Remember the 2020 outlooks that were issued this time last year? I don’t recall any of the outlooks predicting that a major pandemic would sweep through the world and upend life as we knew it. The uncertainty of what’s to come still exists, at least for the next several months, and it would be presumptuous of me to think I could forecast, with any degree of certainty, what will happen in the coming year.
There’s no shortage of prognosticators talking about the impending doom of the foodservice industry due to COVID-19. These doomsayers are forgetting that the U.S. foodservice industry has been through many challenging times, and has always found a way to overcome the challenges. One key reason why is that consumers won’t let the industry fail. They need and want restaurants.
While I’m not going to prognosticate, what I can do with confidence, based on NPD’s four decades of tracking the foodservice industry, is share with you 5 reasons why in 2021 the foodservice industry will endure through whatever 2021 brings.
- Restaurant Chains Are Resilient: There will be restaurants chains that experience double-digit growth in 2021. How do I know? Because there are more than a handful of major restaurant chains that have experienced 10%-20% growth in customer traffic over year ago throughout the pandemic. How can this be? It turns out that concepts that execute well are relevant to consumer needs. Restaurants that offer good value for the price and quality food can find success in any environment. This was true during the Great Recession, it’s true during COVID, it’s true no matter boom or bust.
- Off-Premises Restaurant Occasions Will Stick: The pandemic has accelerated a trend toward what consumers were already demanding. Off-premises occasions have been outpacing on-premises for years. The pandemic has now forced operators to fine-tune their capacity for high volume off-premises service whether through carry-out, drive-thru, or delivery. Those who are best-in-class have emerged as growth leaders and will help transform restaurant service in the future.
- Digital Orders for Pick-Up Will Be a Growth Engine: I’ve boasted of the triple-digit growth rates of delivery during the pandemic in scores of board meetings, conference keynotes, and executive briefings over the past few months. Still, carry-out and drive-thru have eight times more traffic volume than delivery. Yes, ghost kitchens, virtual concepts, and third-party platforms will have eye-popping growth, but all of these will still be small. If I’m asked to make a mega million-dollar bet, I’d put it on carry-out and drive-thru.
- Always Chicken, Pizza, And Burgers: Oh I know, these menu items aren’t cool or nouveau and won’t win me accolades from the culinary crowd, but these will be the winning food concepts in 2021 and 2031. Want to win big with exotic global spices, regional cuisine, or functional superfoods? Put them on a burger. Providing these foods in convenient family meal bundles that can be delivered or picked up for an at-home dinner solution will further define next year’s winners.
- Quality Food Is a Must: Quality is the number one thing that creates perceived value for the price paid, in good and bad times. If we want to spend less money on a meal, we go to the grocery store to buy food and prepare it ourselves, which is always less expensive. To entice someone to part with their hard-earned dollar in 2021, the food experience and quality better be worth it.
Also, since we need a little positivity as we put 2020 in the rear-view mirror, here are three 2021 predictions that I have reserved for a more optimistic scenario with news of a vaccine right around the corner.
- New Independent Restaurant Startups: There’s no doubt that many independent restaurants have permanently closed during the pandemic and, unfortunately, there will be more. The fact is that we see thousands of independent restaurants fail in any normal year, and in any normal year, we see thousands of new independent restaurants open. The restaurant industry is a vibrant, creative community of entrepreneurs, and they will take advantage of empty spaces, buy a food truck, or leverage technology to launch a virtual brand. We’ll likely have a net reduction in total restaurant unit counts in 2021, but the next superstar concept is already well into the planning phase.
- Pent Up Demand for Restaurants: Optimism for an efficacious vaccine also creates optimism for unleashing huge pent up demand for on-premises dining occasions. As I said above, the industry has been shifting to off-premises for years, but there will always be demand for that differentiated dining experience. We’ve already seen on-premises traffic accelerate quickly in areas where dining room restrictions are eased, and we’d expect this to be accelerated by a more virus-free environment.
- Non-Commercial Improvement Next Fall: The vaccine may be too late to rescue this school year, but next fall may well see robust populations of K-12 go back to school and college students return to campus. And while the workplace may never be the same, we will see more people return to an away-from-home workplace and bring back some business and industry (B&I) volume.
The U.S. restaurant industry is vital to this country’s economy and important to American consumers. Make no mistake, it will recover, just like it always has.