Will a Vaccine Be the Light at the End of the Tunnel for the Restaurant Industry?

2020 has been a challenging year for restaurants and hospitality professionals to say the least. The good news is that with the recent announcement of three vaccine trials that are up to 95-percent effective, the light at the end of the tunnel is becoming more apparent. 

Looking ahead to 2021, there are three trends we see defining the restaurant and hospitality industry.

1: COVID pivots are here to stay for a while longer until widespread vaccination and herd immunity.

Heading into the winter months, restaurants will be challenged even further as the revenue streams that have been keeping them afloat during the summer and fall such as outdoor dining and patio seating will see fewer customers with inclement weather and colder temperatures. 

By this point, most restaurants have experimented with their concept and menu to adapt. From elevated takeout, optimizing their menu for delivery, repurposing parking lots and urban streets, kitchen upgrades with technology, to selling consumer packaged goods, setting up a grocery store section and pre-packaged meal kits, it has been remarkable to see the creative ways that chefs have changed their business to stay afloat. The newest innovations we observe are restaurants investing in ghost kitchens to service larger geographic areas and building out outdoor dining tents which increasingly resemble indoor dining.

Many in the industry expect that vaccinations will begin with frontline healthcare workers and the elderly as soon as December, with more widespread vaccinations going to the general public by March and April. Therefore, we expect that the “New Normal” of operations will be here to stay at least until summer if not into the fall of 2021.

2: Restaurants need to stay flexible amid changing regulations, keep track of new relief organizations and make their voices heard.

In an effort to clamp down on surging COVID cases, local governments have instituted new stay at home orders and restrictions on restaurant dining heading into the December holidays. The Los Angeles county’s department of health announced on November 22nd a ban on outdoor, on-premise dining and Governor Cuomo shut down indoor dining in New York City this week. 

Restaurant owners have expressed frustration over the changing rules, most of which were announced without the consultation of the restaurant industry, and come after months of preparation and investments into outdoor dining infrastructure. This additional layer of uncertainty, in a year that has seen closures, rehirings and furloughs, makes it extremely difficult to plan ahead and have peace of mind.

Given these circumstances, independent restaurants must use every tool in their disposal to stay together and be plugged into national and local advocacy efforts to make their voices heard. The Independent Restaurant Coalition has been lobbying for the passage of the RESTAURANTS ACT, a $120 billion grant program that is industry specific to restaurants. Meanwhile, nonprofits like ROAR, SF New Deal and the Southern Smoke foundations have been doing the hard work of supporting the industry since the very start of the pandemic. New organizations like No Us Without You and the 86 Fund have also been popping up to help the industry weather the storm of winter and support the most vulnerable people working in the back of house. 

Keep an eye out for resources from local governments, such as Los Angeles county which is offering $30,000 in grants to eligible businesses and the state of California which has offered $25,000 grants to various small businesses.With the incoming presidential administration and pending senate elections in Georgia, there is hope for additional stimulus and financial relief to the industry going into the new year.

3: The silver lining for the restaurant industry is that operators have been forced to run their businesses even more effectively and consider changes in concept, real estate and technology that will pay dividends in the years to come.

Restaurants and chefs we talk to overwhelmingly talk about how the pandemic has forced them to reconsider what are the most important parts of their business and what they can do to innovate to serve customers more effectively. According to research from Mckinsey in October, “A very high proportion [of restaurants] are planning changes to their restaurant layouts for the long term… we’ll see stickiness of drive-through, stickiness of carryout, stickiness of delivery.” 

Independent restaurants have also doubled down on their local community by servicing neighborhoods and cul-de-sacs and changing menus that fit the needs of the suburban home. Finally, restaurants have realized that investing in technology is simply table stakes. From online ordering, to digital marketing, to streamlining the back of house, value-added technology will enable those hospitality businesses to stay alive well into the new year.

A safe and effective vaccine for COVID-19 is on the horizon and is ultimately the answer to the struggles of the restaurant industry. We forecast that it is still a long road ahead in 2021, with the restrictions from the public health community butting heads against the restaurant industry.

Restaurants must continue to innovate and stay agile with opportunities in order to weather the storm. In the long term, we’re optimistic that independent restaurants and dining out will come back and remain a fixture in communities and cities all over the country.