Restaurant industry analysts at Technomic are now predicting a $300 billion loss for the industry by year’s end, up almost $50 billion from the beginning of the coronavirus pandemic in March.
The company unveiled its prediction in three scenarios: Best Case, Middle Case, and Worst-Case.
However, Technomic is not so quick to write off the next couple of years. The company’s Middle Case scenario predicts a 21 percent spike in sales in 2021.
“Few industries have felt the repercussions of the COVID-19 pandemic quite like foodservice,” Joe Pawlak, managing principal at Technomic, said in a press release. “Restrictions are wreaking havoc, especially on the segments that depend upon on-premise consumption. What we are seeing is continued decline for the remainder of the year but aggressive growth in 2021.”
While local restrictions on travel, outdoor activities, and social distancing are certainly factors in Technomic’s predictions, other factors such as the growth of quick-service concepts, increasing technological focus, and enhanced safety precautions say brighter days are ahead for the industry.
A recent report from Grand View Research shows the quick-service restaurant industry is expected to grow by nearly 70 percent within the next seven years, primarily driven by an increased volume of independent restaurants. Much of that growth will occur after 2024 when the industry is expected to meet its pre-pandemic production.
“Quick service restaurants and fast food restaurants have evolved as a major provider of this mass-produced food, which has been attracting an increasing number of people towards experiencing and enjoying their services. Convenience, good taste, and economical in terms of both time and money are some of the crucial factors acting in favor of the market for fast food and quick service restaurant,” the report reads.
But, not everyone within the industry shares this rosy outlook. Tom Colicchio, celebrity chef and founder of Crafted Hospitality, told Yahoo! Finance that industry-wide depressed revenue is a major cause for concern for businesses of all sizes.
“The industry just isn’t faring at all,” Colicchio said. “Estimates show that without help from the federal government, over 85 percent of independently-owned restaurants in the country will close.”
A recent report from Chicago-based research firm Compass Lexecon echoed Colicchio’s sentiments. The report found that restaurants most severely impacted by the pandemic include restaurants with fewer than 20 locations, family-owned establishments, pizza joints, etc. These establishments make up over 75 percent of the industry as a whole and account for 11 million jobs nationwide.
These restaurants also support a variety of other industries including farming, fisheries, vineyards, and distilleries.
“We’re looking at an extinction event for independent restaurants,” Colicchio said.
The James Beard Foundation reported that over 70 percent of restaurants named paying rent or bills as their greatest struggle in the near future. Funding from the federal Paycheck Protection Program (PPP) initiated under the CARES Act, overwhelmingly went to large chain restaurants, leaving independent restaurant owners to struggle. In turn, over 75 percent of restaurants surveyed reported taking on debt of more than $50,000 since the pandemic began.
This led to many independent restaurants to face a lot of tough choices on how to restructure for the future. Chief among them was whether to close for good. Others include reducing staff, replacing employees with robots, and increasingly relying on technology for day-to-day operations.