STUDY: 74% of Restaurants Say Top Challenge is Recruiting Employees

The National Restaurant Association released a mid-year supplement to the 2021 State of the Restaurant Industry Report, which illustrates the continued impact of the COVID-19 pandemic on the restaurant industry. The report 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.

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% of adults would like to see restaurants incorporate more technology to make ordering and payment easier.
• 84% 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.

“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 Bene, 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.”

Top Challenges: Labor & Food Costs

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 1 million jobs or 8% below pre-pandemic employment levels.

Help Wanted Everywhere

Hospitality brands everywhere are trying to reel in employees. Chipotle recently took to TikTok Resumes to Recruit for Workforce and upped its minimum wage in the US and Canada. Papa John’s International Inc. announced new hiring, referral and appreciation bonuses for its 14,000 front-line team members. Taco Bell launched a hiring spree to hire 5,000 employees in one day. Some believe low wages are driving away restaurant staff. Others blame the extension in unemployment benefits. According to a recent report from JobList, hospitality workers are transitioning out of the industry in search of a different work setting 

Operators also continue to grapple with higher input costs, with wholesale food prices increasing at their fastest rate in seven years.

• 75% 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% below pre-pandemic employment levels; the limited-service segment was down 175,000 jobs or 4% in the same period.
• Menu prices have increased nearly 4% through June 2021.

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.

• 6 in 10 adults changed their restaurant use due to the rise in the delta variant.
• 19% of adults said they completely stopped going out to restaurants.
• 37% of adults said they ordered delivery or takeout instead of dining in a restaurant.
• 32% 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.

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% indoor dining capacity; 11 states and Puerto Rico are open at varying capacities ranging from 50% to 80%.

“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.