1. Trends & External Forces

As Pandemic Recedes, Restaurant Industry Comes Roaring Back

As mind-blowing as that “up 23,000 percent” number is, it is important to keep certain things in context.

First, there is a lot of pent-up demand … and so it is not surprising that in a lot of markets we’re seeing this kind of activity. The weather is improving, and restaurants all over the country have embraced al fresco dining, enabled by loosened government regulations – all of which creates enthusiasm and momentum.

But there are shortages out there that could inhibit growth.

The Wall Street Journal this morning has a piece about how “Americans are returning to restaurants, bars and other dining places” is “adding new strains in food supply chains. Suppliers and logistics providers say distributors are facing shortages of everyday products like chicken parts, as well as difficulty in finding workers and surging transportation costs as companies effectively try to reverse the big changes in food services that came as coronavirus lockdowns spread across the U.S. last year.”

I also think that we have to keep in mind the rising prices that continue to bedevil the food industry in general, and specifically the restaurant biz – a meal and a nice bottle of wine can cost a more than it did before the pandemic. For a lot of people, this could dampen their enthusiasm going forward and reduce the frequency with which they eat out. (I had this happen to me the other day. Went out for a light meal and a couple of drinks with my wife and daughter, and it was more than a hundred bucks before tip and taxes. It was enjoyable and I was glad we did it, but there was a bit of sticker shock … I couldn’t help but think that a bottle of wine at home would’ve cost less than the two glasses of wine that I consumed.)

This could happen a lot, and it actually creates an opportunity for food stores to emphasize that advantage – that you can have a quality meal at a fraction of the cost of a restaurant meal, and, oh by the way, we’ll help you make it (or provide it already cooked) and find you a good bottle of wine to go with it.

But that’s going to require a lot of engagement on the part of retailers.

Retailers have had more than a year to think about what they would do when this moment came, about how they would differentiate themselves and compete effectively when the pandemic is over. I wonder how many have had any sort of epiphany during the past 16-18 months.

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