The restaurant industry has made a complete recovery from the pandemic, at least if you look at sales.
Industry sales totaled $67.3 billion in May. That was up 70.6% from the same month a year ago and up 1.8% from April.
But the real number is this: 1.6%. That’s how much higher sales were in May than they were in February 2020, the last month before COVID-19 led governments to close restaurants across the country, sending the industry into a tailspin.
While the industry remains far off from where it would be today had there been no pandemic—and traffic remains far down—it nevertheless is a milestone for restaurants that at one point saw sales hit a more than 30-year low, wiping out more than half of industry revenues in one fell swoop.
The restaurant industry has also reached a post-pandemic milestone of a different sort: Leapfrogging grocery stores in spending.
Before the pandemic, consumers had been spending a growing percentage of their food dollar at restaurants.
That dynamic shifted violently last March, leading to dramatic shortages of everything from toilet paper to ramen noodles, while restaurants started selling milk and steaks to customers in a bid to generate some cash and offset some shortages.
That dynamic had been gradually shifting back toward pre-pandemic levels in recent months but another round of federal stimulus payments in March put that shift into overdrive. That in turn has caused more shortages of things like ketchup packets and pickles along with chicken wings. And labor.
It’s worth pointing out that at least one facet of the industry’s recovery has come from prices, which in recent years have been a major factor in driving up restaurant sales. Restaurants, which have higher labor costs, have traditionally raised prices more than grocers, outside of periods of heavy food inflation.
When demand shifted to grocery last year, retailers raised their prices dramatically and the situation reversed itself for a few months. But as that demand has shifted back, the pricing dynamic changed once again. As labor costs have soared more recently, the gap returned and is as wide as ever.
In short, consumers have returned to a more normal level of spending. They’re paying more to eat out, willing to swallow higher prices to do so. And they’ve shown little sign of changing that tendency anytime soon, but especially after emerging from a global pandemic.