Already in decline before COVID, dine-in in recent months accounted for less than a fifth of all restaurant traffic, said Hudson Riehle, senior vice president of the National Restaurant Association, Washington.
At the U.S. Department of Agriculture’s outlook forum on Feb. 24, Riehle offered insight into changes in the restaurant industry. He participated in a panel that looked at consumer food trends and food price outlook for 2022.
While an increase in food delivery “is the subject of much discussion and is very important to various operators”, it is the drive-thru that has been the biggest beneficiary of the restaurant meal leak, Mr. Riehle said.
Locals accounted for 39% of restaurant traffic in February 2020 and had dropped to 19% by November 2021, he said, citing data from the NPD Group and the National Restaurant Association. Take-out orders also fell over the period, slipping to 30% in November 2021 from 32% in February 2020. Drive-thru, however, accounted for 42% of traffic in November 2021, from 26% in February 2020. period increased from 3% to 9%.
“Part of the reason the offsite market has been able to perform so well in the pandemic environment has been a greater focus on technology,” Riehle said.
Before the pandemic, about 5% of restaurant orders were digital. Since then, the figure has risen to 20%, he said.
Recruiting employees was the biggest challenge facing restaurateurs in December 2021, cited by 61% of survey respondents, Riehle said. Food costs were a close second at 20%. He said hourly labor costs rose 8.6% in 2021, by far the highest level in the past 10 years, when restaurant workers’ annual hourly earnings rose between 1.5 % and 4.4% per year.
Restaurant traffic will gradually recover in 2022, Riehle said. Sales in 2020 were $659 billion, 27% lower than expected for the year. In 2021, sales were just under $800 billion.
“For 2022, the industry will continue to improve, but it’s very important to remember that 2022 will definitely be another year of transition for the restaurant industry,” he said.
Among the reasons for his caution, Riehle noted that nonfarm employment is still down 3.6 million jobs since the start of the pandemic. He described overall employment as a key metric for predicting restaurant sales prospects.
“The reason this is important for the restaurant industry is that when someone is employed, they have less time to cook their meals at home and also have extra income to support restaurant expenses” , did he declare.
Similarly, weak travel and tourism trends are a factor holding back the restaurant recovery, Riehle said.
“The association seeks to travel on tourism in leisure travel, business travel and international visits,” he said. “Leisure traffic is starting to come back while business travel is just starting to come back as well.”
Absent external factors such as the emergence of another variant, supply chain challenges will ease in the second half of 2022, predicted Andrew Harig, vice president of tax, trade, Sustainability and Policy Development at the IMF – The Food Industry Association, Arlington, Va.
“(Barring such factors) we will see supply chains start to catch up and we will see some of the shortages ease and some of the pressure on the industry and on consumers, ease a bit” , Mr. Harig said. “It will set the stage for inflation to follow. It will be a little behind.
It would be an understatement to say such relief would be welcome, Mr Harig said. He called 2021 one of the toughest years the consumer packaged food industry has ever seen.
“In some ways, even harder than 2020,” he said. “We saw three factors play out. These, I think, will surprise no one – COVID, supply chain disruptions and inflation. And each of these three factors persists into 2022 and it looks like they will present, at least for the first half of the year, ongoing challenges. »
Labor is a major challenge facing the food sector, adding cost and disruption, Harig said.
“It’s incredibly difficult to recruit enough people to fill positions and, when you have them, to keep them,” he said.
With labor costs also rising, putting pressure on restaurant margins, full-service operators should streamline menus in the coming months, he said.
On the input cost side, Harig said the challenges go far beyond the realm of ingredients alone.
“It’s not just at the commodity level,” he said. “It’s also about areas you wouldn’t expect, like packaging, it’s something we often take for granted. When we get our products, they are packaged for food safety, freshness, different reasons. Often we don’t think about why and how this product gets there, but the packaging was a huge challenge for us.
The food sector has come under scrutiny due to rising prices, but Mr Harig said food price inflation is no exception in today’s economy.
“I would say if you look at inflation in the economy, in general, food is actually quite comparable to where it is now,” he said. “People feel it more, don’t they? Not everyone is there to buy a TV or buy a car. Almost everyone goes to the grocery store. They tend to feel food price inflation in ways they don’t feel for other categories…
“We understand the impact this has on consumers. I think this should be obvious and clear, this is an economy-wide issue that everyone has to deal with and supply chains in general that have been impacted, not specifically food.
Higher prices have not encouraged consumers to “swap” to lower-priced options, Harig said. Such changes may still occur, and some preliminary signs have appeared, he added.
“Weekly market baskets remain fairly consistent,” he said. “Based on some January data that we’ve seen from industry partners who are doing this work, we’re starting to see changes in that market basket. There’s been a slight drop in chicken breast sales This is the ‘canary’ that lets us know that we will see behaviors. For January and February, as we receive good data, we will see good changes in consumer behavior that reflect the impact of the inflation and people trying to adjust to it.
Overall food prices will rise 2% to 3% in 2022, and 3.5% to 4.5% for out-of-home food, said Matthew MacLachlan, economist at the Economic Research Service, USDA, Washington.
“In 2021, we saw high inflation in food and mostly in all food categories,” MacLachlan said. “The price increases have been the largest for meat and they have increased more than any other category. Prices have not fallen for any product category.
While all take-home food prices rose between 3.5% and 4% in 2021, the figure was skewed by a spike in meat prices, Mr MacLachlan said. Beef and veal increased by 9.3% and pork by 8.6%. The smallest increase was for fresh vegetables, up 1.1%. Dairy products rose less than 2%, and cereals and bakery rose just over 2%.
Over the past five years, food prices have increased by a total of about 11%, slightly less than housing and transportation, but slightly more than medical care and the average for all items.
Offering information on the food price chart, Mr. MacLachlan noted that food-at-home and food-out-of-home prices have moved in parallel for decades, but diverged about 15 years ago.
“Following the financial crisis of 2008 and 2009, food-at-home prices increased more slowly than food-out-of-home prices,” he said. “Now, during the pandemic, the growth rate has somewhat converged, with food-at-home prices rising at a faster rate than the recent average.”