Restaurant Sales Expected to Exceed Pre-Pandemic Levels in 2022
are looking up in the world of foodservice.
industry sales are expected to hit $898 billion this year, up from $864 billion
in 2019, according to the National Restaurant Association's State of
the Industry report.
sales gains are expected to come from price increases, which are about 8%
higher at quick-service restaurants and 6% higher at full-service restaurants
versus 2020. At the same time, the industry is significantly smaller, by about
80,000 establishments, than in 2019.
recovery continues on a year-over-year basis, especially compared to last
year," said David Portalatin, NPD food industry advisor, in a press release. "The
industry's recovery isn't going to be a straight line moving upward based on
the nearly two years of the pandemic so far; it's going to be bumpy. That said,
restaurant traffic should recover 98% of 2019 visits by the end of 2022."
majority of restaurant operators expect to maintain or grow their sales in
2022. Nearly half are forecasting higher sales than 2021 and 40% expect similar
levels. Four in 10 operators expect their sales to surpass pre-pandemic
numbers, the report said.
Gen Z Becoming More Influential
the report also found that Gen Z consumers are far more likely to use modern
innovations like alcohol delivery than other generations, noting that 70% of
Gen Zers said the ability to add alcohol to a takeout or delivery order is a
determining factor in their restaurant decisions, reported Restaurant
Business (Jan. 31). Full Story
more than half said they would prefer ordering and paying with a tableside
tablet or mobile app, compared to service from a waiter. This is good news for Panera
which just launched contactless dine-in, a new feature in the Panera Mobile App
that allows customers to order on their own devices for dine-in service.
general, four in ten Gen Zers said they think restaurants need to add more
tech, but just a quarter of all adults agreed.
Labor Void Still a Challenge
cash flow gains, restaurants are still facing labor pressures. About half of
operators in all segments expect recruitment and retention to be their top
challenge this year.
industry employment is expected to reach just under 15 million jobs in 2022,
which is only about 400,000 above the previous year. The report also states
that 80% of operators are paying more for labor versus a year ago, and combined
food, labor, and occupancy costs now account for around 70 cents of every
dollar generated in sales. Food Institute Focus
How Will Fast-Food Value Deals Look Different This Year?
value deals are back, but they're not quite the same as before.
the past several weeks, brands such as McDonald's have returned to value
messaging for the first time in several years, noted a report by BTIG.
McDonald's is promoting a 2 for $6 deal, Burger King is offering a $5
Meal, and Sonic Drive-Thru is advertising a $0.99 Fritos Chili Cheese
Wrap, just to name a few.
recent report from foot traffic analytics firm Placer.ai, QSR Q4 Recap, noted
that foot traffic to a number of major fast-food chains in the U.S. neared
pre-pandemic levels as of December 2021, however, rising food and labor costs
have caused them to adjust value deals, reported CNBC (Jan. 24). Full Story
Will Value Meals Attract Customers?
says value messaging is necessary to attract lapsed users and retain customers
that are starting to feel the impact of heightened food inflation and lessened
said, there is still concern that this could translate into a more aggressive
value war between concepts, dampening margins further as commodity and labor
Changes to Look For
this in mind, here are some of the biggest fast-food deals that will look
different this year, according to Eat This, Not That!:
- Little Caesars announced that it is increasing the price of its $5
Hot-N-Ready pizza to $5.55.
- Domino's $7.99 carryout will no longer include the option of ten
chicken wings, but eight.
- The Big Box deal at Popeyes has gone from $5 to $6 since it was
last on menus in 2018.
- Olive Garden's Never-Ending Pasta Bowl could be getting phased out
for good, according to president and COO Rick Cardenas.
- Burger King is no longer offering printed coupons and is planning
to reduce the volume of promotions it runs overall.
more in the Food Institute Focus.
Analysts Expect Plant-Based Food Trend to Continue
plant-based food continues to make inroads, industry observers expect the
category to become a larger part of our diet in the years to come.
was a key theme during The Food Institute's recent webinar titled "2022 Outlook for
Plant-Based and Next Gen Protein."
Who Is Eating Plant-Based?
Darren Seifer of The NPD Group noted that 19% of consumers say they want
to get more plant-based food in their diets – pandemic or not.
actually still saw it as a way to continue to do the things they were doing,"
said Seifer. "Not to mention there were some supply shortages in the
traditional meat markets at the beginning of the pandemic, so it filled a gap
that consumers were facing."
the majority of those eating plant-based foods are still eating animal-based
products. Eighty-nine percent of plant-based users do not consider themselves
vegan or vegetarian.
fact, Seifer added that the number of vegans and vegetarians has not changed
since the introduction of plant-based proteins.
it comes to demographics, presenter Nik Modi of RBC Capital Markets
emphasized that age is an important structural driver. "The younger generation
is eco conscious, but the older generation is more health conscious," he said,
noting that people are beginning to place a premium on what is going into their
The Importance of Variety
plant-based burgers are still dominating the market, with in-home options
having more variety than restaurants.
a look into the top alternatives consumers are consuming at home:
- Burger alternatives: 39%
- Sausage alternatives: 12%
- Tofu/tempeh: 11%
What's Next for Plant-Based?
meat and dairy alternatives are expected to grow, according to Seifer. However,
though dairy alternatives will remain a larger category, meat alternatives will
see a higher growth rate.
plant-based chicken category is also expected to grow in the future. "If some
of these alternatives to chicken can capture even just a sliver of what's out
there from the traditional market, perhaps the alternative chickens might rival
alternative beefs," said Seifer. Food Institute Focus
- McDonald's is expanding its test of the McPlant
burger as part of its partnership with Beyond Meat, rolling out the
burger at roughly 600 locations in the San Francisco Bay and Dallas-Fort Worth
areas to learn more about consumer demand for the potential menu item, reported
CNBC (Jan. 20). Full Story
McDonald's will sell four menu hacks popularized by its biggest fans for a
limited time. It's the first time McDonald's has sold "hacks" by
name, which have become prominent on social media platforms, such as TikTok,
reported CNN (Jan. 26). Full Story
reversed course on
its vaccine mandate for workers announced in early January after the U.S.
Supreme Court shot down the Biden Administration's vaccine
requirements for employers with more than 100 workers. The company will still
strongly encourage vaccinations and booster shots, reported CBS News
(Jan. 19). Full Story
- Meanwhile, Starbucks
is set to open two new "Pickup with Amazon Go" locations, as the
pickup-and-go concept continues gaining steam for fast food chains, reported The
Street. Full Story
- Del Taco opened its new "Fresh Flex"
prototype restaurant in Orlando, Florida. The tech-enabled venue features
double drive-thru lanes, pickup lockers, and designated parking spaces for
customers who want to park and eat in their car, reported Forbes (Jan.
19). Full Story
Southern Biscuits and Righteous Chicken announced a multi-unit franchise deal to bring its
award-winning southern comfort fare to Florida. Full Story
- On The
Border Mexican Grill & Cantina and franchise partner JRW have committed to expanding
the brand's franchise presence in Southeast Asia including its 13th restaurant
in South Korea. Full Story
- Panera has launched contactless dine-in, a
new feature in the Panera Mobile App that allows customers to order on their
own devices for dine-in service. Full Story
- Wendy's released two new hot honey chicken
offerings with demand for hot and spicy food on the rise. From 2016-20, menu
instances of hot honey grew by 187%, reported Forbes (Feb. 2). Full Story
kitchen company Kitchen United is coming to more malls after securing a
deal with the Simon Property Group. Kitchen United will appear at food
courts at two additional malls this year, in Los Angeles and Long Island, but
it could be the start of something much larger, reported Restaurant Business
(Feb. 3). Full Story
- Wingstop launched its first a cash-free
"restaurant of the future" in Dallas — joining chains like Chipotle
and Jimmy John's that are experimenting with cashless locations,
reported The Street (Feb. 3). Full Story
on the Move:
- Red Lobster announced Patty Trevino as chief
marketing officer. Full Story
- Pieology appointed Shawn Thompson as CEO. Full Story
Madeleine French Café
has promoted Christine Johnson as its new CEO. Full Story
Juice announced the
promotion of Quick Chadwick to the position of chief marketing officer. Full Story