The restaurant industry has been a big moneymaker in the U.S. economy for decades. Then came COVID-19. While there’s no question that the industry will survive, it will do so with heavy losses and a number of changes. Let’s take a look at the industry as a whole and see the current lay of the land.
What is the restaurant industry?
Basically, any business involved with preparing or serving food is part of the restaurant industry. If a place allows you to enter, order food, and eat it there or on the go, it’s part of the industry. This includes high-end restaurants to fast-food chains to eateries in hotels or airports. Each of these venues is considered a subset of the hospitality industry.
The restaurant industry is broken down into two main categories, full service and limited service, each with additional subcategories:
- Full-service restaurants are any establishments that don’t require customers to prepare or serve their own meals. These can include family, fine, or casual dining restaurants. Menu choices may be limited to a particular cuisine. You can expect the price at a full-service restaurant to be mid-range and up when compared to limited-service restaurants. These are establishments for people willing to spend some time while dining.
- Limited-service restaurants are fast-food places and any casual restaurants with buffets or predominantly take-out service. In addition to usually being cheaper than full-service restaurants, these places typically have faster service. Limited-service includes fast-food restaurants, restaurant vendors, and catering.
How is the restaurant industry landscape doing in 2021?
Over the past few decades, the restaurant industry in the U.S. has grown steadily. In 1970, the industry’s sales were about 42 billion dollars. Those sales have more than doubled since 2000 with a peak of about $863 billion in 2019. In 1955, the restaurant industry’s portion of the food dollar was 25%. By 2019, it was more than half. In our blog Female Hospitality Leaders Shaping the Industry, you can learn how women are contributing to these 21st-century successes.
As you can imagine, COVID-19 dramatically affected restaurant sales. By the end of 2020, the restaurant industry’s total sales were $240 billion below National Restaurant Association’s predictions for the year. While they’re expected to hit substantial growth in 2021, it’s still not enough to cover the restaurant industry’s losses.
Full-service restaurants were much harder hit than limited-service establishments. Coming into 2020 with an already saturated market, full-service restaurant visits were down by 50% by the end of the year. To survive, a number of restaurants adopted delivery, curbside pickup and takeaway services.
Lost Jobs and Closures
More than eight million bar and restaurant employees were furloughed or laid off in 2020. By the end of the year, the restaurant industry had nearly 2.5 million fewer jobs than the start of 2020. 110,000 bars and restaurants closed their doors by the end of 2020. Unfortunately, most of these were long-standing businesses, open for at least 16 years. 16% of those closed had been open for at least 30 years.
How Restaurants are Adapting
In order to survive, a number of restaurants found they had to adapt. This has meant increasing or adopting off-premise service, adding outdoor dining or modifying existing outdoor areas, adding specials and deals, promoting takeout orders, coming up with entirely new menus, using new menu technologies, and selling alcohol to go. 2020 was the year ‘contactless’ was added to everyone’s vocabulary. Restaurants added contactless ordering and delivery options, and have tested out other models like virtual restaurants or ghost kitchens. New restaurant technologies – such as digital menus, online ordering, and online delivery – were adopted rapidly. These changes show no sign of going away in 2021, or even once the pandemic has subsided.
The Future Restaurant Industry Landscape
Fortunately, things are looking up for the restaurant industry in 2021. The National Restaurant Association predicts double-digit growth in restaurant sales this year as the vaccine roll-out becomes widespread. Pent-up demand to eat on-premise reached 67% in December 2020, suggesting that when people feel safe eating out again, we will see an influx of restaurant-goers at some point in 2021.
What is the restaurant industry?
The restaurant industry comprises businesses involved with preparing or serving food.
How big is the restaurant industry?
In 2019, there were approximately 660,000 restaurants in the United States with 13.49 million employees.
What are the segments of the restaurant industry?
The two main segments are full-service (including fine, family, and casual dining) and limited-service (which includes quick service, fast food, fast-casual, and coffee shops).
Is the restaurant industry growing?
It is expected to grow in 2021, but it will take a long time to make up for the losses in jobs, businesses, and revenue in 2020.
How has the restaurant industry changed due to COVID-19?
Some of the changes include adding off-premise service, outdoor dining, specials and deals, new menus and new menu technologies, and selling alcohol to go.