They’re Back! Restaurant Guests Returning to the Fold

As most of you know, the restaurant industry took a beating in 2020, with projected sales down $240 billion for the year. Over 110,000 eating and drinking establishments, that had been in business for 16 years on average, closed their doors. Approximately 2.5 million employees in the restaurant industry lost their jobs.

And now, the good news: As states across the nation release dining restrictions, restaurant guests are heading to their favorite neighborhood eateries.

Morning Consult, a global data intelligence company, posts diner’s return in their series, “Tracking the Return to Normal: Dining.” In 2020, the number of people who said they were comfortable dining out never surpassed 42%. In 2021, those numbers rose gradually until leveling out in April and early May. Now, as of May 15, 64% of adults are comfortable returning to restaurants, and 77% say they’ll be ready to return within six months.

For the first time since Morning Consult started tracking consumer sentiment in the midst of COVID-19, on-premise dining caught up to takeout, an incredibly good sign.

Outdoor Dining

Guests who are ready to enjoy a meal on the outdoor patio of their favorite restaurants rose to 72%. This rise is great news for the restaurant operators who put large sums of money into their outside seating areas amid the pandemic. According to 5280 magazine, Caroline Glover, the chef-owner of Annette in Aurora, CO, spent about $12,000 on an outdoor greenhouse village. The Rio Grande Mexican Restaurant reportedly dolled out about $50,000 on igloos, trailers, and even a trolley car to provide outdoor dining at their five locations.

According to the National Restaurant Association’s (NRA) 2021 State of the Restaurant Industry report, 56% of casual dining and 62% of fine-dining operators dedicated resources to expanding or developing their outdoor dining during the pandemic.

From 41-45% of full-service restaurants took to the sidewalk, parking lot, or street to increase their outdoor dining footprint. Private greenhouses, yurts, and cabanas sprouted up in outdoor restaurant spaces. The money spent creating these spaces appears to be well-spent as restaurant guests flock to outdoor dining venues.

Pent-Up Consumer Demand

The NRA’s report also noted that 46% of consumers are excited to dine out again, and this excitement carries across all demographics.

Many restaurant’s 2021 Q1 earnings verified the pent-up demand. For example, Cheesecake Factory’s president, David Gordon, reported on the “incredible pent-up demand for the experiential dining occasions” in the company’s Q1 earnings call. Total revenues for the first fiscal quarter came in at $627.4 million, outpacing year-over-year 2019 sales.

The Motley Fool, known for their investment strategies, recommended buying three restaurant stocks based on their tremendous Q1 2021 earnings: Texas roadhouse, Wingstop, and Yum China.

The State of Restaurant Openings

Across the country, restaurant restrictions are ending. Some of the last strongholds for limited capacity include Los Angeles and San Francisco, Michigan, Vermont, and Pennsylvania, with 50% indoor dining restrictions. Minnesota, North Carolina, and Chicago remain at 75% indoor dining restriction levels. Many of these states and cities expect to lift the remaining restrictions in June and July, as long as COVID-19 cases continue to decline.

Some cities and states are reducing capacity restrictions based on vaccinated individuals. In Chicago, the Vaccine Exemption began May 14. This regulation states that fully vaccinated individuals do not count towards COVID-19 capacity limits. Bars and restaurants may seat more than 10 people at a table if everyone over the age of 15 has been vaccinated. Bars can return to late-hour operations if all patrons are fully vaccinated, and all establishments can operate without restrictions if all guests and employees are vaccinated.

New York City’s New Post-Vaccination Normal

The empty streets of the once-bustling thoroughfares of New York City were stark reminders of the devastating effects of the pandemic. On May 19, restaurants received the go-ahead to reopen at full capacity, and fans of the Mets and Yankees received the good news that normal capacity was returning to their ballparks for vaccinated individuals. May 31 marks the lifting of the 12 am indoor curfew on food and beverage service.

Connecticut and New Jersey, in a coordinated effort, also lifted capacity restrictions on May 19.

Unfortunately, the news is not all good. As Americans return to their favorite eateries, operators are experiencing shortages in key ingredients due to stretched food supply chains, and refrigerated transportation costs surge as the demand escalates. Restauranteurs are, however, happy to accept these limitations and increased costs over closed doors and capacity restrictions. Seeing restaurant patios filled to overflowing as consumer confidence continues to grow is a beautiful reminder that the worst is behind us.

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