The restaurant business will probably never recover from Covid

The trade group says 2022 will be a “new normal,” for the sector as it struggles to rebound and as competition for workers remains intense, according to the association’s 2022 State of the Restaurant Industry report, which was released Tuesday.

“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,” said Hudson Riehle, senior vice president of the Research and Knowledge Group at the National Restaurant Association.

Pent up demand from consumers will help in 2022 — the group predicts sales will continue to rise, forecasting sales this year of $898 billion, up from $864 billion in 2019. Yet just one in four restaurant operators believes their restaurant will be more profitable this year than last.

Recruitment and retention are top issues. Seven in 10 restaurant operators say they don’t have enough employees, and about 50% note that will be a top challenge this year.

A full return to employment is not expected in 2022 and competition for employees will remain “intense.” The group estimates total industry employment will reach 14.9 million jobs. That’s up just 400,000 from 2021 as job openings remain high — and still a million fewer jobs than pre-pandemic levels. Just five states — Idaho, Montana, North Dakota, Utah and Arizona — have the same number of restaurant employees as they did pre-pandemic.

In December, quit rate in the accommodation and food services sector, which includes restaurants, was 10.2%, according to seasonally adjusted data released this week by the Bureau of Labor Statistics. It follows months of similarly high quit rates in the industry.Some restaurant operators are turning to technology to ease staffing shortages. Thirty-eight percent of adults say they would be okay with a robot delivering their meal at a restaurant this year. Ghost kitchens — offsite delivery-only kitchens for restaurants — remain a small part of the landscape, but 50% of quick service operators expect it to grow in 2022.

Employment is just one issue facing restaurants. Ninety percent of restaurant operators say rising costs will likely continue through 2022, and 96% of operators do not believe supply chain issues will be fixed this year.

Working from home changed the game for the restaurant industry. Fifty-four percent of work-from-home employees say they go out to dinner less frequently than they did before the pandemic, while 47% of WFH employees say the same thing about lunch, according to the report.