Industry Update: 7 Things to Know Going Into 2022

As 2021 comes to a close, the foodservice industry is seeing some hopeful signs as sales recover. But the picture remains uncertain thanks to ongoing labor and supply chain issues, not to mention regional COVID-19 surges and emerging variants. In this article, we’ll review some key trends and performance measures from the third quarter of 2021 to help you understand the business climate going into 2022.

Sales and traffic are coming back faster than projected after a fall detour for Delta

Online and in-person visits continue to outpace 2020 with a 9% year-over-year increase in total operator revenue thanks to higher menu prices and spending on home meal replacements which lead to higher tickets. Traffic, however, is still down -4% compared to September 2019.¹

Operators are shifting their rising costs onto their customers

The week ending October 17th saw year-over-year check averages increase 5.7%, the biggest surge since mid-April. It was the eighth week in a row that check averages increased by at least 5%, clear evidence operators are passing on the rising costs of labor and supply chain issues to their customers.²

Delivery and drive-thru growth is slowing, but still well above 2019 levels

The dramatic shift to off-premise service observed in 2020 has been tempered by the return of diners to actual dining rooms. That said, delivery is still up 109% over pre-pandemic levels, and you can expect the use of these modes of service to remain elevated over what they were in 2019.³ 50% of consumers report getting accustomed to using drive-thrus and pickup/takeout options over the past year and are likely to use them as much or even more in the future.⁴

Labor is still hard to find and it’s hurting the bottom line

As of August, the rolling 12-month hourly turnover rate in restaurants was 19% over 2019 levels, with total employment in leisure and hospitality still 10% under pre-COVID levels, the lowest of any industry. Operators have responded by raising wages faster than any other industry to attract workers and avoid reducing their hours of operation.⁵ Higher wages, however, were no magic bullet: the foodservice industry added only 29,000 jobs in September, according to the U.S. Department of Labor. On a hopeful note, experts are expecting the labor market to ease in mid-2022.⁶

Operators becoming less optimistic about a quick end to the supply chain crisis

Last spring, operators anticipated a resolution to the supply chain crisis by the end of 2021. Now the consensus is mid-2022 at the earliest. Fill rates for distributors now range from 75% to 85% due to their own labor and staffing issues. This is forcing operators to rethink their marketing and innovation calendars.⁷

Consumers are positive about dining out over the next six months, but momentum is slowing

15% of consumers say they’ll be eating out more over the next six months than they do today. Unfortunately, this sentiment has declined by 13 points since July, indicating a more cautious trend through the fall.

For now, the only thing for certain is more uncertainty

The good news is that the U.S. economy is growing at a healthy rate despite all of these headwinds noted above. Wages are rising and consumers are spending their extra income freely. This bodes well for the restaurant industry over the medium term as operators continue to demonstrate their creativity to work around the obstacles.

¹ NPD CREST Monthly First Look, September 2021
² BlackBox Intelligence Weekly Sales Reports, October 27, 2021
³ NPD CREST Monthly First Look, September 2021
⁴ Datassential, Midyear 2021 Trend Report
⁵ Cleveland Research Company, Leisure & Hospitality Labor Shortages and Wages, September 2021
⁶ Joblist, Q3 2021 U.S. Job Market Report, October 2021
⁷ Cleveland Research Company, Supply Chain & Labor Challenges, October 2021