The last big revolution in the restaurant industry was during the Great Recession between 2007 and 2009. Food trucks proliferated, fine-dining chefs threw in their crisp white coats and started crafting elevated casual fare, bringing their exacting eyes to deli sandwiches and diner food. Fast casual thrived while supply outstripped demand for highfalutin, multicourse prix-fixers.
Some of the culinary changes — often described as the “casualization” of the industry — wrought by those difficult times persist today, but it’s clear that the pandemic pushed things even further.
Whether or not the economy heads into a recession next year, diners are skittish and extra price-conscious. Restaurant transactions dropped almost 7 percent in the third quarter of this year, according to Rabobank research, a slightly worse drop than in the second quarter, experts attributing the slide to inflation in menu prices and consumers feeling squeezed.
“We’ve been steadily revising our forecast downward every time we’ve looked at the industry, particularly the real number of volume growth,” said Henkes. Because restaurants have increased their prices, the top-line number looks pretty good, he said, “but underlying that is a softness developing in the fall — inflation coupled with a high level of uncertainty has begun putting a damper in restaurant traffic.”
Consumers feel constrained, but restaurateurs are extra pinched: According to government data, prices for food consumed at home rose 12 percent over the past 12 months, while food consumed away from home rose 8.5 percent in the same time. This means restaurant owners are eating some of that increase in food costs and not passing it along to customers to stay competitive.
One way restaurants cope with uncertainty is to scale back offerings and streamline menus, focusing more on foods that have a longer shelf life, a higher profit margin or that require less labor to prepare. (Restaurant labor costs are up 9.8 percent this year, and were up 9 percent last year, according to the National Restaurant Association.) Menus became exercises in brevity in the thick of the pandemic, and while they are no longer haiku, they remain pared down.
Because chefs and owners whittled entrees from 10 options to, say, six, and they have to cover the most popular categories like chicken, beef, salmon, shrimp and something vegetarian, range has suffered and more creative fare has gotten short shrift.
Adding to that winnowing of choice, Smith said, is the decimation of small independent restaurateurs’ nest eggs during the pandemic. They aren’t as insulated against potential future economic hardship. He predicts struggles and maybe closures for some small international restaurants and restaurants that focus on regional cuisines, a future that may diminish the whole array of food options in a town.
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