Restaurants need to brace for 18 more months of extreme challenges — and the election is about to make things worse
Restaurantsare going to be facing extreme challenges until 2022, according to Oliver Wright, the global head of Accenture's consumer goods and services practice.
- Nearly 100,000 restaurants have closed across the US since the pandemic began, according to the National Restaurant Association.
- Heading in to the fall, restaurants will face new hurdles, including reduced unemployment benefits, colder weather, and people skipping on dining out because of the election.
To describe 2020 as a bad year for restaurants is an understatement.
Nearly 100,000 restaurants have closed across the US since the pandemic began, according to the National Restaurant Association. That's roughly one in six of all restaurants across the country.
And according to the association, 43% of full-service operators say it is unlikely their business will still be open in six months if conditions created by the coronavirus pandemic do not improve. Unfortunately, experts say that actual improvement is a long way off.
"It's very clear now that it's not a 2020 problem," Oliver Wright, the global head of Accenture's consumer goods and services practice, told Business Insider.
Data indicates that disposable income levels are unlikely to return to 2019 figures by early to mid-2022, Wright said. As a result, restaurant sales will likely not return to pre-pandemic levels until around the same time.
"The next 15 months, at a minimum, and probably next 18 months are going to be extremely challenging," for restaurants, especially smaller independents, Wright said.
2020 is about to get even worse for restaurants
Fall is bringing with it more bad news for restaurants, especially sit-down and full-service options.
In a research note this week, Gordon Haskett analyst Jeff Farmer listed a number of reasons why same-store sales improvement is set to slow in the fall, including reduced unemployment benefits and colder weather reducing outdoor seating.
One factor Farmer lists that hasn't been discussed as widely as other factors is the election. Farmer says the drop in restaurant sales around presidential elections can be tied to uncertainty and the "CNN effect," when people stay at home to watch the news instead of going out to eat.
Farmer discussed this trend in another research report earlier this year.
"Restaurant sales growth rates (especially for casual dining) slowed materially in 2008, 2012 and 2016 over the 6-month period leading into the November election," he wrote in a note in January.
Last year, restaurant industry consultant Malcolm Knapp told Business Insider the fact that almost half of Americans said they were not eating out as much as they want to could be linked to the nation's growing anxiety over issues such as political polarization and income inequality. High levels of anxiety convince people to order in, instead of going out to eat.
"Everything that happens in society turns up in the restaurant business," Knapp said.
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