Restaurant Owners See No Return to Normal in Next 6 Months
By David E. Hubler
Contributor, EDM Digest
Most restaurant operators do not anticipate a rapid return to normal business operations any time soon. In fact, 71% of full-service operators do not expect their restaurant sales to return to pre-coronavirus levels within the next six months. That’s according to a new survey by the National Restaurant Association’s Restaurant Performance Index (RPI).
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The NRA’s Expectations Index, which measures restaurant operators’ six-month outlook, remained unchanged from August. “This reflects continued uncertainty among restaurant operators, as only one in five expect their sales or staffing levels to return to pre-coronavirus levels within the next six months,” the NRA explained.
That’s not good news for the more than 5.9 million industry workers who have lost their jobs as of May, according to the most recent statistics from Restaurant Business. “The industry lost three decades’ worth of employees in just six weeks.”
As Restaurant Business editor-in-chief Jonathan Maze notes in the magazine’s July/August issue, “The pandemic has cost the industry an estimated $120 billion in sales. By the end of the year, that number will double.” Restaurant Business had forecast industry sales of $899 billion in 2020.
In addition, Maze warned: “Thousands of restaurants will likely be closed for good in the process.”
By More Than Two-to-One Restaurant Operators Say Business Worsened in August
Even with some states loosening their coronavirus restrictions, the NRA survey found that restaurant operators are not in agreement that overall business conditions are on the upswing. “In fact, by a greater than two to one margin, operators are more likely to say business conditions worsened in August rather than got better.”
Thirty-two percent of full service restaurant operators said business conditions in August were worse than they were in July. Only 14% said business conditions improved that month, with 54% of full service operators reporting that business conditions in August were about the same as they were in July.
The NRA survey of 3,500 restaurant operators was conducted between August 26 and September 1.
Consumer Spending in Restaurants Slowed during the Peak Summer Months
In fact, restaurant sales levels were down more than $148 billion from expected levels between March and August, based on the unadjusted data, the NRA index reported.
“Add in the sharp reduction in spending at non-restaurant foodservice operations in the lodging, arts/entertainment/recreation, education, healthcare and retail sectors,” the index added, “and the total shortfall in restaurant and foodservice sales likely surpassed $185 billion during the last six months.”
Sales Gains in July and August Were Well below the Robust Growth Registered in May
The RPI – a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry – registered a moderate gain in July.
“While the sales gains in July (4.1%) and August (4.7%) continued to point the trendline in a positive direction, they were well below the robust growth registered in May (31.3%) and June (27.2%). As a result, total sales in August were still nearly $11 billion lower than the pre-coronavirus levels posted in January and February,” the NRA Index noted.
During the summer months many restaurants took advantage of the warm weather to provide outdoor seating that met the social distancing requirements. But with cooler weather in September and colder temperatures to follow, outdoor dining will not be such a favored dining option.
Dan Simons is co-owner of the Farmers Restaurant Group, which operates seven Founding Farmers restaurants in Washington, D.C., Potomac, Md., Tysons Corner, Va., and King of Prussia, Pa., He told restaurantowner.com that he and his team are looking at ways to expand their outdoor dining offerings and accommodate customers who crave the restaurant experience, but not indoors.
“We’re spending a lot of time brainstorming, exploring what we can afford, what we think will work for our guests,” he said. “We’re looking at a combination of tents, heaters and lighting options, and determining what we can get permitted [by the respective county].”
Simons said a tent with roll-down sides or windows could be a solution as long as it remains “open” enough so people stay warm, while simultaneously retaining “an outside feel.”
Marketing in the New Normal Will Require a Much Different Message than Last Year's
Marketing in the new normal will require a much different message than last year's normal. “Most notably, you have to clear the additional hurdle of getting guests to feel comfortable sitting at your tables in the wake of the pandemic,” legal education editor Barry Shuster writes in RestaurantOwner.com.
The coronavirus pandemic has forced many restaurant owners to ramp up delivery or take-out service “simply to fight for revenue and look for ways earn and save every penny of operating cash flow.”
In short, Shuster adds, that’s a “bottom-line” approach to running a restaurant these days. “And it makes sense. When full-service dining was closed and you had to convert to off-premises dining, you had to jettison expenses, and quickly.”