Restaurant sales

Restaurant sales expected to increase this year, but volatility will continue

Photo by Jonathan Maze

The National Restaurant Association expects industry sales to rise 12.4% this year to $898 billion, a nominal record that would be 3.9% higher than 2019 sales levels, according to its annual report on the state of the restaurant industry released on Tuesday.

But other data suggests a tougher year than it looks and even the top figure isn’t as high when you factor in higher menu prices. According to the association’s combination of data and surveys of operators, restaurants expect lower profits and sales that have not kept pace with inflation.

According to the association, majority owner of Restaurant Business parent company Winsight, forecast sales would be 11.5% lower than 2019 when adjusted for inflation. Menu price inflation soared last year as operators tried to keep pace with rising labor and food costs.

Profitability has already taken a hit and operators don’t seem so optimistic about improvements. Nine out of 10 operators said their costs were up and eight out of 10 said their profits were down. Only around 25% of operators expect it to improve this year and a third expect it to get worse.

The results suggest that operators are preparing for continued volatility and relatively little relief from the operational challenges they face.

“Menu price inflation has really taken off,” said Hudson Riehle, senior vice president of the association’s research and insights group, in an upcoming episode of the Restaurant Business podcast “A Deeper Dive.” He noted that menu price inflation, on average over the whole year, was at its highest level since 2008.

“It’s a challenge. It’s going to be ongoing, the rest of the year. We don’t see any immediate relief in food costs, or inflation in labor costs.”

Restaurant sales expected to increase this year

Source: National Restaurant Association.

At the same time, however, the results show an improving sales environment. Total sales were $799 billion in 2021, up 18% from 2020. And the $898 billion the association expects this year is another improvement, if not quite the $918 billion the association was expecting in 2020 before the pandemic.

“2022 will be better than 2021,” Riehle said. “2021 was better than 2020. But it is still a year of volatility, and a year in which the trader will continue to face unexpected events in a rapidly changing environment.”

Sales by industry

Restricted-service restaurants account for a greater proportion of industry sales than before the pandemic.

Source: National Restaurant Association.

One of these events is work. Despite this lack of profitability, the main concern of operators, by far, remains the simple availability of workers. More than half of operators told the association that “employee recruitment and retention” was their top concern. Among casual dining operators, for example, recruitment was the top concern for 51% of operators, while “labour costs” was only a concern for 2%.

The cost of food, in comparison, was a concern for 17% of operators. But that, Riehle said, has grown in importance, while the problem of labor availability has improved over the same period. “Labour recruitment is the main challenge, but that’s better,” Riehle said, noting that at the height of the pandemic, some 80 to 90 percent of operators cited labor availability. work as their primary concern.

Yet the vast majority of operators say they don’t have enough employees to meet demand.

Operators still cannot find workers

Percentage of operators who say they don’t have enough workers.

Source: National Restaurant Association.

Supply chain issues were huge in 2021. The association said 96% of operators experienced supply delays or shortages of food or drink in recent months, and some 80% of operators have experienced delays in equipment or service items.

Yet consumers want to dine out more, even if they want to dine out in restaurants. More than half of consumers, 51%, said they didn’t eat out as much as they wanted. In comparison, 37% said they did not receive enough takeout or delivery.

This “pent-up demand” is more pronounced in low-income households. Sixty percent of consumers in households earning less than $50,000 a year do not eat out as much at restaurants. In comparison, only 32% of people living in households earning more than $100,000 do not eat as much as they would like.

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