Restaurant operators do not anticipate a rapid improvement in business

The restaurant industry has been significantly impacted by the coronavirus pandemic. Restaurant operators nationwide are reporting sharp declines in sales and employment levels, and the National Restaurant Association’s Restaurant Performance Index plunged to a new record low.

Looking ahead, most restaurant operators do not think their business will return to normal during the next several months. Indeed, respondents to the Association’s May tracking survey expect their sales, employment and capital spending levels to remain dampened through the end of the year.

Sales

When asked in May, 73 percent of restaurant operators said they expect their sales volume in six months will be lower than it was during the same period in the previous year. Only 17 percent of operators think their sales in six months will be back above year-ago levels.

On the segment level, operators in the tableservice segments are the most pessimistic about improving business conditions. Ninety-two percent of fine dining operators and 84 percent of casual dining operators expect their sales in six months will still remain below previous-year levels.

Although operators in the limited-service segments are somewhat more optimistic, fully one-half of quickservice operators and 42 percent of fast casual operators do not think their sales will recover by late-2020.

Employment

Restaurant job losses were widespread in recent weeks, and most operators are anticipating a very slow return to pre-coronavirus staffing levels. When asked in May, 66 percent of restaurant operators said they expect their staffing levels in six months will be lower than it was during the same period in the previous year. Only 17 percent think their staffing levels in six months will exceed year-ago levels.

One hundred percent of fine dining operators and eight in 10 family dining and casual dining operators expect to employ fewer people in six months than they did in the previous year. The staffing outlook in the quickservice segment is a mixed bag, with roughly one in four operators expecting higher and lower employment levels. Fast casual operators are somewhat more optimistic about returning to pre-coronavirus staffing levels in six months.

Capital Expenditures

The negative economic consequences of the coronavirus haven’t stopped at restaurant doors, and these ripple effects will continue throughout the supply chain in the months ahead. In fact, the expectation from restaurant operators is that capital spending will be cut in half during the next six months.

Only 27 percent of respondents to the Association’s May 2020 tracking survey said they plan to make a capital expenditure for equipment during the next six months. This is down sharply from the average of 54 percent of operators who reported similarly in the January – March tracking surveys.

Restaurant operators are also putting expansion and remodeling plans on hold. Only 22 percent of operators said they plan to make a capital expenditure for expansion or remodeling during the next six months – roughly half of the 42 percent who reported similarly in the January – March surveys..

Restaurant operators: Want to know how your business compares to similar restaurants on a monthly basis? Find out by taking a few minutes to participate in the National Restaurant Association’s Restaurant Industry Tracking Survey. All survey respondents receive exclusive access to the detailed survey results each month, broken out by industry segment and type of ownership.

Read more analysis and commentary from the Association's chief economist Bruce Grindy.