The US Restaurant Industry Has Shrunk In The Pandemic – And Whether It Will Recover Remains To Be Seen

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The number of establishments in the country fell from 703 thousand in 2019 to 631 thousand last year

Operating a restaurant has never been easy, and in recent years it has been even more difficult.

In 2020, Covid restrictions brought America’s bustling restaurant industry to a standstill. Since then, there have been significant signs of recovery: salons have reopened and customers have returned to cafes, restaurants and snack bars.

But there are fewer restaurants in the United States today than there were in 2019. And it’s unclear when — and if — they’ll be back.

Last year, there were about 631,000 restaurants in the United States, according to data from Technomic, a food industry research firm. This is about 72,000 less than in 2019 when there were 703,000 restaurants in the country.

That number could drop 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 at least 2026.

Restaurants with in-person dining tables, especially, are at a disadvantage as delivery and take-out remain popular. And with inflation still high, some potential customers are avoiding restaurants to save money.

At the same time, restaurant operators are seeing their own costs, such as rent and ingredients, rise, and they say it’s difficult to hire staff.

With conditions so difficult, some owners are advising newcomers to stay well away from the industry.

If one were to ask David Nayfeld, chef and co-owner of Che Fico and Che Fico Alimentari restaurants in San Francisco, whether he should open a restaurant now, his answer would be no.

“I would say it’s not a good time to open a restaurant if you’re not an experienced and incredibly durable operator,” he said. Especially now, when entrepreneurs in the area need experience and deep pockets to succeed, he added.

Even Nayfeld, an industry veteran who worked at the famous Eleven Madison Park, is suffering. The pandemic led to “some really devastating years that we’re still working our way out of,” he said.

Shrinkage

Some have argued that the sector’s contraction is a painful but necessary correction.

“The pre-pandemic narrative was that we were oversaturated – too many restaurants fighting for consumers’ few dollars,” said David Henkes, senior director at Technomic.

Indeed, before the pandemic, the number of restaurants was growing by between 0.5% and 1% a year, he said, adding that the recent decline has served to “reset” the size of the market. Without those hurdles, however, that decline likely would have occurred more slowly, he noted.

Daniel Jacobs, a chef and restaurateur, has seen his own chain shrink in recent years.

Before the pandemic, he and his partner Dan Van Rite operated three restaurants and a bakery, in addition to catering and consulting operations. Today, they are left with just two restaurants in Milwaukee, DanDan and EsterEv.

“Closing a restaurant is an incredibly difficult decision,” said Jacobs. “We’ve done our best during the pandemic to try to keep our teams together, but at some point, you have to give in.”

The rise of delivery services during the pandemic helped several restaurants survive the crisis.

Chinese food DanDan has been offering takeout delivery for years. “We had the customer’s confidence that we would deliver quality products,” he said.

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