As we head into a post-pandemic economy, tensions about social distancing are starting to ease. Whether it will be a thing of the past or develop some hybrid of how it used to be combined with social space awareness remains to be seen. One industry hit hard by the pandemic is the food and hospitality sector. Some restaurants were forced to close their doors, while those who pivoted to alter their offerings and processes could stay afloat. Some even thrived in a new age of entertainment and dining.
According to leading forecasters, 2022 will be marked with numerous economic challenges, including the restaurant industry. Issues such as supply chain difficulties, frequent COVID infections still taking people from work, and the overall labor shortage and "Great Resignation" are all taking their toll on society as a whole and are being felt in the hospitality industry.
There are also concerns that the shortage of available goods will drive inflation, leading to a downturn in the economy, and will likely plague the U.S. at least through 2023. In turn, inflation will make grain and beef products cost approximately 60% more than last year. The consumer will eventually absorb those increased costs, which will likely cut back and choose to prepare meals at home.
For restaurants to remain profitable, they must find new menu offerings with fewer choices and higher prices. Currently, consumer prices are already up an estimated 4%, which is an increase that we have not witnessed in nearly a decade.
The good news is that although costs are climbing, consumers are so happy to return to engagement with the outside world that they are willing to shoulder the increased costs. Despite the new COVID variant issues and other economic uncertainties that plague the U.S. and the world, consumer spending is beginning to rebound.
The biggest hurdle at the moment is the labor shortage. Some workers laid off during the pandemic enjoy the Pandemic Unemployment Assistance that allows them to stay comfortably at home without returning to work. Many restaurants have offered incentive programs like higher pay and more considerable perks to get workers to return. However, those costs will eventually come down the pipeline and fall on the consumer. Labor costs currently are at a 20-year high. Combining that with the inflation rate equals higher menu costs, and how consumers respond is uncertain.
The fitness industry continues to be a safe investment. Still, it is crucial to choose one that fits your net worth, the commitment necessary, and your personal preferences for the highest rate of return. When deciding which one is right for you, these are the factors to hone in on.
It’s easy to understand why initially someone would find the idea of owning a Chick-fil-A franchise appealing. When it comes to most business metrics for fast food chains, it dominates. QSR magazine found that in 2016, the chain averaged $4.4 million in sales per restaurant, with their locations only being open six days a week. But before you decide to invest, there are three crucial things you need to understand about a Chick-fil-A franchise that may have you rethinking how great they are.
There are several types of restaurant models in the foodservice industry. Full-service restaurant franchises have an estimated output of 76.5 billion in the United States alone. Apart from fast food, full-service businesses offer the consumer a dining experience. Full-service restaurants cater to customers who want to be waited on, aren’t looking to be rushed, and desire the “dining experience,” quality food, and service.
2020 was a very challenging year for many industries, including the full-service restaurant. At the beginning of the pandemic, restaurants across the board saw a decrease in revenue. But with the shutdowns and social distancing regulations, most full-service franchises were forced to take a hiatus or to pivot to meet the challenges of a closed dining room. When you take from the experience that a full-service franchise provides, that leaves them with the need to compete in the arena of fast food, where the industry was already prepared for quick pick-up meals, without the routine already established.
The fast-food industry has encroached on every part of our personal lives, from food courts at malls to fast-food pickup. Although fast food has been a way of life since the 1970s, recent trends have changed over the past several years to introduce more variation and diversity to the industry. Menus are continually updated to cater to underserved demographics and entice a more diverse population. That is leaving many entrepreneurs with options to capture an entirely new and growing demographic.
Mass shutdowns and social distancing significantly impacted many businesses across the nation, and franchises were no exception, although they fared better than the rest. And although the economic impact is still looming as we head into the second quarter of 2021, there are some industries that not only appear to have weathered the storm, they have experienced a surge and appear to be headed into a renaissance for years ahead. The restaurant service industry, specifically the immediate service area, reported a revenue of over $239 billion in 2020, even amidst the pandemic. (more…)