National Restaurant Association Mid-Year State of the Industry Report

Despite a steady trend of job creation in the first half of the year, eating and drinking places are still nearly one million jobs, or eight percent, below pre-pandemic employment levels and the restaurants and accommodations sector have one of the highest levels of unfilled job openings of any industry, according to a mid-year supplement to the 2021 State of the Restaurant Industry Report from the Natonal Restaurant Association. 

The report illustrates the continued impact of the COVID-19 pandemic on the restaurant industry and provides an updated look at key indicators and trends influencing the industry's recovery as of June/July 2021, including the current state of the economy, workforce, and food and beverage sales.

Other key findings include: 

• Food and beverage sales in the restaurant and foodservice industry are projected to total $789 billion in 2021, up 19.7% from 2020.
• As of June 2021, 39 states and the District of Columbia had reopened to 100-percent indoor dining capacity; 11 states and Puerto Rico are open at varying capacities ranging from 50 to 80 percent.
• Six in 10 adults have changed their restaurant use due to the rise in the delta variant.

Labor and Food Costs Remain Top Challenges

• July marked the seventh consecutive month of staffing growth, translating to a net increase of 1.3 million jobs in the first half of 2021. Despite these increases, eating and drinking places remain nearly one million jobs or eight percent below pre-pandemic employment levels. Operators also continue to grapple with higher input costs, with wholesale food prices increasing at their fastest rate in seven years.
• 75 percent of restaurant operators reported that recruiting employees was their top challenge as of June 2021 – the highest level ever recorded.
• The fullservice segment was down 626,000 jobs, or 11 percent below pre-pandemic employment levels; the limited-service segment was down 175,000 jobs or four percent in the same period.
• Menu prices have increased nearly four percent through June 2021.

Technology, Outdoor Dining, and Alcohol To-Go Are Here to Stay 

The pandemic catalyzed many changes in the restaurant industry including the rapid consumer adoption of technology for online ordering, electronic payment, and order pickup. Consumers want to see restaurants continue incorporating technology and are keen to continue using outdoor dining. In 31 jurisdictions, thanks to approved legislation, consumers will be able to continue ordering alcoholic beverages with their takeout.

• 52 percent of adults would like to see restaurants incorporate more technology to make ordering and payment easier.
• 84 percent of adults say they favor allowing restaurants to set up tables on sidewalks, parking lots or streets permanently.
• A majority of adults in states that allow alcoholic beverages with takeout and delivery orders would like to see it continue on a permanent basis.

The Threat of Delta

In the first half of 2021 industry trends were positive, but there is still a long road ahead. A National Restaurant Association survey, conducted Aug. 13-15, found that the delta variant of COVID-19 threatens to reverse the gains made in the first six months of the year. 

• Six in 10 adults changed their restaurant use due to the rise in the delta variant.
• 19 percent  of adults said they completely stopped going out to restaurants.
• 37 percent of adults said they ordered delivery or takeout instead of dining in a restaurant.
• 32 percent of adults said that if asked to wear a mask and/or show proof of vaccination to dine indoors again, they would be less likely to dine in a restaurant.

"The trends from the first half of the year are promising, but a lot of uncertainty remains in regard to the delta variant, consumer confidence, and ongoing labor challenges," said Hudson Riehle, Senior Vice President of Research for the National Restaurant Association. "We expect restaurant pent-up demand will remain high in the coming months. However, in this state of flux, maintaining the availability of on-site dining with few capacity restrictions will be critical to keeping the overall sales momentum going forward, especially for fullservice operators."

The National Restaurant Association will continue to monitor the effect of COVID-19 on the industry in the coming months and plans a full State of the Restaurant Industry Report in early 2022. Click here to download the 2021 State of the Restaurant Industry Mid-Year Update, sponsored by Sage Intacct.

"Faced with one of the most devastating and disruptive events of our lifetime, the restaurant industry has taken significant strides toward rebuilding over the first half of 2021," said Tom Bené, President and CEO of the National Restaurant Association. "Consumer expectations around dining out have changed, and the industry is continually adapting to not only meet, but exceed, these expectations. Restaurant operators, along with their partners throughout the supply and distribution chain, remain focused on providing diners with a safe and enjoyable experience, amid rising food and labor costs and challenges related to the pandemic. Given these factors, our outlook through the end of the year is one of cautious optimism."

Bené will be stepping down as President and CEO of the Association and CEO of the National Restaurant Association Educational Foundation. A 30-year veteran of the food and beverage industry, Bené will remain in a leadership role as he returns to the beverage distribution sector. Bené joined the Association and Foundation during the initial stages of the COVID-19 pandemic and has worked with restaurant owners, manufacturers, and distributors to bolster the industry’s recovery efforts.

“I am incredibly proud of the work this team has done and all that we have accomplished together during this incredible time,” said Bené. “Whether it's the significant impact we've made to support the industry through our advocacy efforts; the new governance model that we put in place to drive deeper engagement and more effectiveness; or the restructuring of the organization to meet the changing needs of the industry, our state associations, and our members, it has been a truly collaborative effort. I know the Association and Foundation – and these teams – are well-positioned for continued success.”

Marvin F. Irby, CFO and Chief People Officer, will serve as Interim CEO. Irby has more than 30 years of leadership experience, including executive positions at Kraft Foods, PepsiCo, and Disney. Irby joined the organization in 2010 and has played an integral role in advancing the strategic plans for both the Association and Foundation. 

A task force is being formed to oversee the search for a new President & CEO.