A report from the Delaware Restaurant Association indicates that the industry is still struggling with a Covid-19 surge, inflation, reduced sales, a labor shortage, and supply chain delays.
Employment in the hospitality industry remains down by 4,300 positions from pre-pandemic levels, despite the end of capacity limits and other restrictions.
“It’s dangerous to see restaurants open and think that everything is ok and profits have returned. 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. More support is vital to meet the current challenges our industry is facing. 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,” said Carrie Leishman, CEO, Delaware Restaurant Association.
Mask mandate
Gov. John Carney brought back a mask mandate after hospitals reached capacity from the surge in Covid-19 cases. The mandate ends on Friday. Hospitalizations and new cases have declined in the past couple of weeks but remain elevated when compared to the summer and fall.
The Delaware Restaurant Association released new survey data indicating that the Covid-19 Omicron variant and other issues have a big impact on the industry.
- 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
- 80% say their restaurant is less profitable now than it was before the pandemic
Delaware restaurants took a number of actions in recent weeks that included:
- 70% reduced hours of operation during days that they are open
- 50% closed on some days when they would normally be open
- 30% reduced seating capacity
- 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
The Delaware findings were provided by the National Restaurant Association Research Group.
Consumer spending in restaurants trended steadily higher during the first half of 2021, driven by rising vaccination numbers, the easing of capacity restrictions, and healthy household balance sheets, according to the National Restaurant Association. However, that 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.
Restaurant operators are dealing with a material increase in costs across the board as U.S. inflation hit 7% in December marking the fastest pace since 1982). Restaurants under good conditions generate three-to-5% profit margins.
In Delaware
- 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
