After the initial sales bounce that followed the government-mandated lockdowns during the early weeks of the coronavirus outbreak, consumer spending in restaurants slowed during the peak summer months. Eating and drinking places posted sales of $54.6 billion on a seasonally-adjusted basis in August, according to preliminary data from the U.S. Census Bureau.
While the sales gains in July (4.1%) and August (4.7%) continued to point the trendline in a positive direction, they were well below the robust growth registered in May (31.3%) and June (27.2%). As a result, total sales in August were still nearly $11 billion lower than the pre-coronavirus levels posted in January and February.
While the seasonally-adjusted figures offer a directional look at spending trends from month to month, they don’t provide a complete picture of the sales losses that have been experienced by restaurants during the coronavirus pandemic. For this, the Census Bureau’s unadjusted data set is a better measure, because it represents the actual dollars coming in the door.
In total between March and August, eating and drinking place sales levels were down more than $148 billion from expected levels, based on the unadjusted data. Add in the sharp reduction in spending at non-restaurant foodservice operations in the lodging, arts/entertainment/recreation, education, healthcare and retail sectors, and the total shortfall in restaurant and foodservice sales likely surpassed $185 billion during the last six months.
Despite the sales increase in August, restaurant operators are not in agreement that overall business conditions are on the upswing. In fact, by a greater than two to one margin, operators are more likely to say business conditions worsened in August rather than get better. That’s according to a survey of 3,500 restaurant operators conducted by the National Restaurant Association August 26 – September 1.
Thirty-two percent of fullservice restaurant operators say business conditions in August were worse than they were in July, while only 14% say business conditions improved in August. Fifty-four percent of fullservice operators say business conditions in August were about the same as they were in July.
Operators’ assessment of business conditions is similar in the broadly defined limited-service segment, which includes quickservice, fast casual, and coffee and snack concepts. Only 13% of limited-service operators say business conditions improved in August from July, while 30% say they worsened.
Rocky roads ahead
Looking ahead, most restaurant operators do not anticipate a rapid return to normal. Seventy-one percent of fullservice operators say they do not expect their restaurant’s sales to return to pre-coronavirus levels within the next six months. Fifty-four percent of their limited-service counterparts report similarly.
For many restaurants, treading water simply won’t get it done. Forty-three percent of fullservice operators say it is unlikely their restaurant will still be in business six months from now, if business conditions continue at current levels. Among limited-service operators, one-third say they likely won’t survive another six months if business conditions don’t improve.
Source: National Restaurant Association