The organization that represents restaurants in Delaware said the industry is far from being out of the woods after two years of the COVID pandemic.
The Delaware Restaurant Association’s 2022 ‘State of the Restaurant Industry’ report found that restaurants continue to struggle to keep their doors open amid a surge in coronavirus cases, inflation, a labor shortage, and supply chain delays.
“Alarmingly, Delaware’s restaurant industry remains down 4,300 jobs from pre-pandemic employment levels,” the report says. “Data from BLS.gov shows DE leisure and hospitality jobs at 49,100 in December 2021, down from a high of 53,400 in December 2019.”
According to the National Restaurant Association, the United States lost more than 650,000 restaurant and hospitality industry jobs early in the pandemic and still hasn’t recovered. The group found that to be a loss of 45% more than the next closest industry.
The national association is now asking Congress to replenish the Restaurant Revitalization Fund, a now-depleted $28.6 billion program created by the American Rescue Plan Act that provides emergency assistance for eligible restaurants, bars, and other qualifying businesses impacted by COVID-19.
“It’s dangerous to see restaurants open and think that everything is ok and profits have returned,” said Carrie Leishman, president & CEO of the Delaware Restaurant Association. “Industry subsidies and relief programs in 2020 helped, but the reality for restaurants is that business conditions are more difficult now than a year ago during the height of the pandemic.”
The Delaware association notes in its report that new data collected from Delaware restauranteurs highlights the devastating impact of the omicron variant and the rapid deterioration in business conditions for Delaware restaurants.
According to the survey, 90% of restaurants experienced a decline in customer demand for indoor on-premises dining in recent weeks, as a result of the increase in coronavirus cases due to the omicron variant. 86% of operators report that business conditions are worse now than three months ago and 80% say their restaurant is less profitable now than it was before the pandemic.
The survey also found that Delaware restaurants took a number of actions in recent weeks as a result of the increase in coronavirus cases due to the omicron variant.
Among those actions, 70% of those surveyed reduced hours of operation, 50% closed on some days when they would normally be open, 30% reduced seating capacity while 7 in 10 employers say their restaurant currently does not have enough employees to support customer demand. Most operators expect their labor challenges to continue throughout 2022.
Data collected from the National Restaurant Association did find that consumer spending in restaurants trended steadily higher during the first half of 2021.
That trend was driven by rising vaccination numbers, the easing of capacity restrictions and healthy household balance sheets.
“However, that positive trajectory stalled during the second half of 2021, with sales dropping back below pre-pandemic levels by December 2021 – the lowest monthly reading since August,” the report says, noting a Morning Consult report that found the percentage of U.S. adults who say they feel comfortable dining out has fallen by 9 points since Oct. 30, 2021.
“To make matters worse, restaurant operators are dealing with a material increase in costs across the board as U.S. inflation hit 7% in December.”
This marks the fastest pace since 1982 — “an increase that is tough to swallow for an industry that typically generates, under good conditions, 3-to-5% profit margins. Coupled with the labor inflation necessary to retain enough workers to keep the doors open, we’re finding ourselves in the middle of a malevolent storm,” the association says.
Restaurant survey data also reveals:
- 68% of Delaware restaurant operators report lower sales volume in 2021 than in 2019
- 83% of Delaware restaurant operators say their restaurant costs were higher in December 2021 than December 2020
- 74% of Delaware restaurant operators report slower customer traffic in 2021 than 2019
- 96% of national restaurant operators experienced supply delays or shortages of key food or beverage items in 2021
- More than half of nationwide restaurant operators say it would be a year or more before business conditions return to normal
“More support is vital to meet the current challenges our industry is facing,” Leishman concluded. “Labor and inflationary pressures, as well as a mask mandate that our neighboring states do not require, have added increasing pressure and tensions to our workforce.”
Currently, nine states, including California, Delaware, Hawaii, Illinois, Nevada, New Mexico, New York, Oregon and Washington have mask mandates for indoor public places, regardless of vaccination status.
Nearby Maryland, Pennsylvania and New Jersey do not have such mandates. For most Delawareans, one of those destinations is likely to be within a thirty-minute drive.
The association reiterated in its report that sustained support for restaurants is needed immediately.
“While the bipartisan passage of House Bill 290,” a bill to permanently allow the sale of to-go liquors, “was a small victory for restaurants in Delaware, more support dedicated to sustaining the industry during this critical climb towards recovery is vital.”
The group said that the following list of items are steps the Delaware government can take to alleviate the pressure on the restaurant industry:
- Immediate reinstatement of targeted relief funds to Delaware restaurants
- Support an immediate moratorium on restaurant industry gross receipts tax
- Support regulatory/licensing fees moratorium for two years
- Introduce flexible labor laws for entry-level teen workers
- Limit regulatory barriers for re-entry individuals
- Subsidize mental health and health benefits for front line workers
- Oppose legislation that negatively impacts restaurants and/or threatens the rebuilding of its workforce
- Provide a clear timeline on removal of the current Delaware mask mandate
- Support pro-entrepreneurial/small business and pro-restaurant legislation
“The Delaware restaurant industry recovery is paralyzed and nowhere near complete,” the group said. “As Congress works to provide a further financial lifeline for restaurant operators, the [aforementioned] are actionable items we believe are within the purview of our Delaware state leadership and government officials to help rebuild our industry and workforce.”
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