’s recently released State of the Restaurant Industry 2022 report.
Food, labor and occupancy costs are expected to remain high and continue to impact restaurant profit margins in 2022. In fact, labor is considered the main challenge for the industry this year.
Additionally, 51% of adults say they don’t eat out as often as they would like, up six percentage points from before the pandemic.
The restaurant industry is expected to reach $898 billion in sales in 2022, driven in part by operators using technology to improve their off-premises sales.
The restaurant industry workforce is expected to grow by 400,000 jobs, for total industry employment of 14.9 million by the end of 2022.
Ninety-six percent of operators experienced supply delays or shortages of essential food or drink in 2021—and these challenges will likely continue into 2022.
Reasons for optimism
“The restaurant and catering industry has adapted and continues with absolute resilience, so we are optimistic about the path to recovery over the coming year,” said Marvin Irby, President and acting chief executive of the National Restaurant Association, in prepared remarks.
A few years ago, restaurants would not have been able to handle the level of off-premises demand during the pandemic. Technological advancements are becoming table stakes for this long-term business channel, with more than eight in 10 operators saying that using technology in a restaurant provides a competitive advantage, and a good proportion of operators plan to increase investments in technology this year.
Many operators will dedicate their resources to online or app ordering, reservations, mobile payment or delivery management, in addition to back-of-the-house technology. This is validated by a large number of consumers preferring the use of technology where it does not diminish hospitality.
Help (always) wanted
While the restaurant and catering industry added 1.7 million jobs in 2021 for a total of 14.5 million employees at the end of the year, many restaurants remain in serious under- workforce, which will continue to limit industry growth in 2022.
Despite some gains, 7 in 10 operators across all major segments say their restaurant currently does not have enough employees to meet customer demand and most operators expect their workforce issues to work will continue next year.
About 50% of restaurant owners in the full-service, quick-service and quick-service segments expect recruiting and retaining employees to be their biggest challenge in 2022.
Alcohol to take away, outdoors a bright spot
Last year also continued to drive consumer demand for on-the-go alcohol and al fresco dining, with nearly four in 10 consumers saying the availability of outdoor seating would make them more likely to choose a restaurant rather than another similar one.
Other operational takeaways include:
Fifty-four percent of adults say buying takeout or delivery is essential to their lifestyle, including 72% of millennials and 66% of Gen Z adults.
About half of U.S. restaurateurs believe having sidewalk, parking lot, or street seating will become more common in their segment this year.
Seventy percent of Gen Z adults (21+) and 62% of Millennials say the ability to include alcohol in a takeout or delivery order would make them more likely to choose a restaurant instead. than another similar restaurant.
Outdoor dining, ‘To-Go’ in high demand
Cox, Castle & Nicholson partner Daniel J Villalpando tells GlobeSt.com that based on experiences during the pandemic, restaurants are looking to use all available common areas (sidewalks, parking lots, etc.) to provide seating. outside.
“From a rental perspective, in the future, restaurants will negotiate the use of outdoor terraces. In addition, restaurants are asking for “take-out” or “take-out” parking spaces that are reserved for them and conveniently located next to their restaurants.
“Most quick-service restaurants are forced to offer menus and ordering options through websites and/or apps. Additionally, it has become extremely important to provide convenient pickup parking for customers who have ordered remotely. »
Villalpando said almost all restaurants have had to negotiate with delivery services (GrubHub, DoorDash and Uber Eats) to try to maintain as much profit as possible from sales, while still providing the convenience of ordering and delivery services. to take away”.
“Some restaurants have tried to expand their use provisions, such as being able to sell alcohol for offsite consumption,” he said. “This may conflict with leases with other tenants who have the exclusive right to sell alcohol for off-site consumption (such as liquor stores and grocery stores).”
Underperforming specialty restaurants
Full-year sales were up 9.85% for restaurants in 2021 compared to 2019, 17.65% for fast food and 14.23% for specialty food, Mark said. Sigal, CEO of Datex Property Solutions, to GlobeSt.com.
The only outlier segment was specialty restaurants, which saw their sales contract by 17.46%, due to social distancing and other COVID-related restrictions during the pandemic.
“The favorable outlook for food, beverage and restaurants in 2022 and beyond is reflected in new rental activity, which has seen rental rates increase for these categories by approximately 6%, compared to rates rental rates in 2019, which were flat to negative,” says Sigal.
“Merchants and owners are embracing these categories in a big way. The main takeaway from COVID is that while some categories have been existentially impacted by the pandemic (such as movie theaters), consumers have gravitated towards all things consumer, drink and food related. restaurants, which has led to strong revenue growth and, more importantly, consumer behavior that is expected to favor these categories in the years to come.
Restaurants aren’t downsizing
Michael Wiener, president of Excess Space Retail Services, also believes the restaurant industry will remain strong in 2022.
“While many predicted that restaurants were going to downsize, we haven’t seen much of that to date,” Wiener told Globest.com. “The trend is for significantly higher demand for pad sites as restaurants, QSRs and other retail concepts want to have drive-thru, creating a very competitive environment even in areas that are not not slots A.
“We also see QSRs and restaurants wanting to control their ‘rent-to-sales ratio’ by maintaining a formal lease renewal/restructuring program.”
New winning restaurant concepts
Owners, for their part, are looking for food concepts that have greater take-out activity, creating more resilience in the business model, Mike McKean, founder of Retailsphere, told GlobeSt.com
“This has led to different space requirements than seen in recent years.—smaller dining rooms and larger kitchens, often with take-out windows,” McKean said.
“All of this said, the past few years have shown just how resilient the restaurant industry is and there only seems to be growing interest in introducing new food and beverage concepts into customer spaces. .”
“People still don’t eat out in restaurants as much as they used to, and when they do, they want it to be special,” McKean continued.