Restaurant Industry Predictions for 2021

The year 2020 was filled with challenges. The food business suffered significant losses during the pandemic. Why? Consumers are afraid to go and have contact with other people.

With this current situation, restaurant owners have to adjust their operations and create ways to serve their patrons off-site. Although restaurant capacity is back to 25%, it would take time before businesses can go back to full-service capability.

So, what awaits the restaurant industry for this year? Would it be any different? Here are some restaurant industry predictions from experts and analysts.

Consumers Will Still Spend Conservatively

Some lockdowns have been lifted. Local and some international travels resume while many restaurants opened again to serve people. However, the threat of COVID is still looming above everyone’s head. This makes people skittish.

Unless there’s a vaccine to boost the immune system against the virus, consumers will remain conservative in their spending. Instead, many will save for the future in case another wave of infectious disease emerges.

Demand Is There, But People Are Still Afraid

Consumers still want to avail themselves of the services of a restaurant. The demand is alive, but many are still afraid to mingle with other people. People don’t want to contract the virus. Thus, restaurant businesses should see to it that the premises adhere to strict health protocol.

At the same time, restaurant owners have to adopt new ways to serve consumers. These ways include making ordering online as seamless as possible and delivering the orders in a contactless manner. People are getting used to this set-up, but there is still much to learn.

Presidential Elections Don’t Affect the Industry

With the upcoming change in administration, many anticipate it would affect businesses in general. It might, to some extent, but COVID is still the most significant factor. The pandemic and its effect on the economy make people hesitate to spend and to socialize.

What people need is an assurance of a vaccine that will fight off this virus. If this happens, citizens will feel secure and think it’s safe to go out and mingle with other people.

Going Back to 2019 Performance Level Will Be Tough

Indeed, the restaurant business performance improves a little. However, businesses should expect a tough year, especially in the first quarter. As the second quarter enters, you can expect performance growth, and this momentum continues to the end of the year.

Still, the restaurant businesses will have to temper their positive outlook this year. It will take time, maybe 3 to 4 years more, for a business to reach its 2019 performance and exceed it.

Competitor Analysis Needs Micro-Level Benchmarking  

Macro benchmarking might not be sufficient given the current situation. You need to evaluate the competitors’ performance at a micro-level and see how they are coping with current economic difficulties.

Some regions are more resilient compared to other states. Some industries would outperform other businesses. For example, the tourism industry has the biggest hit in terms of losses. During the lockdown, all incoming and outgoing travels freeze. No one is allowed to cross borders unless necessary and with authority to do so.

Local Transitions Are More Likely to Happen

Some restaurants are known to import ingredients. For now, this operating standard might have to be postponed for a little longer. Business owners have to make do with local ingredients to survive.

Moreover, the transition from zero operation to full capacity depends on what local governments have in mind. One state might allow its restaurants to open at 25% capacity even with the lockdown in place. This regulation could be different from another.

More Closures Balance the Demand and Supply

It’s unfortunate, but analysts predict more closures, especially in underperforming restaurants, even before the pandemic hits businesses. These closures will certainly balance demand and supply.

This balance between demand and supply is right for the competition. However, it’s bad news if you are a restaurant owner. As of the moment, a way to survive is to innovate. But, if you don’t have the resources, the last resort is closing down temporarily, or worst, permanently.

The food and tourism industry is one of the boomers of all sectors. However, the pandemic caused some disruptions to operations. If you’re a restaurant owner during these times, you can protect your investment with an LA Food Industry InsuranceAn insurance policy is an excellent addition to a crisis management plan besides being innovative.

About Arroyo Insurance Services

Arroyo Insurance Services was officially established in 1986, but we have roots dating back to before 1950. One of California’s leading client-oriented and independently owned agencies, we have over 140 employees with a combined experience of over 450 years, spread across 11 locations. We are committed to providing the best insurance and risk management services at the most competitive premiums, and backing it with hands-on service tailored to our customers’ needs. For more information on how we can mitigate your risks, contact us today at (877) 220-4769.