Research chief discusses State of the Restaurant Industry

As the industry struggles to emerge from the pandemic, Hudson Riehle, the National Restaurant Association’s senior vice president of Research, says the current restaurant landscape looks quite different. 

Consumers still want convenience and quality. They miss dining out at restaurants, they’re interested in what they perceive to be better-for-you foods, and they really like the availability of alcohol-to-go beverages. 

Operators are dealing with increased costs, and supply-chain and labor challenges, while trying to satisfy all of their guests. Here’s what Riehle said the State of the Restaurant Industry is looking like in 2022.

What does the year ahead hold for the restaurant industry?
In a nutshell, it remains a year of transition, but the overall path to recovery definitely continues. It’s also important to highlight that restaurant operators’ innovation and sustained flexibility are definitely playing a key role in creating a new future for the industry. We’re asked “When will things will return to normal?” and the answer is we won’t return to the old normal. It's all very much a new world, driven by operators’ ability to respond to rapidly changing consumer wants and needs. 

Also changing things are the supply-chain challenges everyone is still experiencing. This time last year, it wasn’t as huge of an issue as it is now.

What’s the toll of increased food and labor costs on restaurant operations?
Obviously, it was a problem last year, but it’s even more severe today. Costs of both are dramatically higher so profitability margins are tighter, but there’s great pent-up demand among consumers, who have missed visiting their favorite restaurants and are trying to make up for it now.

How did off-premises dining become the game-changer it is today?
Off-premises dining is having the greatest impact on the industry. Pre-pandemic, 61% of restaurant traffic came from off-premises. During the height of COVID-19, it was 90%. Now, 81% is off premises. It’s gradually been shifting, but will never go back to those pre-pandemic numbers. Off-premises foodservice is a long-term operational trend, not a fad.

What role has technology played in off-premises dining’s popularity?
It's definitely facilitated things. Five years ago, you’d never have had this robust, carry-out/delivery/drive-thru market without technology in place. Without doubt, the technology available to online customers over the last few years has enabled much heavier off-premises use. And—especially in the last year—consumers are receptive to its availability. Technology made online transactions a much more convenient overall experience for everyone, but especially for customers under the age of 40.

How did COVID-19 change the consumer mindset and the industry’s playing field? 
It’s led to a heightened interest in wellness, including the availability of more plant-based menu items, use of better packaging, an increase in outdoor dining facilities, plus a host of operational solutions, such as streamlined menu offerings, contactless payment methods, and alcohol to go, which has become a new revenue stream for many restaurant businesses.

What does the future of the restaurant industry look like?
The two most important drivers of sales are convenience and socialization, but there’s always going to be a tug of war or counterbalancing of the two. Nevertheless, consumers will always want to visit restaurants, whether it’s for the dining experience or to celebrate a special occasion. The industry, which showed it’s resilient and capable of meeting any challenges thrown at it, will adapt to whatever operating environments it encounters.

The National Restaurant Association’s 2022 State of the Restaurant Industry report is considered the authoritative source for restaurant industry sales projections and business trends. The report is free to members (a $349 value).