This story is part of RB's look at the impact of the pandemic on the restaurant industry.
The first thing you will notice about all of the following charts is how remarkably similar many of them look.
COVID-19 was like a big bomb that hit the industry last March, and in the months since, it’s been working to recover. For the most part, that recovery remains a long way off, and even as numerous folks believe some semblance of normalcy will return once this whole thing is “over,” when that normalcy comes back is another thing.
Yet the pandemic has had a massive impact on restaurants, which have lost one-fifth of their sales and one-fifth of their employees. That poor recovery has held down the overall economic recovery and helps explain Congressional efforts at more targeted relief to restaurants.
But there is at least some hope, especially from investors, who are increasingly confident in a turnaround of the traditional industry.
The first chart is the basic one, showing average daily cases. The pandemic’s first wave hit in March and into April. The shutdowns clearly had an impact. Case growth slowed, leading to more reopenings and … a summertime surge that led to yet another round of closures. Cases surged again in November and December and have been falling since.
Average daily cases
Source: The COVID Tracking Project/The Atlantic
Unsurprisingly, we can see this reflected in reservation data from OpenTable seated diners, which has given us a daily look at restaurant demand throughout the pandemic. That data, especially when compared with daily cases, shows the impact of state responses.
But it also shows that states are somewhat limited in what they can do. Even restaurants in states that have reopened dining rooms completely are still down at least 20% from year-ago traffic levels.
OpenTable seated diners
Source: OpenTable
Fewer diners yields less sales. The industry has likely lost some $200 billion in sales due to the pandemic, having fallen to the lowest monthly rate in nearly two decades in April. Sales have recovered in the subsequent months but that recovery has stalled—even after improving for the first time in three months in January, sales still remain some 17% below where they were a year ago and likely more like 25% below where sales should be.
Food services and drinking places sales
Source: U.S. Census
With a decline in sales—likely reflecting closed locations or units with restricted seating—restaurants cut back on employees in a big way.
In April, industry employment was lower than any year since the Bush administration—the first Bush administration—and its recovery has yet to complete. Some 2 million restaurant jobs have been lost due to the pandemic.
Restaurant jobs
Source: U.S. Bureau of Labor Statistics
How much consumers paid during the pandemic has also changed. This chart shows inflation in grocery and restaurant prices since the pandemic began.
Check out what happened to grocery prices last spring. It was only recently that price inflation in the two industries has stabilized.
Restaurant vs. Grocery Prices
Source: U.S. Bureau of Labor Statistics
Ah, but pricing isn’t even in the restaurant industry itself. Prices for fast food have surged in recent months, thanks to demand, rising wage rates and prices for delivery. Full-service chains—which are afraid of losing customers—have not raised wages nearly as high.
Limited-Service vs. Full-Service Restaurant Menu Prices
Source: U.S. Bureau of Labor Statistics
None of this seems to worry Wall Street all that much.
While full-service dining has been curtailed and executives have been scrambling for answers, their stock price valuations have soared. After dropping significantly last March, stock prices for big casual-dining companies Darden Restaurants, Bloomin’ Brands, Brinker International and Texas Roadhouse have all recovered—and then some.
Some are trading at all-time highs.
Casual-dining company stock prices
Source: Yahoo Finance
All of which is to say that Wall Street investors are banking on future improvement, not past performance. And many industry observers are expecting a return to normalcy at some point, which will mean people are dining at restaurants once again.
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