So, how is the restaurant industry doing?
Are we back to pre-pandemic levels? Has the industry hired people back? What’s going on with prices? These are all good questions and with the help of our friends from the National Restaurant Association, we can give you the facts, and leave out the fiction.
Below please find the key findings from our friends at the NRA illustrating how the restaurant industry continues its recovery:
- The foodservice industry is forecast to reach $898 billion in sales in 2022.
- The foodservice industry workforce is projected to grow by 400,000 jobs, for total industry employment of 9 million by the end of 2022.
- More than half of restaurant operators said it would be a year or more before business conditions return to normal. Food, labor, and occupancy costs are expected to remain elevated, and continue to impact restaurant profit margins in 2022.
- 96% of operators experienced supply delays or shortages of key food or beverage items in 2021 – and these challenges will likely continue in 2022.
- 51% of adults say they aren’t eating at restaurants as often as they would like, which is an increase of 6% from before the pandemic.
What does this all mean?
Technology and innovation are now part of the restaurant DNA.
Operators are leveraging the right tech & innovation tools and HI-Tech is now viewed as medicine as opposed to vitamins. As noted by the NRA, technology advances have become table stakes for the industry. It would have been hard to imagine pre-pandemic the level and demand for off-premise dining. According to the NRA, 80% of operators are telling them that the use of technology in a restaurant provides the necessary competitive advantage and they expect to ramp-up their investments in technology. The delivery space still dominates the discussion, and more operators are devoting their resources to online / app ordering, reservations, mobile payment and delivery management. Back-of-House is also being forever changed by technology as operators need to be even more focused on managing the cost side of their business.
Labor Lulls
While delivery is still a dominant topic, the tight labor market remains one of the biggest challenges facing the industry. Despite the re-hiring of 1.7mm jobs during 2021, 70% of operators say they currently don’t have enough employees to support customer demand.
- Roughly 50% of restaurant operators in the full-service, quick-service, and fast-casual segments expect recruiting and retaining employees to be their top challenge in 2022.
- Between 2023 and 2030, the industry is projected to add an average of 200K jobs each year, with total staffing levels reaching 16.5M by 2030.
- 75% of operators said they plan to devote more resources to recruiting and retaining employees.
Branded believes the embracement of technology & innovation will prove to be a meaningful part of the solution to address the labor shortage.
The key message we took away from the complete report is that restaurants continue to adapt and carry-on with absolute resilience. This is a unique industry that despite being completely fragmented, is still very much a community of hard working, creative, agile and roll-up your sleeves and get sh#t done people!
We’ll finish this week’s Insights by sharing a quote from Hudson Riehle, senior vice president of the Research and Knowledge Group at the National Restaurant Association. Mr. Riehle shares that “Restaurants and their patrons have found themselves in a ‘new normal.’ Given emergent technology, changing consumer behavior and dining preferences, and the extraordinary challenges of the last two years, the industry is unlikely to ever completely return to its pre-pandemic state. While recovery speed varies across the industry by segment, the constant innovation and sustained flexibility of restaurant operators are creating a new future for the restaurant industry. There will continue to be ample opportunities for growth in 2022 and beyond.”
The Branded Team very much agrees with Mr. Riehle. We believe our own commitment to identifying, vetting, validating and supporting operator-centric technology and innovation companies has our investment platform at the right place at the right time to deliver value to our stakeholders and community.
Want to learn more about Branded? Want to talk more? We’d love to hear from you.