The 2022 State of the Restaurant Industry Report just released by the National Restaurant Association (NRA) says foodservice industry sales will hit $898 billion this year.
In inflation-adjusted dollars, sales are around 11% below what they were before March 2020 when the COVID-19 pandemic struck, according to a report in Restaurant Hospitality. In addition, costs have increased—wholesale food costs are up 7.9%, and hourly labor costs rose 8.6%.
The NRA expects 2022 sales to top last year. Hudson Riehle, the association’s senior vice president of the research and knowledge group, told Restaurant Hospitality that 2022 is “still the year of transition, but the path is directionally correct.”
Restaurant Hospitality also notes that 400,000 jobs will likely be added to the foodservice workforce, reaching 14.9 million by the end of the year.
Restaurant operators expect it will take “a year or more before business conditions return to normal.” And they think “food, labor, and occupancy costs will remain elevated,” continuing to impact profit margins. Plus, almost all (96%) of the restaurant operators “experienced supply delays or shortages of key food or beverage items in 2021 and expect these challenges to continue in 2022.”
On a positive note, Riehle says, “consumers [are showing] a willingness to spend money in the industry,” with 51% of adults who were surveyed saying they didn’t eat at restaurants as much as they’d like to.
The report also highlighted the “dramatic” differences in what Gen Z and millennials want from food services. Riehle told Restaurant Hospitality that those younger demographics expect “restaurants to provide new offerings,” which could include things like “alcohol to go…outdoor dining…meal subscriptions, even meal kits, loyalty programs, technology usage, and eco-friendly packaging.”
Technology has given restaurants a “competitive advantage,” says more than eight in 10 food operators who note the benefits of smartphone app ordering, reservations, mobile payment, and delivery management.
Obviously, restaurant traffic is down significantly since the onset of the pandemic. That, plus inflation has, says Riehle, “really put pressure on profitability.”