New York (CNN) It has never been easy to operate a restaurant and in recent years it has become even more difficult.
In 2020, Covid restrictions halted the country’s large restaurant industry. Since then, there have been significant signs of a comeback: Dining rooms have reopened and customers have returned to cafes, fine dining and fast food.
But there are fewer restaurants in the U.S. today than in 2019. It’s not clear when — if ever — they’ll come back.
Last year, there were about 631,000 restaurants in the United States, according to data from Technomic, a restaurant research firm. That’s roughly 72,000 fewer than in 2019, when there were 703,000 restaurants in the country.
That number could drop even further this year, to about 630,000 locations, according to Technomic, which doesn’t predict the number of U.S. restaurants will return to pre-Covid levels until 2026 either.
To-go orders have remained high even though dining rooms are open again.
Sit-down restaurants are especially at a disadvantage delivery and take-out remain popular. And with inflation still high, some potential customers are avoiding restaurants to save money. Meanwhile, restaurant operators are seeing their costs, such as rent and ingredients, rise and say it’s difficult to hire staff.
With conditions so difficult, some restaurant owners are advising newcomers to leave the industry altogether.
If one were to ask David Nayfeld, chef and co-owner of Che Fico and Che Fico Alimentari restaurants in San Francisco, if he were to open a new restaurant right now, his answer would be no.
“I would say it’s not a good time to open a restaurant unless you’re a seasoned and very stable operator,” he said. Especially now, when restaurant operators need experience and deep pockets to succeed, he added.
Even Nayfeld, himself an industry veteran who worked at the famous Eleven Madison park, is struggling. The pandemic led to “some really devastating years that we’re still working to get out of,” he said.
Calling it
Some have argued that shrinking is a painful but necessary correction.
“The pre-pandemic narrative was that we were oversaturated … too many restaurants asking for too few consumer dollars,” said David Henkes, senior director at Technomic.
A restaurant stands empty and closed in Brooklyn, New York in 2020.
Indeed, before the pandemic, the number of restaurants was growing between half a percent and one percent each year, he said, adding that The recent decline served to “reset” the size of the market. However, without those obstacles, that decline likely would have happened more slowly, he noted.
Daniel Jacobs, a chef and restaurant owner, has seen his chain of restaurants shrink over the past few years.
Before the pandemic, he and his business partner Dan Van Rite ran three restaurants and a bakery, plus a hotel and restaurant consulting business. Today, they are left with two Milwaukee restaurants, DanDan and EsterEv.
“Closing a restaurant is an incredibly difficult decision to make,” Jacobs said. “We did our best during the pandemic to keep our teams together … at some point, you just have to call it.”
Daniel Jacobs, chef and restaurant owner, and his business partner Dan Van Rite, in 2017.
The increase in shipping and delivery during the pandemic helped many restaurants survive the pandemic.
DanDan, an American Chinese restaurant, had been serving food for years. The restaurant “had that customer confidence that we would provide quality products,” he said.
EsterEv is a tasting-menu-only restaurant within a restaurant (functionally, a dining room located within DanDan) open only on weekends and “definitely wouldn’t have [made it] if we had to pay rent for a space,” Jacobs said.
To stay or to go?
The trend towards delivery and takeaway has stalled, with restaurants reporting higher levels of off-premise orders. According to Revenue Management Solutions, a restaurant consultancy, delivery increased 11.4% at fast food and fast casual restaurants in January compared to last year.
“We increasingly like to take our food on the go,” said David Portalatin, foodservice industry consultant for NPD Group, a market research firm. “We’re still a more home-centered society.”
Plus, sit-down restaurants tend to be more expensive, which can turn away cash customers, Portalatin said. Even with rising food prices, eating at home is generally less expensive than eating out, and restaurants last year saw their foot traffic increase.
Full service restaurants are also more labor intensive. This is a problem now, as restaurant owners report that they are having a hard time hiring staff.
Help wanted
Job openings in lodging and food services rose by 409,000 in December, the largest increase by sector for the month, the Bureau of Labor Statistics said in February.
Demand for workers marks a turnaround since the start of the pandemic, when restaurants laid off millions of workers. Some employees also left voluntarily during the pandemic, out of fear of contracting Covid-19 or tired of dealing with grueling conditions and rude customers.
People walk past a closed restaurant near Times Square on January 24, 2023 in New York City.
Today, some of those workers have not returned, leaving operators to struggle to restore.
“Basically, the labor situation is one where … there just isn’t an adequate supply of skilled workers,” Henkes said. “And restaurants are particularly vulnerable because it’s never been the industry of choice for many people.”
Some restaurants, Henkes said, “are very aware that they need to improve the work experience and what they’re offering to employees,” he said. “But doing that at scale for an industry is very difficult.”
And, of course, some large employers are not interested in higher wages for workers.
Chipotle, Starbucks, Chick-fil-A, McDonald’s and KFC owner Yum Brands, for example, have each donated $1 million to Save Local Restaurants, a coalition opposing a California law that could raise the minimum wage to 22 dollars per hour and codify the work. conditions for fast food workers in the state.
