Restaurant Industry Outlook for 2022: Is the Restaurant Recovery Really Happening?

by | May 11, 2022 | Restaurant Trends

Photo of a restaurant’s glass window with a “Yes, we are open” sign, as a positive sign of the restaurant industry outlook showing they’re once again open for business.

The COVID-19 pandemic undoubtedly impacted businesses around the world. However, it seems none were hit quite as hard as restaurants and bars. As a restaurant owner, the restrictions put in place likely had a major impact on your bottom line. Business slowing down made it difficult to keep employees. Plus, revenue decreasing may have made it hard to pay your bills. Now that the world is reopening, what’s the current restaurant industry outlook? Are restaurants finally starting to recover? And can your business really bounce back after such a challenging time?

In this article, we look at how the global pandemic caused a decline in the restaurant industry, as well as the struggles that are still plaguing restaurateurs. We also dive into a few critical changes that can be made to assist in helping the industry bounce back.

Key Takeaways:

  • The pandemic forced many restaurants to close their doors entirely, while others adapted to restrictions by focusing on carryout meals or creating outdoor dining spaces.
  • The Great Resignation makes it difficult for restaurants to stay fully staffed, while surging prices deter some from eating out as often as they were before.
  • Although we’re not out of the woods yet, the overall restaurant industry outlook is positive, with hopes that things will return to a pre-pandemic normal very soon.

How COVID-19 Impacted the Restaurant Industry

Restrictions required restaurants to improvise and change the way they do business. Although these restrictions differed from state to state in the U.S., some were common across the country. For instance, restaurants in many locations were forced to reduce their maximum capacity due to patrons needing to remain six feet apart. This meant only a small percentage of their tables could be used at one time, meaning fewer customers dining in.

Some restaurants were left to close their indoor dining areas entirely. Others chose to get creative by setting up outdoor seating. And due to the limitations on indoor dining, there was a massive push for takeout orders. This allowed restaurants to serve their patrons without indoor or outdoor dining space. In many cases, these shifts allowed restaurants to still bring in sales during what was a difficult time worldwide.

Graph depicting the United States revenue weekly trends in 2020, showing totals for dine-in, takeout, and delivery orders.

Image from CNBC

The pandemic caused dine-in orders to decrease drastically in 2020, while takeout orders got a significant boost. However, if you were to look at the big picture, restaurant revenue overall fell to new lows. Although many restaurants survived, others permanently shut down, unable to keep up financially.

The Current Restaurant Industry Outlook: What’s Happening Now? 

As restrictions are lifted and restaurants go back to operating normally, it would seem that things are looking up and recovery is underway. However, a few issues are presently plaguing the restaurant industry, preventing many businesses from getting back on track compared to pre-pandemic times.

Here are a few things impacting the overall restaurant industry outlook:

Graph depicting eating and drinking place employment growth from January 2021 to January 2022.

Image from Restaurant.org

  • More Jobs Have Been Added, But Employee Retention is Low: In January 2022, eating and drinking establishments added a net 108,200 jobs. It marked the 13th consecutive month in employment gains for the industry. Although, research shows the industry is 8% below pre-pandemic staffing levels, as many moved on to other careers during the pandemic.
  • Menu Prices Are Increasing Due to Rising Costs: With prices of food, labor, and fuel on the rise, many restaurants have been forced to raise their menu prices, so they’re able to turn a profit.

Graph depicting eating and drinking place sales from February 2020 to December 2021.

Image from Restaurant.org

  • Total Industry Sales Have Steadily Declined: Spending in restaurants was trending higher in the first half of 2021, which was likely due to the beginning of restrictions easing. Unfortunately, that growth stalled in the second half of the year and slowly decreased. In January, the industry saw total sales of $72 billion, down from $72.7 billion in December.

What to Expect for the Future of the Restaurant Industry

Although the restaurant industry outlook may not seem too optimistic at the moment, there’s no need to give up hope when it comes to your business. The restaurant and food industry is resilient and will bounce back, albeit with some changes. 

Here’s what we can expect to see more of:

Pick-Up and Delivery Orders Will Continue to Be in High Demand

Patrons love eating in the comfort of their own homes, so the need for pick-up and delivery services will remain crucial. Luckily, restaurant owners have plenty of options available that make delivery more efficient. Businesses can accommodate this need by accepting online orders, whether it’s through the business website or a third party like DoorDash. These services are great if you don’t have staff available to handle deliveries. Plus, you won’t have to worry about only having one delivery driver struggling to drop off food on time. DoorDash, Uber Eats, and others will have someone on the job right away.

In the video above, The Restaurant Boss shares his predictions on the restaurant industry outlook for 2022.

Menus May be Reduced to Save Money and Reduce Waste

As mentioned above, food prices have skyrocketed recently, largely due to supply chain issues created by the COVID-19 pandemic. At the same time, some items have been more difficult for restaurants to acquire, forcing restaurant owners to improvise or change menu items. Some businesses chose to scale back menus so fewer items are to choose from. And in some cases, restaurants prioritize using local ingredients they can easily get from providers nearby.

Having a smaller menu means restaurants can cut down on the variety of ingredients they need to source each week. This means there are fewer chances they’ll be unable to source something, and it’ll help cut down on food waste as well. Even better, a smaller menu will be more accessible for kitchen staff to execute so they’ll become more efficient on the job.

Customers Will Want Reassurance Regarding Cleanliness and Safety 

While cleanliness and food safety have always been important aspects of the restaurant industry, these things matter more today than ever before. During the COVID-19 pandemic, many people were hesitant to dine out because they were concerned about getting sick. Some still have similar concerns, so your customers are likely going to want reassurance regarding your cleaning practices. Be transparent about all safety practices you’ve put in place. 

Going the extra mile with your cleaning and safety practices is beneficial for employees as well. Provide them with a healthy environment to work in and they’ll be more likely to stick around for the long haul. After all, employee happiness is essential to your business and its success. And when your team feels respected, taken care of, and enjoys coming to work every day, they’ll be successful on the job.

Increase Success in Your Restaurant Business

A great way to grow your restaurant business is to connect with others in the industry, which we can help you do. Through SIAL America, you’re able to connect with distributors from around the world, giving you the chance to make long-lasting connections.

Contact us today to learn more.