Foodservice business improves as Omicron looms

The foodservice segment recovered in fits and starts during 2021 as the spread of the Delta variant of COVID-19 slowed what was thought to be a summer and fall of getting back to normal. The market researcher The NPD Group recently reported that breakfast, morning snack, and lunch dayparts that were impacted by people not being outside their homes earlier in the year saw an increase in visits September through November.

Online and physical visits to restaurants for breakfast increased by 11% compared to a 10% decline in the same period a year ago. From a pre-pandemic perspective, breakfast traffic is now at the same level as the September through November period in 2019. Morning snack improved visits over the last three months by 6% compared to a 7% decline last year and down 1% for the same period in 2019. Lunch improved by 4% in the reported period compared to a year ago when visits were down by 11%, so beginning to recover but still 7% below pre-pandemic levels, according to NPD’s continual tracking of the US foodservice industry. 

While very hard-hit during the pandemic, dining on-premises also is recovering during morning and lunch occasions. Dining on-premises at restaurants for breakfast also has improved over the last three months. Visits to dine-in at breakfast increased by 51% in September through November this year compared to the same period in 2020 when on-premises traffic was down 55%. Morning snack also increased dine-in visits by 51% compared to the reported period last year when on-premises traffic declined by 48%. Lunch also improved on-premises traffic by 44% this September through November compared to the 60% decline in the same period in 2020.  Despite the gains in recent months, traffic levels for all dayparts at on-premises remain well-below pre-pandemic levels, according to NPD.

“The increased mobility this fall contributed to year-over-year gains at key restaurant dayparts, although visits are not fully back to pre-pandemic levels,” says David Portalatin, NPD food industry adviser and author of “Eating Patterns in America.” “We’re in a steady-state for the next several months, perhaps with a bump up or down here and there, but we expect to lag pre-pandemic traffic levels through 2022 slightly.”

A key unknown that may affect near-term restaurant performance is the course of the pandemic and the spread of the Omicron variant. Operators are facing two primary problems. First, many restaurants have had to temporarily limit operations or close, because staff has become infected by the highly transmissible variant and are not able to work. The second problem is it remains to be seen if the new variant will alter consumer eating patterns or prompt state or local governments to restrict restaurant operations or close them temporarily.